Martoma: a Lesson for MBA Applicants on Owning Up to Mistakes

Earlier this month, Stanford Graduate School of Business made the unprecedented move of nullifying the MBA degree of Mathew Martoma, the SAC Capital Advisors LP employee convicted of insider trading.

For those unfamiliar with the education angle of the story, Martoma was expelled from Harvard Law School in 1999 for falsifying his transcripts. He subsequently gained admission to the Stanford Graduate School of Business—without disclosing the expulsion from Harvard Law—and received an MBA degree in 2003.

As part of its admissions policy, prospective GSB students must disclose any prior academic disciplinary actions, including suspensions and expulsions. Therefore, Stanford’s decision to revoke the degree is based not on Martoma becoming a convicted felon, but because he gained admission under false pretenses.

According to Wall Street Journal‘s Melissa Korn, the move “highlights the lengths to which schools may go to protect their reputations when graduates become enmeshed in scandal long after leaving campus.”

I spoke to Bloomberg BusinessWeek in the days following the announcement, because while invalidating degrees isn’t common, I have seen instances where people have been accepted into school and then escorted out of class within the first couple of weeks. Admits can be revoked, and I believe Stanford is putting Martoma out there as a lesson.

B-school hopefuls should always come clean about a criminal record when applying, because this is not the sort of information you want discovered during a background check. This issue may seem insurmountable, but I have helped more than one client explain an embarrassing episode from their past.

Many MBA programs ask you to explain a mistake you have made, or discuss a challenge you overcame. The most interesting candidates have faced difficulty and learned from it, preferably changing their behavior for the better. If you can turn a setback into an opportunity, and show how the incident sparked a period of serious self-reflection and change, your story may actually become inspiring.

Showing who you are, your potential, and even how you have overcome blemishes to your otherwise perfect record gives the school insight into your potential as a student, and as a future business leader.

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