Whitman Capital founder gets 2 years for insider trades

Thu Jan 24, 2013 6:55pm EST
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By Jonathan Stempel

NEW YORK (Reuters) - California hedge fund manager Doug Whitman was sentenced on Thursday to two years in prison after he became the first defendant in a broad U.S. crackdown on insider trading to take the stand to convince jurors of his innocence.

U.S. District Judge Jed Rakoff in Manhattan imposed the sentence, which was less than half the 4-1/4 to 5-1/4 years that federal prosecutors wanted.

Whitman, the founder of Whitman Capital LLC in Menlo Park, was convicted in August of securities fraud and conspiracy over his involvement in two insider trading schemes between 2006 and 2009.

Prosecutors said one scheme resulted in more than $900,000 of illegal profit from trading the shares of Google Inc (GOOG.O: Quote) and video-conferencing company Polycom Inc PLCM.O.

They said the other involved "soft-dollar" payments used to obtain tips on and then trade in chipmaker Marvell Technology Group Ltd (MRVL.O: Quote).

Rakoff said he believed Whitman "repeatedly perjured himself" on the stand and was "willfully, blatantly aware that he was trading on inside information every step of the way."

But he also noted evidence of the defendant's good character, including his assistance to children with learning disabilities, in imposing punishment.

Before learning his punishment, Whitman, 55, choked up as he read from a prepared statement in which the Atherton, California, resident alluded to the breakup of his 20-year marriage soon after he was charged.   Continued...

California hedge fund manager trader Doug Whitman exits the Manhattan Federal Courthouse in New York, following his sentencing, January 24, 2013. REUTERS/Brendan McDermid