Photo: Katya Wachtel for Business Insider
At 3:02 pm this afternoon, about 70 people in a 17th-floor courtroom inside the U.S District Courthouse on Pearl Street, heaved a collective sigh of relief, as the window on Rajiv Goel’s testimony finally closed in the insider trading trial of Raj Rajaratnam.The man who first stepped into the witness box last Tuesday — a man who spoke softly and seemed pitifully sad — had after four days in the stand become a feisty, take-no-fact-or-suggestion lying down kind of witness.
Goel tussled with defence lawyer Terence Lynam over every word, every date… If filibustering was a course at college, Goel would have graduated summa cum laude.
The focus of the tussle was the much-discussed deal between Sprint and Clearwire, in which Intel, where Goel was employed at the time, made a $1 billion investment. The government argues that Raj traded on tips provided by Goel, who had insider information due to his role at the company.
Today the defence repeated its core argument that Raj’s trading decisions were based on a mosaic of information, not tips from company insiders.
And they added another theme: Goel’s information was not good enough for Raj. Raj was a sophisticated, accomplished investor, and Goel’s tips were barely worth Raj’s time — he didn’t take any of it into account.
The defence hammered away at Goel for not remembering the specific details of what he revealed to Raj about Intel’s quarterly earnings in 2007, or whether the news had been good or bad for the company.
“I didn’t recall exactly what I said to him,” Goel said. “But it was about earnings information I’d gotten from Mr. Lenke.”
“You can’t remember if the information was bad or good information?” Lynam asked.
“Yes sir, I don’t remember specifics of numbers, I just passed on information that I got sir.”
Lynam argued that if anything, given the information on Intel’s revenue for the quarter in question, Raj should have sold or shorted Intel stock. He also pointed out that after earnings news was released by Intel on April 18, the stock price moved about 1.5% and therefore the information “didn’t significantly affect the stock price.”
“You don’t know how that information was perceived or analysed or processed,” Lynam said to Goel of the information he says he provided to his then-friend. He pointed to news articles and analyst reports that discussed a potential deal by Sprint and Clearwire, and Intel’s potential investment.
Goel time and again emphasised that those reports were merely speculation.
“He’s A Lot Smarter Than I Am”
Lynam also pointed out another phone call in which Goel called Raj about a prior conversation the pair had about Sprint and Clearwire’s joint venture — the Wimax deal — to tell the Galleon chief that his “approach” to the valuation “is wrong.”
“You wanted to call and your old friend from Wharton and prove you were smarter than he was, right?” Lynam said.
“He’s a lot smarter than I am,” Goel said. “Even today.”
When it came time for the government to re-direct, prosecutor Reed Brodsky asked frankly: Did you tell the FBI that you knew that Raj was going to trade on the information you gave him. “I knew,” Goel said.
When it came for Lynam to re-cross Goel, they squabbled again over the meaning of “anything” in one of the wiretapped conversations (as shown below).
Lynam argued that when Raj said, “If you hear anything let me know,” he was talking specifically about news being released about the Clearwire Sprint deal at the CTIA cable show. Goel denied that, and argued that Raj didn’t need Goel to pass along what’s in the news — that “anything” referred to information Goel might garner as a insider at Intel.