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‘The Billionaire’s Apprentice,’ by Anita Raghavan

‘The Billionaire’s Apprentice,’ by Anita Raghavan

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Published by anirudh71
The cases against these two men are the twin pillars of Anita Raghavan’s true-life business thriller, “The Billionaire’s Apprentice.”
The cases against these two men are the twin pillars of Anita Raghavan’s true-life business thriller, “The Billionaire’s Apprentice.”

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Published by: anirudh71 on Jun 30, 2013
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05/14/2014

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Just a few years ago, Raj Rajaratnam and Rajat Gupta were two of the most admired businessluminaries from the “twice blessed” generation of South Asian immigrants. Both were born after Indiaachieved independence from Britain in 1947, and both came to the United States after the Hart-Celler Act of 1965 abolished national origin quotas. Like many top students at the time, they sought graduate business degrees: Rajaratnam at the Wharton School, Gupta at Harvard.
Rajaratnam founded the Galleon Group hedge fund and becamea billionaire, and was considered the richest Sri Lankan-bornperson in the world. Gupta rose within McKinsey & Company to become the elite consulting firm’s three-term leader and thefirst Indian-born chief executive of a multinational company.Both were rich and reputable, traveling in the most exclusivesocial and business circles. Rajaratnam was dedicated to helping victims of land mines; Gupta presided over global efforts to fight AIDS, tuberculosis and malaria.Needless to say, neither of these men needed to engage ininsider trading. And yet (spoiler alert for anyone who hasn’t read the businesspages since 2011), in separate trials, juries convicted each of multiple counts of securities fraud. Investigators discovered thatRajaratnam had been given insider tips and used this advantageto make millions of dollars trading shares. Gupta was one of hissources. Rajaratnam received an 11-year sentence, the longest in American insider trading history; Gupta got two years.In one particularly dramatic instance, Gupta, on a conferencecall with Goldman Sachs’s board of directors one week after thecollapse of Lehman Brothers, in 2008, learned that WarrenBuffett was prepared to support Goldman with a $5 billioninvestment. Within minutes, Gupta called Rajaratnam and
 
Galleon purchased nearly $25 million of Goldman stock, mostly for Rajaratnam’s portfolio. The following month, when Guptalearned Goldman was about to report a loss, he calledRajaratnam 23 seconds later. Galleon soon began dumpingGoldman stock.The cases against these two men are the twin pillars of AnitaRaghavan’s true-life business thriller, “The Billionaire’s Apprentice.” Raghavan, a reporter who spent 18 years at The Wall Street Journal and has contributed to The New York TimesDealBook, scoured documents and dissected testimony, addingcolor from more than 200 interviews on three continents. Herreporting is meticulous. The minutiae are instructive, though attimes relentless. There is as much men’s clothing here as atBarneys New York, and these two defendants really are whatthey wear: the roguish Rajaratnam in a white captain’s capsmoking pot on the upper deck of a yacht; the genteel Gupta ina black Nehru suit with a red handkerchief at President Obama’sfirst state dinner.The book’s prefatory Cast of Characters sets a big, complexstage. My edition of “Hamlet” lists just 18 named dramatispersonae at the outset, whereas “The Billionaire’s Apprentice”lists 81. For Wall Street insiders, there are large dollops of gossip about the bit players. Preet Bharara, the United Statesattorney in Manhattan, idolizes Bruce Springsteen and calls hisfather a “tiger dad.” Judge Richard J. Holwell mispronouncesthe name of Goldman Sachs’s chief executive Lloyd Blankfein.Raghavan’s coverage is encyclopedic. Some readers will wishshe had heeded Elmore Leonard’s advice and left out the parts
 
people tend to skip.But the details of the two cases support a larger edifice, whatRaghavan calls “the rise of the Indian-American elite.” Vijay Prashad, a scholar who has written extensively about South Asian history and Indian immigration, argues that men likeRajaratnam and Gupta benefited from two of the greatest socialmovements of the past century: independence in India and thestruggles for civil rights in America. Those were the changes thatmade them “twice blessed.”
Nevertheless, as Raghavan shows, it took time and work for this new generation of South Asians topenetrate American financial firms. Rajaratnam was the only Sri Lankan in his class at Wharton, andGupta had perfect grades after his first term at Harvard but couldn’t get a job. One McKinsey sourcerecalled how a partner asked, “Will our senior clients ever relate to you?” As Rajaratnam explained in a2011 interview with Newsweek: “Wall Street was tough to get into for us. Not to be crude but there’s aJewish mafia, and a WASP mafia, and an Irish mafia. . . . They hire their own; they socialize amongtheir own.”
The barriers fell slowly, man by man. Anshu Jain, the co-chief executive of Deutsche Bank, joined Kidder, Peabody &Company in 1985. Arshad Zakaria, the brother of the journalist Fareed, joinedMerrill Lynch in 1987. As finance becamemore mathematical, Wall Street firms began to hire skilled graduates, mostly men, from the ultra-competitive Indian

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