He was just found guilty, but Raj could have gotten away with it.
He was close – he knew the government could be watching him, and he knew to cover his tracks. But he took a couple of missteps.
It’s become obvious from what the jury used to convict him how Raj could have built a much stronger defence and gone free.
Here’s what Raj should have done.
How to insider trade “legally:”
- Get someone to steal the information: Weirdly, according to the definition of insider trading they’re using in Raj’s trial, your tipper has to be a person with material nonpublic information that they got because they are an insider at the company or know someone who is. So if your tipper just breaks in and steals the information for you, you’re in the clear.
- Ask your tipper: Are you allowed to tell me this? Get him or her to say yes, and you’ve escaped the “knowingly accepted insider information from a company insider who received the tip in violation of their position of trust” clause.
- Tell at least 5 people what you know. Preferably, get a news article written about it. Raj’s mistake is that he asked Danielle Chiesi to keep “radio silence.” The prosecution says that’s evidence that he knew the tip was material and nonpublic. If you’re tell a few people you can say that you didn’t know it was material.
- Ask your tipper: Is this info important? You’re looking for an answer like this: “Nah, it’s no big deal. A lot of people know about it already and no one really cares.” This will challenge the materiality of the tip too.
- Be mean to your tipper. The prosecution has to prove that the tipper benefited from giving you the tip. So obviously, don’t give him or her any money or give him anything quantifiable (like two BMWs). But don’t be nice either. The prosecution says friendship and just enjoying giving the tip are enough to count as a “benefit.” He or she should never say “thank you” and they should sound like being on the phone with you is an unpleasant experience.
- Last and most importantly: Only insider trade with someone you have something big on. That will ensure they don’t testify against you like Anil Kumar did, and say the whole thing was your idea, and then laugh in your face about it.