[ by Howard Haykin ]

               
Irreconcilable differences.  The relationship between former Goldman director Rajat Gupta and Galleon former hedge fund manager and Galleon founder Raj Rajaratnam remains icy, according to the WSJournal's Chad Bray.  And that's months after a jury convicted Mr. Gupta on insider-trading charges.  The problem revolves around Gupta's $10 million investment in the Galleon Voyager International Fund.

On Friday, nearing the end of the year, Terrence Lynam, a lawyer for Raj Rajaratnam, issued a statement “strongly” denying claims by Mr. Gupta’s lawyers that he was “swindled” out of his $10 million investment by Mr. Rajaratnam.   Lynam said:  “As a partner in the fund and also someone with a sophisticated business background, Mr. Gupta was aware of the potential risks and rewards of this investment.”  The fund, initially profitable, collapsed in September 2008 after Lehman Brothers Holdings sought bankruptcy protection, according to Mr. Lynam, who then said: 

“As a result, the fund collapsed as well and Mr. Gupta lost his investment of $10 million and Mr. Rajaratnam lost his investment of $40 million.  No funds of Mr. Gupta were ever misappropriated and Mr. Gupta was not ‘swindled’ in any way.”

Continues Claim of Innocence.  Mr. Gupta, 64, twice claimed his innocence, noting that he had a falling out with Mr. Rajaratnam, 55, over the Voyager investment in 2008 and had no motive to provide inside tips as alleged by prosecutors and securities regulators.  The first mention of these circumstances came during Gupta's insider-trading trial.  The second time was in subsequent court papers.

A lawyer for Mr. Gupta didn’t return a phone call seeking comment Friday.

Mr. Gupta, who once headed McKinsey & Co., received a 2-year prison sentence in October;  he remains free on bail and is appealing his sentence.  Mr. Rajaratnam currently is serving an 11-year sentence, and has already filed an appeal.
 

For further details, go to:  [ WSJournal, 12/28/12 ].