2017 insider trading cases

In 2014, Mathew Martoma, a former portfolio manager for S.A.C. Capital Advisors L.P. (SAC), was sentenced to nine years in federal prison for employing an insider trading scheme, which resulted in approximately $275 million in profits and avoided losses for himself and SAC. The sentence was one of the most severe penalties handed out for an insider trading conviction and has since been appealed. The appeal remains in the balance after the Second Circuit Court of Appeals ordered a re-argument on March 1, 2017, based on the United States Supreme Court’s recent decision in Salman v. United States, 137 S. Ct. 420 (2016). Salman clarified the requirements for a “personal benefit” in insider trading cases, and the Martoma appeal will be watched closely to determine how the lower courts will interpret the Salman opinion. The Development of Tipper-Tippee Insider Trading Cases Insider trading cases … [Read more...] about Defining the Standard of Friendship in Insider Trading Cases After Salman

Rep. Chris Collins says the insider trading charges filed against him are “meritless,” and the Clarence Republican vows to go to trial to clear his name. But in a federal court where more than 90 percent of criminal cases end up in plea deals, clearing his name won’t be easy for Collins or his two co-defendants, according to defense attorneys who spoke to The Buffalo News about the case. “Based on the facts I’ve seen from the indictment, this appears to be a very egregious case of insider trading … These facts, these allegations – you don’t often get much better evidence than this,” said David R. Chase, a Florida attorney who used to prosecute insider trading cases as a senior counsel for the Stock Exchange Commission’s enforcement division and now defends people accused of the crime. Felony charges were filed Wednesday against Collins; the congressman’s son, Cameron; and Stephen Zarsky, the father of Cameron … [Read more...] about Legal experts say Collins insider trading case will be difficult to defend

A former portfolio manager’s conviction for insider trading was upheld by a federal appeals court, which in so ruling, admittedly stepped back from the reasoning of one of its recent decisions. Also, an investment adviser agreed to pay total sanctions of approximately US $5 million to settle an enforcement action by the Securities and Exchange Commission for allegedly failing to have and follow policies and procedures reasonably designed to prevent insider trading. Separately, ICE Futures U.S. settled another anti-spoofing disciplinary action against a trader who, on multiple occasions, purportedly placed only a single large order on one side of the market to induce the execution of a smaller order on the other side. The trader apparently did not utilize layered orders to facilitate his fills as has been more customary in spoofing cases. As a result, the following matters are covered in this week’s edition of Bridging the Week:Former Portfolio … [Read more...] about Bridging the Week: August 21 to 25 and August 28, 2017 (Insider Trading; Spoofing; Canadian Regulation of Digital Tokens; Reform) [VIDEO]

In what appears to be the first appellate decision since the Supreme Court’s December 2016 ruling in Salman v. United States, the U.S. Court of Appeals for the First Circuit affirmed an insider-trading conviction based on a tip of material, nonpublic information. The February 24, 2017 decision in United States v. Bray held that the jury had sufficient evidence to conclude that, in soliciting and receiving a trading tip surreptitiously written on a pub-room napkin, the tippee had known that the tipper had provided the information in breach of his duty of confidentiality and in expectation of a personal benefit.However, the court also made clear that a tippee cannot be criminally convicted for insider trading if he merely “should have known” of the tipper’s breach of duty. The court further held that a “willful blindness” or “conscious avoidance” standard cannot be based on mere negligence (at least in a criminal case). Factual … [Read more...] about Watch the Napkin: First Circuit Affirms Insider-Trading Conviction

SEC’s Increased Focus on Insider TradingOn March 23, 2017, a New York federal judge granted a temporary asset freeze against the assets of a Hong Kong private equity investor, Shaohua “Michael” Yin, who the SEC accused of making $29 million by trading on insider information about Comcast’s purchase of DreamWorks Animation.According to the SEC’s complaint, filed on February 10, 2017,  Yin used brokerage accounts under other people’s names to buy $56 million of DreamWorks stock (2.15 million shares) at a weighted average price of $26.25 per share. Shortly thereafter, Comcast and DreamWorks jointly announced that Comcast would acquire DreamWorks at a price of $41 per share. Predictably, DreamWorks stock skyrocketed 47.3% after the announcement, from $27.12 per share to $39.95 per share. In all, Yin’s brokerage accounts realized more than $29 million in profits from their trading at DreamWorks.Investors should rest assured, however, that … [Read more...] about SEC Whistleblower Program: Exposing Insider Trading