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Billionaire Babies

A Commentary by Susan Estrich

Raj Rajaratnam should be about the last person in the world that I have any sympathy for. I don't know him. I don't have a lot in common with billionaires who would cheat to save $3 million, as he was convicted of doing. I dislike insider trading, not so much because it's unfair (it's also unfair that so many people are so much better than me at investing) but because it undermines confidence in the markets, and our economy depends on that confidence.

So I'm not here to make excuses for the former billionaire, as he's now being called. After federal authorities wiretapped his calls and caught him talking --- and talking -- he was convicted this week on a slew of counts of securities violations and conspiracy and faces up to 19 years in prison.

Rajaratnam did not take the stand, but the jury reportedly got quite an earful on the calls. He was a consummate name-dropper. He was forever dropping tidbits about what whoever he just talked to told him, proving in a single line both that he was an insider and that he was letting you (whoever was on the line) in, too.

You know the kind of guy. Whenever you see him, he shares a tidbit he heard that morning from someone rich/powerful/famous who made him promise not to tell a soul. You know you're one of a long list, but you can't help but smile at the thought that he's taken you into his confidence.

One of the rites of initiation to high-level Democratic politics used to be the rundown on which of the Democratic dons you had to be sure to call before lunch so he could tell everyone whatever it was you just happened to tell him that morning. That was the second part: Have a few tidbits to spread around every day. Spread them to politicians. Spread them to the press. Spread them to anyone you were trying to reach out to and bring into the fold.

They didn't need to be great tidbits. No worries about staying up all night thinking of tidbits. They could be from the morning paper, for goodness sake, or from a poll you were releasing that day, or from an ad that ran somewhere last week. That was the beauty of it. What was being said was far less important than the mutual process of identification -- the inside wink -- where who you know is far more important than what you know.

Greed? Sure. He didn't need the money; they never do. But a guy who is basically greedy doesn't tell everyone in sight. He uses the information for his own benefit, not as conversational fodder. He keeps the names secret and the information close to his chest. Rajaratnam did just the opposite.

One of the defense experts apparently reviewed exhibits that demonstrated that in many of the cases at issue, the inside information Rajaratnam passed on or traded on was publicly available. It was not secret at all. That should be a defense.

I don't know why, but the jury was not convinced. My guess is that they did not like Rajaratnam very much, sitting there silently in his expensive shirts, showing off his wealth and power on the tapes -- a big, fat rich guy.

Maybe so. But it never ceases to amaze me how completely and totally insecure some of the most successful people in the world are. When I read the quotes from the tapes, I shook my head: Here is a 53-year-old billionaire, with houses everywhere, board chairs, surrounded by people who will kowtow to him and meet his every need, and he's bragging on the phone like a kid showing off how popular he is.

Market types are saying the conviction should not have any impact on the markets. By Lehman Brothers standards, it's chump change. But if it's not a story that will change stock values, it's still worth talking about to your teenage (or older) kid.

He didn't need the money. He didn't need to brag. To have done less would have made him bigger. But only a secure man would understand that. No matter how much he made, he never got there. The insecurities that almost surely drove him to succeed also cost him that success. Some baggage will kill you if you don't find a way to leave it behind.


See Other Political Commentaries.

See Other Commentaries by Susan Estrich.

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