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Mathew Martoma, the SAC Capital Advisors LP employee found guilty last month of insider trading, is no longer a graduate of the Stanford Graduate School of Business, the school confirmed Tuesday.
Administrators at the business school rescinded their offer of admission to Mr. Martoma, a move that nullifies the degree he earned in 2003, according to people familiar with the matter.
The former trader may face decades in prison, so it’s unlikely his business degree is top of mind. But Stanford’s move is noteworthy because it’s believed to be the first time the business school has revoked a graduate’s degree, and highlights the lengths to which schools may go to protect their reputations when graduates become enmeshed in scandal long after leaving campus.
Shortly before applying to Stanford, Mr. Martoma was expelled from Harvard Law School for falsifying his transcript grades, according to documents unsealed in advance of his trial last month.
Stanford spokeswoman Barbara Buell declined to comment on Mr. Martoma’s record, citing privacy laws.
However, when asked about the school’s general policy, she said, “We take very seriously any violation of the integrity of our admissions process,” she said. The school has provisions for revoking degrees or acceptance offers if a student is found to have gained admission through false pretenses, she added.
Stanford sent Mr. Martoma a letter last month seeking explanation about statements on his application and allowed him two weeks to respond, according to people familiar with the correspondence. Mr. Martoma’s lawyers requested a two-week extension, which was granted, according to those people. That extension ran out last Friday.
All applicants must sign a statement acknowledging that Stanford can withdraw an offer of admission if the candidate has misrepresented his or her credentials or engages in behavior “that indicates a serious lack of judgment or integrity” before arriving on campus, among other criteria.
With their signatures, applicants are also confirming that all of the information in their applicants are their own work and, “to the best of your knowledge, complete and accurate.”
A representative for Mr. Martoma declined to comment on the substance of the Stanford correspondence and did not immediately respond to a request for comment about his graduate status late Tuesday.
Several elite business schools have had high-flying graduates whose careers imploded in scandal. University of Pennsylvania’s Wharton School counts among its alums former Galleon Group chief Raj Rajaratnam, convicted of securities fraud in 2011, while Harvard Business School educated Enron Corp. CEO Jeffrey Skilling, now serving a prison term for insider trading.
Unlike Mr. Martoma, those executives still hold their degrees.
“What makes this possible is not that he was a convicted felon, but that he was admitted under false pretenses,” said one Stanford faculty member with knowledge of the situation.
Mr. Martoma was convicted on Feb. 6 of insider trading for illegal trades on two pharmaceutical companies that helped SAC book profits and avoid losses worth $275 million. On Feb. 28, he asked the presiding judge to overturn the verdict or give him a new trial.
He is currently set to be sentenced June 10 and faces up to up to 20 years in prison for each of two counts of securities fraud, and up to five years for a conspiracy charge.
Stanford B-School Strips Diploma of SAC Capital?s Martoma - MoneyBeat - WSJ
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