By Ben Baris
The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund
Anita Raghavan
(Hachette/Business Plus; $29)
The arrest of Galleon Group founder Raj Rajaratnam in 2009 sent a shock wave through the South Asian community in the U.S. Even more shocking was the conviction of prominent businessman Rajat Gupta for passing insider information to Rajaratnam. Nine years Rajaratnam’s senior, Gupta, now 64, had been a trailblazer for South Indian expatriates in business and finance as head of McKinsey & Co. and later a Goldman Sachs and Bill & Melinda Gates Foundation board member. Rajaratnam himself used to refer to Gupta as a “rock star.”
Journalist Anita Raghavan says she wanted to write a book about the South Asian diaspora in the U.S., and the Galleon arrests provided the perfect impetus. The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund is a gripping narrative that is partly an examination of the culture of entitlement that influenced Rajaratnam, Gupta and the various associates who became ensnared in the Galleon web. But Raghavan’s writing is at its most engaging when she dissects the personalities involved in the scandal.
Raghavan depicts a Mad Men –like workplace drama with Rajaratnam as a driven financier who knew that as a foreigner he couldn’t crack the Wall Street club, so he set out to build his own. Early on, as investment banker to a number of high-tech entrepreneurs at Needham Asset Management, he figured he could also manage those entrepreneurs’ new wealth in a hedge fund. Some of Needham’s brokerage clients expressed concern that “he was president of the company, he was a banker and he managed money for the very same executives whose companies he covered as a banker…he was in a position to get information from his banking clients that he could then use to trade on for his hedge fund.”
Those concerns led to his departure from Needham. Rajaratnam took many of the same clients with him to Galleon. He was a tough taskmaster — at Galleon he charged analysts and portfolio managers $25 fines if they were late to meetings — but he played as hard as he worked. Raghavan relates that Rajaratnam would sometimes offer $5,000 to any employee who could drink 10 tequila shots and gives an account of a birthday party involving much marijuana and Rajaratnam in a cowboy shirt that “only Jimmy Buffett could love.”
Gupta became involved with Galleon reluctantly, according to Raghavan. As Gupta’s lawyer pleaded in trial: “He has lived a life of probity. Why would he do this in the seventh decade of his life?” The book doesn’t really try to explain why a man of Gupta’s stature would pass along securities secrets — or for that matter why a skilled technology stockpicker like Rajaratnam would take the chances he did. But some clues seem to lie in the way he approached his business from early on: as a fiefdom in which he was free to tap all the connections and authority he had to do as he pleased.
