Score one for the Underdog: 2nd Circuit Court of Appeals ruling requires DOJ to show confidential information disclosed was received in exchange for a personal benefit in insider trading cases.

Posted by

In U.S. v. Newman, the 2nd Court of appeals overturned convictions of two hedge fund traders finding that the Government had failed to show the information received by the defendants was received in exchange for a personal benefit. The Defendants received non-public information second-hand from a group of personal friends.

This ruling requires the Government establish a “meaningful close personal relationship that generates an exchange that is objective, consequential” and represents a potential for pecuniary gain where a tipster has “gifted” confidential information to a defendant.

The Department of Justice has filed for certiorari review stating that Newman fails to define the term “meaningful close personal relationship,” and will result in immunizing the exchange of insider information amongst friend or colleagues. In the meantime, the Department of Justice will be held to a heightened degree of proof in prosecuting these cases by having to establish the tipster had something to gain from divulging insider information.

Score one for the Underdog: 2nd Circuit Court of Appeals ruling requires DOJ to show confidential information disclosed was received in exchange for a personal benefit in insider trading cases.

Posted by

In U.S. v. Newman, the 2nd Court of appeals overturned convictions of two hedge fund traders finding that the Government had failed to show the information received by the defendants was received in exchange for a personal benefit. The Defendants received non-public information second-hand from a group of personal friends.

This ruling requires the Government establish a “meaningful close personal relationship that generates an exchange that is objective, consequential” and represents a potential for pecuniary gain where a tipster has “gifted” confidential information to a defendant.

The Department of Justice has filed for certiorari review stating that Newman fails to define the term “meaningful close personal relationship,” and will result in immunizing the exchange of insider information amongst friend or colleagues. In the meantime, the Department of Justice will be held to a heightened degree of proof in prosecuting these cases by having to establish the tipster had something to gain from divulging insider information.

Score one for the Underdog: 2nd Circuit Court of Appeals ruling requires DOJ to show confidential information disclosed was received in exchange for a personal benefit in insider trading cases.

Posted by

In U.S. v. Newman, the 2nd Court of appeals overturned convictions of two hedge fund traders finding that the Government had failed to show the information received by the defendants was received in exchange for a personal benefit. The Defendants received non-public information second-hand from a group of personal friends.

This ruling requires the Government establish a “meaningful close personal relationship that generates an exchange that is objective, consequential” and represents a potential for pecuniary gain where a tipster has “gifted” confidential information to a defendant.

The Department of Justice has filed for certiorari review stating that Newman fails to define the term “meaningful close personal relationship,” and will result in immunizing the exchange of insider information amongst friend or colleagues. In the meantime, the Department of Justice will be held to a heightened degree of proof in prosecuting these cases by having to establish the tipster had something to gain from divulging insider information.