Whitman Capital founder gets two years for insider trading
By Jonathan Stempel | January 25, 2013 10:21 AM EST
California hedge fund manager Doug Whitman was sentenced on Thursday to two years in prison, after he had become 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, had been 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 trades in Google Inc
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.
Whitman choked up as he read from a prepared statement prior to learning his punishment.
"This has been the most painful and shaming experience of my life," Whitman said. "My father taught me not to cut corners and I tried to apply that to my life and my job ... My trial and my conviction have served as a rude and bitter wakeup call."
Whitman was also fined $250,000. Federal prosecutor Chris LaVigne said the government will seek to force him to forfeit about $935,000 of illegal profit.
The defendant is scheduled to surrender on May 9. His lawyer David Anderson said he believes there are several grounds for appeal.
(Reporting by Jonathan Stempel in New York; Editing by Tim Dobbyn)