Saturday, March 12, 2011

How Americans Expose Swiss Secret Accounts and Terror Financing?

Home Minister and Finance Minister need to learn a lesson or two on "War on Terror" from the Americans!

Insider Trading: What Else Did McKinsey Tipster Kumar Tell Rajaratnam?
"Greedy" Rajaratnam had info on AMD, says the prosecution
The first round of wire-taps were played in a Manhattan law court on Thursday, revealing what will be the prosecution’s modus operandi in the mega-trial for insider trading where former Forbes 400 member Raj Rajaratnam is accused of reaping $45 million in illegal profits. Jurors heard recordings of Anil Kumar, former senior partner at McKinsey, giving Rajaratnam tips on deals involving American Micro Systems, a McKinsey client. Considered the prosecution’s star witness by the NYPost, Kumar gave Raj a few other tips, revealed when he plead guilty to insider trading earlier this year. Here’s what he knows.

As a senior partner at McKinsey, Kumar had insider information and a fiduciary duty not to disclose his knowledge. Pressured by Rajaratnam, Kumar finally broke down and accepted an initial $250,000 to act individually as a consultant for Raj, against McKinsey policy. Finally accepting the money, which had to be deposited in a Swiss account under his domestic worker’s name. United States Attorney General for the Southern District of New York, Preet Bharara, estimated Kumar pocketed about $2.6 million, including profits from reinvestments in Galleon itself, and has been charged with conspiracy to commit securities fraud and securities fraud.

The tape played on Thursday showed Kumar and Rajaratnam having a friendly conversation on August 15, 2008 about some deals AMD was involved in. More specifically, Kumar claims that “yesterday they agreed on, at least they’ve shaken hands, and said they’re going ahead with the deal.” When Raj asks how much is being invested, Kumar puts the figure in the $6 to $8 billion range.

In his guilty plea, Kumar reveals that he informed Rajaratnam of AMD’s intention to spin-off its loss-making manufacturing arm and enter into agreement with Abu Dhabi investment facility Mubadala Development, which would inject a substantial amount of cash. From the release:

During August, September, and October of 2008, the Galleon Technology Funds invested tens of millions of dollars in AMD securities. On October 7, 2008, AMD publicly announced plans to spin off its manufacturing operations and to receive an investment from another entity in Abu Dhabi. That same day, AMD’s stock opened up approximately 25 percent over the prior day’s closing price.

Paradoxically enough, a bad performance by the tech sector in the coming months erased all of Galleon’s gains, according to Preet Bharara.

The Post stresses that “Kumar’s testimony is central to the government’s case against” and that he will continue to be questioned on Monday. So what else does he know?

Kumar told Rajaratnam confidential information on two other market moving events, apart what was stated above. All in all, these tips helped Galleon make $19.7 million in illegal profits. The first deal Kumar disclosed was AMD’s intention to acquire ATI Technologies. Kumar heard about AMD’s negotiations and informed Raj, whose Galleon fund began accumulating ATI stock over the course of the next several months. When the deal was finalized and publically announced, on July 24, 2006, ATI’s stock “rose significantly on the news,” and, as Galleon sold all of its holdings in ATI, Rajaratnam made a hefty $19.2 million profit.

The other deal the Attorney General’s office disclosed involved lay-offs at eBay. On October 2, 2008, Kumar found out from a client, and eBay subsidiary, that substantial layoffs would be announced that Monday, October 6, at the e-commerce giant. Kumar called Raj the next day, on October 3, and on that same day, Galleon began to short eBay stock. As had been anticipated, eBay announced the layoffs, the stock dropped precipitously, and Raj’s Galleon took in a nice $500,000 in profits, after closing their short positions.

If the post is right, and Kumar is one of the star witnesses, then this will be what comes up next week in the super trial that is shocking Wall Street.
Insider Trading: What Else Did McKinsey Tipster Kumar Tell Rajaratnam?

World Financial Fraudsters
Rajat Gupta takes 'leave of absence' from New Silk Route- sample of corporate governance globally
Former Intel Exec Rajiv Goel Pleads Guilty in Insider Trading Case

In Contrast Sample India
We have Spectrum of Secret Swiss Bank Account Holders- like Hasan Ali- who defy the rule of law!

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