Whitman Capital Securities Fraud
Securities Fraud cases such as insider trading are prosecuted by the federal government through its Securities and Exchange Commission Enforcement Division (SEC).
Below is an article that was posted on this Website a few years back that relates to this topic and has been updated since its original posting. To read more detailed articles on this subject, visit Mr. Cohen's legal blog by clicking here.
According to the Wall Street Journal, Doug Whitman a portfolio manager at Whitman Capital, LLC was found guilty this week of two counts of securities fraud and two counts of conspiracy to commit securities fraud on charges that he used secrets he learned about companies to take in $1 million in insider trades.
Whitman was convicted on all four counts with which he was charged. By way of aspects of the deceitful arrangements, Whitman implemented trades constructed on material and information not disseminated to the public, connected to three companies that are publicly traded. The companies named were Polycom, Inc., Marvell Technology Group, Ltd. and Google, Inc. After a trial that was argued for about three weeks before U.S. District Judge Jed S. Rakoff, Whitman was convicted of the offense.
Karl Motey, an independent research consultant delivered the inside information concerning Marvel Technology Group to Whitman. He had acquired it from particular Marvell employees in exchange for monetary considerations.
In reference to the two other publically-traded companies; Google and Polycom Inc., Whitman attained the inside information, from a Roomy Khan, a woman who was a member of the hedge fund industry. The Polycom inside information was given to her from an employee of the firm, and she obtained the Google inside information from an employee of a company which presented investor relations services to the company.
The penalty for each of the conspiracy counts is double the gross gain or loss from the offense or a maximum penalty of five years in prison and a fine of $250,000. Each of the securities fraud counts carries a maximum penalty of 20 years in prison and a maximum fine of $5 million. Whitman is scheduled to be sentenced in December of 2012.
The case was investigated in coordination with the President's Financial Fraud Enforcement Task Force. The Manhattan U.S. Attorney Preet Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group.
Update January, 2013
It was announced in an FBI press release that Doug Whitman has been sentenced in Manhattan federal court to twenty-four months in prison for his participation in two insider-trading schemes that brought his firm Whitman Capital more than $900,000 in illegal proceeds.
Preet Bharara the Manhattan U.S. Attorney commented: "With his sentence today, Doug Whitman joins scores of other privileged professionals who traded on inside information to gain an illegal edge and now live behind bars. His punishment shows yet again that supposedly elite financial players must operate by the same rules that apply to everyone else."
Whitman was also sentenced to one year of supervised release upon the completion of his prison term. Additionally, he was also ordered to pay $250,000 in fines as well as a special assessment penalty of $400, and forfeiture of more than $900,000 in what has been determined to be ill-gotten gains.
In early February of last year (2016) former hedge fund manager Doug Whitman won release from serving the balance of his twenty four month sentence when a number of judges expressed uncertainty that his original conviction should be upheld.
The second U.S. Circuit Court of Appeals in New York granted the Whitman Capital LLC founder bail, permitting him to be released from a halfway house in Sacramento, California where he was serving the outstanding four months of his original sentence.
The three-judge panel's decision gave no detailed explanation for their decision. However, their pronouncement followed a previous hearing earlier in the day when some of the judges submitted that Whitman's conviction could no longer stand, subsequent to a major appellate ruling that narrowed the scope of insider trading regulations.
Whitman lost a previous appeal earlier in the month.
The ruling came during ongoing litigation in regard to "what establishes insider trading?" which is an issue the United States Supreme Court has agreed to review.
If you, a family member or somebody close to you is under investigation, or has been arrested on a charge of Securities Fraud, contacting a Fort Lauderdale federal criminal defense attorney who specializes in securities fraud allegations of any type is essential. Being charged with Insider Trading can have severe penalties if a conviction is attained by the prosecution. Click here to find out what your next step should be.
Michael B. Cohen, Esq. is a Fort Lauderdale Securities Fraud lawyer who can provide the proper advice needed and deliver a free case evaluation if any charges relating to Securities Fraud are filed by the government.
Mr. Cohen can be reached 24 hours a day, 7 days a week including holidays at his main office which is centrally located to all major cities in Southeast Florida.
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