The typical consequences of a criminal conviction for insider trading include fines, the loss of one's job, and even possible prison time, but sometimes there are further repercussions. In the case of Ayal Rosenthal, who pleaded guilty to insider trading in 2007, those consequences include the denial by NYU's Stern School of Business of a masters in business degree (MBA) for which he had completed all of the course requirements.

Rosenthal challenged NYU's 2007 decision to refuse to grant him the MBA degree he had earned in a June 2008 lawsuit. Rosenthal alleged that NYU's action was "unauthorized, excessive, and unfair," and violated the university's disciplinary rules, Reuters reports. On Monday of this week, U.S. District Judge Lewis Kaplan ruled against Rosenthal, finding that he was only able to complete his course requirements by concealing the criminal investigation from the school, and that, in any event, "the authority and discretion to determine whether Rosenthal was qualified to receive an MBA degree from Stern properly rested with its faculty."

In February 2007, Rosenthal (a former PwC accountant) and several others--including his brother (a lawyer) and his father--pleaded guilty to an insider trading ring that netted over $2 million. As summarized by the DOJ,

The government's investigation revealed that the ROSENTHALS and HEYMAN operated an insider-trading ring in which they stole confidential information from certain of their employers and used it to profit in the securities markets. While working at Taro, ZVI ROSENTHAL had regular access to confidential information concerning the expected approval of Taro's application to the Federal Drug Administration ("FDA") to market a new generic drug and Taro's forthcoming quarterly earnings announcements. ZVI ROSENTHAL passed this information to his son AMIR ROSENTHAL, who quickly executed transactions in Taro options before the FDA's approval and the company's financial results were made public. AMIR ROSENTHAL passed this inside information to his friend, DAVID HEYMAN, who likewise placed profitable options trades before the public release of the information. Subsequent publicly disseminated news of the FDA approval and the company's financial results caused substantial fluctuations in the price of Taro's securities.

The investigation also disclosed that when HEYMAN, as part of his work at Ernst & Young, learned that two large, publicly held corporations were contemplating an imminent merger, he communicated this information to AMIR ROSENTHAL, who promptly executed options trades with the hope of profiting when the share price of one of the merger partners rose. Similarly, when AYAL ROSENTHAL, while working at PricewaterhouseCoopers, received confidential information that two other companies were contemplating a merger, he immediately informed AMIR ROSENTHAL, who again executed options trades to profit if the share price of one of the merger parties rose.

In July 2007, Ayal Rosenthal received a two-month prison sentence for his role. After his release, Reuters reports, NYU voted to deny him the degree, citing his guilty plea as the "deciding factor."