- Last Updated: 12:27 AM, August 9, 2012
- Posted: 12:00 AM, August 8, 2012
She lied, cheated and snitched — but she still wasn’t slimy enough.
Hedge-fund manager Doug Whitman, who is on trial for insider trading, told former trader turned FBI informant Roomy Khan that she needed to be a “slimeball” to stay on his good side.
“What value do you have if you’re not a slimeball?” Whitman told Khan during a secretly taped phone call in 2008 after she had become an informant for the feds.
The recording was one of several played for a Manhattan federal jury yesterday during Khan’s testimony against Whitman.
The founder of Whitman Capital, based in Menlo Park, Calif., is accused of earning $1 million over 18 months from tips on Polycom, Google and Marvell Technologies.
He has pleaded not guilty as part of the government’s massive crackdown on insider trading.
Khan, 53, told jury that she gleaned illegal tips on Polycom’s earnings from Sunil Bhalla, a former Polycom exec who was placed on leave in 2009. She then passed those tips to Whitman and a handful of other hedgie pals, including convicted Galleon Group co-founder Raj Rajaratnam and her bosses at Trivium Capital Management.
Bhalla settled civil charges brought by the Securities and Exchange Commission last year for $85,000. Rajaratnam, whose ties to Khan go back to the 1990s, is serving an 11-year prison sentence following his conviction for insider trading.
At the time of Whitman’s “slimeball” comment, Khan had agreed to record her phone calls for the FBI and could no longer pass on inside info.
“You know what would make you feel better?” Whitman asked Khan when she started complaining about her lot in life. “Calling Sunil and getting a good call on Polycom and being able to short it.”
“Yeah, but I could go to jail for doing that, too,” Khan said.
“You’re not going to be a slimeball, what do I want to talk to you for,” Whitman said.
In 2001, she pleaded guilty to wire fraud for giving Rajaratnam information about chipmaker Intel, where she had access to billing data.
After being approached by the feds for the second time in 2007, Khan admitted to going behind their backs. At one point, she testified that she bought a secret cell phone in her gardener’s name so she could continue talking with her hedge-fund contacts.