Convicted CPA Loses MBA and Court Ruling

A federal court judge has upheld New York University’s decision to deny an MBA degree to a CPA who neglected to tell the graduate business school about his conviction on insider trading charges.

Former PricewaterhouseCoopers employee Ayal Rosenthal pleaded guilty in February 2007 to one count of conspiracy to commit securities fraud after he was accused of disclosing confidential information to his brother about a 2005 transaction between two public companies. The conviction came only three months after he finished taking the necessary classes to earn his master’s degree in business administration, according to Bloomberg.com. He was sentenced to 60 days in prison.

However, he did not disclose the charges against him, his guilty plea, or his jail term to NYU’s Stern School of Business. Once the faculty found out about his conviction, a committee voted to withhold the MBA from him and to alter his grade to F in his professional responsibility course, where he had been a teaching assistant. He sued the Stern faculty in 2008, but U.S. District Judge Lewis Kaplan upheld the decision on Monday. He noted that the faculty’s “decision was fully within the faculty’s power and discretion.”

“Rosenthal managed to complete his course requirements only by concealing his criminal investigation from Stern,” Kaplan wrote, according to Reuters. “In the last analysis, the authority and discretion to determine whether Rosenthal was qualified to receive an MBA degree from Stern properly rested with its faculty.”

For reprint and licensing requests for this article, click here.
MORE FROM ACCOUNTING TODAY