Whitman Capital Securities Fraud

Securities Fraud
Insider Trading

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.

If you find yourself, or a family member or friend is under investigation, or has been arrested for a charge of Securities Fraud, the first thing you should do is retain a knowledgeable criminal defense attorney who specializes it these types of allegations. 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.