Bloomberg is reporting that Doug Whitman, founder and president of Whitman Capital, was charged with using illegal tips on Google, Polycom and Marvell Technology to gain more than $900,000.

An indictment filed in Manhattan federal court yesterday said that Whitman had traded information two sources, one of whom had also traded information to Raj Rajaratnam. The SEC has also sued Whitman and his California hedge-fund firm for insider trading practices.

“Whitman recognized the value of the information he got, and paid cash for it in one case, and bartered his own inside information in the other,” Janice Fedarcyk, assistant director in charge of the FBI’s New York office, said in a statement.

Whitman has been charged with two counts of conspiracy to commit securities fraud and two counts of securities fraud. He faces up to five years in prison for each conspiracy charge and up to 20 years for each fraud charge.

Whitman pleaded not guilty yesterday in Manhattan federal court and was released on a $1.5 million bond.

Whitman received his tips from former Intel executive Roomy Khan and his neighbor according to the SEC. Khan tipped off Whitman to the earnings of Polycom and Google before they were made public.

Interestingly enough, two men that Whitman had reportedly gained insider info from, Khan and Karl Motey, were the same men who helped put Rajaratnam behind bars last year.

Whitman’s attorney, David L. Anderson, said that his client was not guilty and that Whitman “traded on the basis of lawful research and analysis, not unlawfully obtained inside information.”

Authorities said the case was brought forth by the efforts of the Obama’s Financial Fraud Enforcement Task Force.

Hedge fund billionaire Raj Rajaratnam was sentenced to 11 years in prison for insider trading practices that resulted in over $50 million in profits. The founder of the Galleon Group (which used to be one of the largest hedge fund management firms in the world) was also ordered to pay $10 million in fines.

Rajaratnam, who was born in Sri Lanka, was arrested by the FBI in 2009. Prosecutors called him “the modern face of illegal insider trading” and accused him of profiting on tips from a well-connected group of insiders that included former IBM and Intel execs. In May, he was convicted of 14 counts of conspiracy and securities fraud.

Good news for Raj – his sentence, though the longest in history for insider trading, is still shorter than the up to 24 years the the federal government requested.

According to the NYT, his sentence is an example of recent trend – white collar criminals receiving harsher penalties. Although some down at the OccupyWallStreet protests might scoff at that notion, insider trading penalties have been on the rise as of late.

A former Galleon trader, Zvi Goffer, got a 10 year sentence for his role in the insider trading. The average length of sentences for the other people convicted in Rajaratnam’s case is 3 years.

Twitter is sounding off about the sentencing, and Raj isn’t getting much sympathy –

Some have used this sentence as an example that there is some justice for financial crimes –

In 2009, Rajaratnam was the 236th richest man in America and the richest person in the world to have been born in Sri Lanka.

What do you think about this sentence? How do you think the political climate affected it, if at all? Let us know in the comments.

Today’s front page of the Wall Street Journal features Cuban in his classic “I can’t believe that idiot referee just made that call against my team and I will have his head on a platter” pose. Are there any other pictures of this guy out there other them him pitching a hissy fit on the sidelines of an NBA game? His less than adult behavior has helped him ring up more than $2 million in fines during his tenure as the owner of the NBA’s Dallas Mavericks. Considering his wealth that is just ‘throw around’ money but still why couldn’t he just feed some hungry kids rather than acting like one.

It appears that his impetuous nature has garnered him the 2 words that may actually be worse than ‘IRS audit’ and those are ‘SEC investigation’. Yikes, aren’t there usually big fines and jail time associated with those things? All of this stems from a 6% stake in Mamma.com which was sold by Mr. Cuban following some information that was given to him by the company’s CEO, Guy Faure. The details seem to be many but the one that stands out is the arrogance of this guy and his handlers. His lawyer, Christopher Clark had this to say:

We’re shocked. We find it incredible that with all the important issues that the SEC has to address with regards to today’s economy they’ve sought to bring a $750,000 case relating to a he-said, she-said about one trade against a person whose integrity has never been questioned before with regard to the securities markets.

Funny how he needed to qualify how Mr. Cuban’s integrity has never been questioned about the securities markets because it is questioned everywhere else due to his childish antics. Granted, the details seem a bit sketchy and the case may be one that doesn’t deserve this kind of attention but this guy thrives on attention. In his case, is online reputation monitoring or any type of reputation monitoring needed because nothing is secret with him? At what point does the persona end and the person begin? It will be interesting to see if this dings Mr. Cuban in any way since he has recently suffered some embarrassment about publically stating his desire to buy the Chicago Cubs but apparently not being able to raise the money he said he could.

So what’s the internet marketing angle? I would say it’s more of an internet angle in general. You need to be careful about what you put out there at any level because people are watching. Attitudes and actions are now monitored at a level unheard in modern times. I suspect that Mr. Cuban should have taken the more relaxed attitude he displayed on his blog last summer when he wrote:

Is there anything more fun than sitting around, growing your hair, drinking a Bud while listening to Jethro Tull and pondering how to change the balance of power in the search world and unseat Google?

Uh, Mark? This is reality checking in with you. Unseating Google appears to be the least of your concerns (and probably pretty far removed from reality). Maybe a few less alleged insider trading moves and some time off to try to exhibit some good behavior would be better?

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