California hedge fund manager Doug Whitman was sentenced on Thursday to two years in prison after he became the first defendant in a broad US crackdown on insider trading to take the stand to convince jurors of his innocence.
US 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, was 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 trading the shares of Google Inc and video-conferencing company Polycom Inc.
They said the other involved "soft-dollar" payments used to obtain tips on and then trade in chipmaker Marvell Technology Group Ltd.
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.
Before learning his punishment, Whitman, 55, choked up as he read from a prepared statement in which the Atherton, California, resident alluded to the breakup of his 20-year marriage soon after he was charged.
"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 and sentenced to one year of supervised release. He was granted bail pending an expected appeal. Federal prosecutor Chris LaVigne said the government will seek a forfeiture of $935,306 of illegal profit.
"Doug Whitman maintains his innocence and looks forward to vindication on appeal," his lawyer David Anderson said in a statement.
Whitman had sought a maximum prison term of six months.
Another of his lawyers, David Rody, told Rakoff that a long sentence was not needed for deterrence, and that prosecuting a "relatively smaller player" such as Whitman was enough to convince others in the hedge fund industry that "nobody's safe."
US Attorney Preet Bharara in New York has obtained well over than 60 guilty pleas and verdicts since publicly revealing his insider trading probe in late 2009.
Prosecutors said Whitman tried to make