California Hedge Fund Chief Charged With Insider Trading

(The Wall Street Journal) - A northern California hedge fund manager was charged Friday with making a series of improper trades in Google Inc. and other technology companies based on inside information, the latest in a broad government crackdown on insider trading.

The case against Doug Whitman, of Whitman Capital in Menlo Park, Calif., stems from a wider investigation involving Galleon Group founder Raj Rajaratnam. Rajaratnam was convicted of insider trading charges last May and is serving an 11-year prison sentence.

Federal prosecutors in Manhattan have alleged that Whitman, 54, made trades based on secret tips he received from Roomy Khan and Karl Motey, two people who have pleaded guilty to insider trading charges and are cooperating with the government in its probe. Since late 2009, the government has secured 56 guilty pleas or convictions out of 63 people charged with insider trading in the crackdown.

"Inside tips, illegal shortcuts and corrupt collaborations have no place in a trading strategy, and there is a high price to pay for those who think and act otherwise," said Preet Bharara, the US Attorney in Manhattan.

Whitman, of Atherton, Calif., surrendered to FBI agents in New York on Friday morning.

He has been charged in a four-count indictment with conspiracy to commit securities fraud, as well as securities fraud. He faces up to 20 years in prison on each fraud charge.

Read more: The Wall Street Journal