In Miami in 2009, Raj Rajaratnam and Anil Kumar were chilling at Raj’s South Beach pad just days before they were arrested on insider trading charges that October, when Raj got a call on his cell phone.
Kumar relayed this event to jurors yesterday during Raj Rajaratnam’s insider trading trial.
The Galleon founder owns a condo in the Setai Hotel in South Beach, and according to Kumar, the pair were lounging on deck chairs a few days after attending the wedding of a co-worker in Trinidad with their wives, when the call came in.
Raj answered his cell, and then, according to Dealbook,
[He] walked down the beach to have a private conversation for about 5 or 10 minutes.
He came back excited [and told Kumar] he had gotten a call from a Cisco Systems executive that Cisco is buying a company called Starent.
Kumar describes what happened next:
“I thought, let me just buy a few shares of Starent to see if this thing ever happens.”
When Cisco bought Starent days later, Kumar made some nice cash on the $8,000 worth of shares he’d picked up.
Apparently on that same day, Raj told Kumar about one of his former Galleon guys, Ali Far, who he’d recently discovered was working for the government. “You know Anil, I’m told that there’s a gentleman who used to work for me and he’s now wearing a wire,” Raj said, according to Reuters.
He then recommended to Kumar, from now on, “When you call me, you should use pre-paid cell phones.”