Calif. fund founder gets 2 years in prison in NYC
Jan 24, 2013, 11:54 PM
Associated Press
NEW YORK (AP) – A San Francisco hedge fund founder was sentenced Thursday to two years in prison for his conviction on insider trading charges after he apologized to the court, saying he was “terribly, terribly sorry.”
Doug Whitman received less than half of the more than four years in prison called for by federal sentencing guidelines after his August conviction on securities fraud and conspiracy charges.
U.S. District Judge Jed Rakoff said Whitman seemed to be a decent person in his personal life but was “cavalier and crude in his business dealings.”
The judge also fined the founder of Whitman Capital $250,000 and ordered him to forfeit $935,000.
At trial, prosecutors said Whitman made nearly $1 million between 2006 and 2009 by receiving inside tips about the earnings of public companies. Whitman testified he was careful to avoid inside trades.
At his sentencing, Whitman, 54, called his trial and conviction the most “painful and shaming” experience of his life.
“I am terribly, terribly sorry,” he said. “This is something that haunts me today and will for the rest of my life.”
A defense lawyer said the case had cost Whitman his reputation, his job and his marriage.
Whitman is scheduled to report to prison May 9. Before his arrest, he had presided over a hedge fund that had about $100 million in assets.
He was the only defendant to testify among dozens charged in a wide-ranging crackdown since 2007 on insider trading by federal authorities. Nearly all of those charged have pleaded guilty or been convicted at trial.
During a three-week trial last summer, jurors heard testimony that Whitman’s hedge fund made trades over a three-year period based on inside information related to Google Inc., Marvell Technology Group Ltd. and Polycom Inc.
Among witnesses for the government was Roomy Khan, who once lived near Whitman in Atherton, Calif.
She said Whitman was “almost hounding me” for inside information from a close contact at Polycom, a telecommunications company. Whitman testified his firm realized $362,172 in profits on Polycom shares during the period the government alleged Khan passed him information.
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