But this is the part that strikes me as really barmy:
Mr. Rajaratnam later told Mr. Kumar that he should get someone outside the U.S. to sign the consulting agreement on his behalf with Galleon and had him set up an account with Galleon under Mr. Kumar’s housekeeper’s name in order to reinvest the money with Galleon, Mr. Kumar said. The structure was so McKinsey didn’t know about the payments, Mr. Kumar said.
So Kumar has an agreement, not in his name, and “his” money is in Galleon hands.
That money was in no real sense ever his money. The SEC can seize it, but what ability did Kumar have to get at it? Even if he had been smart about he did negotiate the offshore agreement (UK is very tough; failure to honor contracts that have clear payment and withdrawal arrangements can be argued to be an admission that the company is “trading insolvent”, which makes the directors personally liable) did he have any practical ability to enforce it? His “payment” was just round tripped back to Galleon, he remained dependent on Rajaratnam’s continued good will if he were ever to access a dime. Hence by having control of Kumars account, the hedgie had leverage to keep extracting more from him, independent of continued “payments”.
It may prove a tad ironic if Rajaratnam’s having picked such a mark was what led to his downfall.
....... http://www.nakedcapitalism.com/2011/03/insider-trading-case-testimony-suggests-mckinsey-types-are-stupid-crooks.html http://ca.news.yahoo.com/confessed-co-conspirator-testifies-nyc-insider-trading-trial-20110310-134119-304.html