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The manager of a Menlo Park-based hedge fund was charged with alleged insider trading on Friday (Feb. 10), the Securities and Exchange Commission announced.
Atherton resident Doug Whitman, 54, of Whitman Capital was arrested in connection with an insider trading ring linked to hedge fund advisory firm Galleon Management.
His attorney, David Anderson of Sidley Austin LLP, issued a statement asserting his client’s innocence and cooperation with the investigation. “The charges are based on claims made by Roomy Khan and Karl Motey, who have pled guilty to insider trading and conspiracy, and who hope to reduce their prison sentences by accusing Mr. Whitman. Their claims are false and will be proved false,” the statement concluded.
The Securities and Exchange Commission (SEC) alleged that Mr. Whitman illegally traded based on non-public information obtained from friend and neighbor Ms. Khan. In its complaint, the agency stated that Mr. Whitman got confidential information around six years ago about Polycom and Google earnings in 2005 and 2007, estimating that he then allegedly earned nearly $1 million by trading on the information.
“Whitman engaged in what even he termed ‘slimeball’ activity and together with Khan brought new illicit meaning to the maxim ‘help thy neighbor,'” said George Canellos, director of the SEC’s New York Regional Office in a written statement.
According to the SEC’s complaint, filed in a Manhattan federal court, the information about Polycom and Google is the same inside information that the SEC previously alleged Ms. Khan provided to other hedge fund contacts.
The complaint alleges that Whitman Capital accumulated 132,263 shares of Polycom stock and then liquidated it after getting the tip from Ms. Khan for a profit of more than $360,000. On at least one later occasion, in September 2008, Mr. Whitman allegedly asked her for further information and suggested using Skype to avoid detection, the SEC said.
The complaint further alleges Mr. Whitman illicitly earned $620,000 in 2007 from similar information about Google’s quarterly financial results. Afterward, according to the SEC, Mr. Whitman sent Ms. Khan flowers as a thank you.
The SEC has charged 30 defendants to date in its Galleon-related investigation. The insider trading occurred at more than 15 companies for profits of more than $91 million, according to the agency.
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One percenters like this caused the recession that our country is still escaping. Throw the book at all of them. Make them pay for the economic devastation that they have caused across the country.
These types of guys get their day in court and some will say theyll just hire good lawyers to get them off. You should know that the SEC has some of the most intelligent and shark-like attorneys this world has to office. Rest assured fellow 99%
To many liberals a mere accusation is enough to convict. Testimony from criminals is often suspect especially when there is a quid pro quo in play.
I have a radical idea. How about having a trial where all the evidence can be presented and let a jury decide his fate and then if a guilty verdict is rendered then people should weigh in. Doug Whitman has already been convicted in the court of irrational leftist opinion.
I remember the Frank Quatronne story. Poeple were like sharks circulating around the victim in a blood lust frenzy ready to eviscerate Quatronne. Of course he was innocent.
Unfortunately many liberals in their quest for income redistribution (taking away income from people who worked for it and giving it to people who haven’t) joyously pass judgment on accomplished people because of their jealousy of success.
I don’t know whether Mr. Whitman is guilty or not. But a mere accusation is not enough to render an informed opinion.