Page 45 - Psychology of Money - Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

Bill Gates. He sat on the board of directors of five public companies. From
the slums of Kolkata, Gupta had quite literally become one of the most
COBACOBA
successful businessmen alive.

With his success came enormous wealth. By 2008 Gupta was reportedly

worth $100 million.¹¹ It’s an unfathomable sum of money to most. A five
percent annual return on that much money generates almost $600 an hour,
24 hours a day.

He could have done anything he wanted in life.

And what he wanted, by all accounts, wasn’t to be a mere centa-millionaire.
Rajat Gupta wanted to be a billionaire. And he wanted it badly.

Gupta sat on the board of directors of Goldman Sachs, which surrounded
him with some of the wealthiest investors in the world. One investor, citing
the paydays of private equity tycoons, described Gupta like this: “I think he
wants to be in that circle. That’s a billionaire circle, right? Goldman is like

the hundreds of millions circle, right?”¹²

Right. So Gupta found a lucrative side hustle.

In 2008, as Goldman Sachs stared at the wrath of the financial crisis,
Warren Buffett planned to invest $5 billion into the bank to help it survive.
As a Goldman board member Gupta learned of this transaction before the
public. It was valuable information. Goldman’s survival was in doubt and
Buffett’s backing would surely send its stock soaring.

Sixteen seconds after learning of the pending deal Gupta, who was dialed

into the Goldman board meeting, hung up the phone and called a hedge
fund manager named Raj Rajaratnam. The call wasn’t recorded, but
Rajaratnam immediately bought 175,000 shares of Goldman Sachs, so you
can guess what was discussed. The Buffett-Goldman deal was announced to
the public hours later. Goldman stock surged. Rajaratnam made a quick $1
million.

That was just one example of an alleged trend. The SEC claims Gupta’s
insider tips led to $17 million in profits.