In Manhattan federal court on Wednesday, August 17, prosecutors in their closing statements informed a jury that Doug Whitman, of Whitman Capital in Northern California’s Menlo Park in San Francisco, used confidential information leaked by corporate insiders and used the illegal advantage to the detriment of the general investing public. Whitman’s lawyer counterclaimed that his client did not use secret corporate trading tips and had in fact, only traded after diligent, legitimate, and extensive research.
The jury, however disagreed with the defense and convicted Whitman on Tuesday, August 21. The trial took place over three weeks in Manhattan federal court; the charges against Whitman were based on allegations that he earned a profit of $1 million due to receiving leaked insider information about Google Inc and other companies that specialize in technology between 2006 and 2009. On the charges of conspiracy and securities fraud, the hedge-fund manager plead not guilty.
Whitman is now convicted of two counts of securities fraud along with two counts of conspiracy to commit securities fraud and may possibly wind up serving a 50-year prison sentence. Sentencing is scheduled to occur on December 20th of this year.
“Douglas Whitman now joins the grim procession of convicted Wall Street professionals who decided that the rules don’t apply to them. The rules do apply. Mr. Whitman had a hedge fund with his name on the door, with rules against insider trading. He flouted those rules, tarnished his name and now is a convicted felon facing imprisonment,” said U.S. Attorney Preet Bharara after the guilty verdict was issued.