Whitman Capital founder Doug Whitman gets 2 years for insider trades

Jan 25 2013, 10:35 IST
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Whitman Whitman "repeatedly perjured himself" on the stand and was "willfully, blatantly aware that he was trading on inside information. (Reuters)
SummaryWhitman repeatedly perjured himself on the stand and was willfully, blatantly aware that he was trading on inside information.

illegal profit with the help of insiders such as Roomy Khan, a former Intel Corp employee who passed tips on Google and Polycom, and Karl Motey, a consultant who passed tips about Marvell.

Also testifying against Whitman was Wesley Wang, a former Whitman Capital employee who later worked at Steven Cohen's SAC Capital Advisors LP.

Khan, Motey and Wang have pleaded guilty to various crimes linked to insider trading. They have been cooperating with investigators with the hope of receiving lighter sentences.

As in many other recent insider trading prosecutions, the government's evidence against Whitman included telephone conversations secretly recorded by the FBI.

Khan was also a central figure in the government's prosecution of Galleon Group LLC hedge fund founder Raj Rajaratnam, a former billionaire who is now serving an 11-year prison sentence for insider trading.

Wang, meanwhile, has given the government information on as many as 20 people who may have been involved in insider trading, prosecutors have said. Among those he named was Dipak Patel, a former SAC portfolio manager.

Rakoff often imposes lesser sentences than the sentencing guidelines recommend and ignored the 10- to 12-month recommended lengthening of Whitman's sentence for perjury.

The judge said that provision could "chill" defendants from defending themselves under oath and be "an impediment to innocent people taking the stand and clearing their name."

In October, Rakoff sentenced former Goldman Sachs Group Inc director Rajat Gupta to two years in prison for tipping Rajaratnam - well below the eight to 10 years guideline range that prosecutors wanted. Gupta is appealing his conviction.

The case is US v. Whitman, US District Court, Southern District of New York, No. 12-cr-00125.

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