Well this is… interesting.

David Glovin writes in Bloomberg News that New York University does not have to grant accountant and convicted felon Ayal Rosenthal the MBA degree he earned:

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.

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.

Rosenthal, a part-time student at NYU’s Stern School of Business, apparently completed and passed all the school’s required coursework. Three months later he pleaded guilty to insider trading. Apparently Rosenthal, who worked at auditing firm PricewaterhouseCoopers, gave his brother insider stock tips.

NYU then voted not to give Rosenthal a degree.

Rosenthal sued, saying that NYU didn’t have the authority to discipline him. Well actually, yes, it does, said Kaplan. The Stern faculty decided “that Rosenthal was not fit to receive a degree of the basis of his admitted felonious conspiracy to commit securities fraud. That decision was fully within the faculty’s power and discretion,” Kaplan wrote.

This, of course, is ridiculous. Rosenthal did actually did earn a diploma from NYU. Ethical behavior is only a very incidental part of obtaining an academic degree. In terms of business the relationship between success and ethical behavior is even more ambiguous. It’s an MBA, not a certificate of good conduct.

By the same token, however, one wonders why Rosenthal cares. He’s been convicted of insider trading; it’s not like a Stern MBA is going to put him back on the fast track. He’s never getting anther financial services job again.

This brings to mind the recent behavior of the Kennedy School at Harvard, which decided to revoke an M.P.A. degree it gave to Andrey Bezrukov in 2000 when he was (subsequently and unrelatedly) deported for espionage this summer.

One wonders if Rosenthal gets his tuition money back. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer