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Bout to tell "what had happened"
In a move that could add to the government's arsenal in the Galleon Group insider-trading case, prosecutors made a federal court filing on December 30, 2009 that suggests they are on the verge of accepting a guilty plea from former McKinsey & Co. partner Anil Kumar.  According to the Wall Street Journal, the filing signals that Mr. Kumar may waive his right to an indictment by a grand jury, which could be seen by lawyers as a step toward a guilty plea.  Of the 21 people the government has brought charges against, four are acting as cooperating witnesses.  They are as follows: (i) Roomy Khan, former Intel employee, (ii) hedge-fund managers Richard CB Lee, Ali Far, and Steven Fortuna.  All four have pleaded guilty to conspiracy and insider trading charges and are hoping for reduced sentences for their testimony and aid in gathering evidence - a classic case of "prisoners dilemna". 

Prisoner's dilemna involves a scenario where Prisoner "A" and Prisoner "B" are both arrested.  Prosecutors separate the two prisoners and offer then a reduced sentence in exchange for "snitching" on the other.  In the case of Prisoner B, (i) if he snitches and Prisoner A does not snitch, Prisoner B receives a reduced sentence and Prisoner A gets the book thrown at him; (ii) if Prisoner B does not snitch and Prisoner A does snitch, then Prisoner B receives the maximum sentence while Prisoner A receives a reduced sentence; (iii) if both prisoners snitch then they both receive the maximum sentence; (iv) if neither snitches then they both get off or receive something less than getting the book thrown at them.  As you recall from our earlier post on Stanford Financial (http://clicky.me/stanford) that James Davis, Stanford's former CFO, admitted to running a ponzi scheme when faced with prisoners dilemna.

Stanford CFO ... Play on player
Mr. Kumar, 51 years old, was a star consultant at McKinsey at the time of his arrest.  Prosecutors allege that in August 2008 he tipped off Mr. Rajaratnam, head of Galleon Group, about the timing of a reorganization of Advanced Micro Devices, Inc. involving a spinoff of its manufacturing business.  Mr. Kumar, who worked on the transaction and was a direct or indirect investor in certain Galleon funds, told Mr. Rajaratnam (i) when the transaction would occur and (ii) to buy AMD stock.  The Journal went on to report that Mr. Kumar built his career at McKinsey by building relationships in the technology industry and in the Indian business world ... It shouldn't be hard to be a star performer when you trade inside information in exchange for consulting engagements ... What lawyers refer to as "quid pro quo".     



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