ORIGINAL ARTICLE
Sept. 13 (Bloomberg) -- A certified public accountant who hid his conviction for insider trading from his teachers at New York University’s graduate business school wasn’t entitled to the MBA degree that he thought he earned, a judge ruled.
In February 2007, three months after completing his course work at NYU’s Stern School of Business, Ayal Rosenthal pleaded guilty to charges that he leaked to his brother secret tips that he learned at his job at PricewaterhouseCoopers LLP. Rosenthal never told the school about the investigation of him or his guilty plea, even while serving as a teaching assistant in a professional responsibility course, according to a court ruling.
Rosenthal sued after faculty learned of his conviction and voted not to award the degree. U.S. District Judge Lewis Kaplan in New York today upheld the university’s decision, saying Rosenthal wasn’t entitled to damages and can’t force NYU to grant him the masters of business administration degree.
The faculty determined “that Rosenthal was not fit to receive a degree of the basis of his admitted felonious conspiracy to commit securities fraud,” Kaplan wrote. “That decision was fully within the faculty’s power and discretion.”
Rosenthal, who was a part-time student, also didn’t tell the school that he had served a two-month term in prison, Kaplan said. Two days after he was released from jail, Rosenthal told the school’s Judiciary Committee that his guilty plea was for “conscious avoidance of securities laws, which is materially different from a customary guilty plea,” Kaplan wrote in his decision.
Grade Change
As part of its recommendation to the faculty that Rosenthal be denied a degree, the school’s committee also recommended that Rosenthal’s grade in professional responsibility be changed to an “F,” the judge said.
Rosenthal argued in his 2008 lawsuit that the Stern faculty lacked jurisdiction to discipline him and that NYU failed to comply with its own disciplinary rules and procedures.
Edward Hernstadt, Rosenthal’s lawyer, didn’t immediately return a call seeking comment after regular business hours.
The case is Rosenthal v. New York University, 08-cv-05338, U.S. District Court, Southern District of New York (Manhattan).
