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April 21, 2014

U.S. insider trading cases face test at appeals court

“U.S. appeals court is set hear a case whose outcome could make it harder for the government to prosecute insider trading and potentially jeopardize several high-profile guilty verdicts, including that of SAC Capital Advisors portfolio manager Michael Steinberg.

“The question facing the 2nd U.S. Circuit Court of Appeals in New York on Tuesday is one that has divided lower court judges: whether to be convicted of insider trading, the recipient of non-public information must know that the source of the tip benefited from the disclosure.

“The issue is at the heart of the appeal brought by Todd Newman, a former portfolio manager at the hedge fund Diamondback Capital Management, and Anthony Chiasson, co-founder of the hedge fund Level Global Investors.

“Newman and Chiasson were convicted in 2012 for their roles in a scheme prosecutors said reaped $72 million in illicit profits after trading on inside information about Dell Inc and Nvidia Corp.”

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Read full Reuters article here.

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