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US court overturns insider trading convictions - developing
Posted on 12/10/14 at 9:13 am
Posted on 12/10/14 at 9:13 am
This maybe a game-changing story if the appeal ruling stands;
Breaking, so not much info on the interwebs yet.
Basically the Appeals Court overturned insider trading convictions against convictions of two hedge fund traders. The court finds that as the inside information provider did not profit (apparently) from the information, it's a "no harm no foul" situation, and folks trading off of the info did not break the law.
"We agree that the jury instruction was erroneous because we conclude that, in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit," the filing said.
Breaking, so not much info on the interwebs yet.
Basically the Appeals Court overturned insider trading convictions against convictions of two hedge fund traders. The court finds that as the inside information provider did not profit (apparently) from the information, it's a "no harm no foul" situation, and folks trading off of the info did not break the law.
"We agree that the jury instruction was erroneous because we conclude that, in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit," the filing said.
quote:Depending on definition of "profit" this could open the doors to a lot of 'extracurricular' trading information for Wall Street traders.
CNBC.com
US court overturns insider trading convictions of Todd Newman and Anthony Chiasson
Everett Rosenfeld
20 Mins Ago
Breaking News
This story is developing. Please check back for further updates.
A U.S. court vacated the convictions of two former hedge fund managers who had been found guilty of insider trading.
Todd Newman and Anthony Chiasson had both been found guilty in 2013 of trading on insider information pertaining to Dell and Nvidia. The U.S. Second Circuit Court of Appeals ruled, however, that the conviction should be vacated and their indictment dismissed with prejudice, according to a Wednesday filing.
The appeals court reversed the ruling on the basis that the two managers did not know where the inside information had come from.
"...the Government presented no evidence that Newman and Chiasson knew that they were trading on information obtained from insiders in violation of those insiders' fiduciary duties," a circuit judge wrote in the filing.
Additionally the court emphasized that there was no evidence the person giving the tip did so for personal benefit, so the conviction of insider trading would be invalid.
"We agree that the jury instruction was erroneous because we conclude that, in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit," the filing said.
LINK
This post was edited on 12/10/14 at 9:15 am
8
Posted on 12/10/14 at 9:58 am to NC_Tigah
Sounds like they are letting regular people play by the same rules that members of congress do.
Posted on 12/10/14 at 10:00 am to NC_Tigah
Nope, no way that this could be abused at all
Posted on 12/10/14 at 10:02 am to TrueTiger
quote:It's "insider" trading, not "regular people" trading.
regular people
Posted on 12/10/14 at 10:38 am to NC_Tigah
Market manipulation at it's finest. Let's ask Martha Stewart how she feels about these guys getting off.
Posted on 12/10/14 at 11:08 am to Iosh
quote:
It's "insider" trading, not "regular people" trading.
Posted on 12/10/14 at 11:15 am to NC_Tigah
quote:Completely irrelevant. The mere fact they had information given to them before the public had access put them in a great position to profit from that info. How the stock reacted once the public gained that information is totally irrelevant. Intent is the issue.
The court finds that as the inside information provider did not profit (apparently) from the information, it's a "no harm no foul" situation
Posted on 12/10/14 at 11:23 am to NC_Tigah
quote:
Additionally the court emphasized that there was no evidence the person giving the tip did so for personal benefit, so the conviction of insider trading would be invalid.
scary part imho
Posted on 12/10/14 at 11:24 am to BigJim
None of this strikes me as a significant deviation from pretty well established tenets of insider trading laws?
This post was edited on 12/10/14 at 11:50 am
Posted on 12/10/14 at 11:25 am to NC_Tigah
quote:
the Government presented no evidence that Newman and Chiasson knew that they were trading on information obtained from insiders in violation of those insiders' fiduciary duties," a circuit judge wrote in the filing.
This seems to say that the traders did not know the information they were trading on was "insider information". It's hard to assign a nefarious motive to their actions if that's the case, as a trader is obviously seeking to profit from trades whether or not they are done illegally.
I should say the quote says the government didn't or couldn't prove that. I don't see an issue with it being overturned if that's the case.
This post was edited on 12/10/14 at 11:27 am
Posted on 12/10/14 at 11:37 am to dante
quote:
Completely irrelevant. The mere fact they had information given to them before the public had access put them in a great position to profit from that info. How the stock reacted once the public gained that information is totally irrelevant. Intent is the issue.
How do you prove intent if they didn't know the information was privileged?
Posted on 12/10/14 at 11:50 am to TerryDawg03
quote:I was only responding to what the OP said. I did not read the article......but if the they did not KNOW the info was insider info how does that change anything?
How do you prove intent if they didn't know the information was privileged?
Is ignorance of the law acceptable when buying stolen merchandise. Is ignorance of the law acceptable when caught speeding, but not knowing the speed limit?
Posted on 12/10/14 at 11:53 am to dante
quote:
s ignorance of the law acceptable when buying stolen merchandise.
You're not talking about ignorance of law, you're talking about ignorance of fact (stolen status), and yes, it's a defense to an accusation of receipt of stolen property.
Further, knowledge requirements in this instance have nothing to do with ignorance of the law, just as in your stolen property hypo.
Posted on 12/10/14 at 11:55 am to dante
quote:
but if the they did not KNOW the info was insider info how does that change anything?
Is ignorance of the law acceptable when buying stolen merchandise.
That's apparently not what happened. Trading on information that one believes to be public or non-privileged isn't a crime.
Posted on 12/10/14 at 12:15 pm to TerryDawg03
quote:I just want to make sure I completely understand the law concerning this situation. It is obvious that "insiders" are not allowed to trade stocks during "black out period", the time period until the public has access to that information.
Trading on information that one believes to be public or non-privileged isn't a crime.
Isn't it also against the law for insiders to share information with individuals who are able to act prior to the public receiving that same info?
Posted on 12/10/14 at 12:17 pm to dante
Apparently not if the third party doesn't know it's inside information.
Posted on 12/10/14 at 12:18 pm to NC_Tigah
They didn't know so it's okay. It's the Cam Newton defense
Posted on 12/10/14 at 12:49 pm to dante
quote:
I just want to make sure I completely understand the law concerning this situation. It is obvious that "insiders" are not allowed to trade stocks during "black out period", the time period until the public has access to that information.
Isn't it also against the law for insiders to share information with individuals who are able to act prior to the public receiving that same info?
If A provides insider info to B, but B doesn't know it's privileged info, do you contend that B is guilty of a crime? "A" could easily be guilty, but if B is unaware, how is intent/guilt established?
Posted on 12/10/14 at 1:11 pm to TerryDawg03
quote:If A gives B a stolen Rolex as a gift and B does not know it's stolen is B guilty of a crime? (Yes)
If A provides insider info to B, but B doesn't know it's privileged info, do you contend that B is guilty of a crime? "A" could easily be guilty, but if B is unaware, how is intent/guilt established?
If A is driving 70 mph (70mph zone), but while approaching a 55 mph speed sign (blocked by an 18 wheeler while passing)and does not know the speed limit changed. Gets ticketed a mile down the road going 70 in a 55. Did he commit an offense?
Posted on 12/10/14 at 1:26 pm to FalseProphet
quote:The question is how one legitimately argues major players in a $$$billion+ hedge fund would make aggressive trades based on bits of unique information, yet not confirm sources or accuracy of that information. That, to me, is a stretch beyond any chance of legitimate credulity.
Apparently not if the third party doesn't know it's inside information
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