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Supreme Court to Hear Insider Trading Case

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January 20, 2016

Dear Friends,

The U.S. Supreme Court agreed to review a ruling of the U.S. Court of Appeals for the Ninth Circuit, which could clarify a key element of insider trading – what constitutes a personal benefit – ┬áresolving a dispute between divided federal courts of appeals.

  • Second Circuit Decision: In December 2014, the U.S. Court of Appeals for the Second Circuit overturned insider trading convictions of hedge fund managers Todd Newman and Anthony Chiasson, narrowly defining “personal benefit” finding it is necessary to require proof of “an exchange that is objective, consequential and represents at least potential gain of a pecuniary or similarly valuable nature,” in order to establish insider trading.
  • Ninth Circuit Decision: In July 2015, the U.S. Court of Appeals for the Ninth Circuit upheld the conviction of a man sentenced to three years in prison, based on tips about mergers from his brother-in-law. The court broadly defined “personal benefit” finding that the gift of confidential information and the familial relationship was sufficient to constitute a personal benefit, necessary to establish insider trading.

Please click here for the Ninth Circuit’s decision and click here for the Second Circuit’s decision. Feel free to contact us with any questions at (212) 867-0200 or email us at info@counselworksllc.com.

Thank you,



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