The U.S. government’s petition for writ of certiorari in the case of United States v. Newman had been very closely watched. The government hoped to have the Supreme Court set aside the Second Circuit’s 2014 decision in the case (here), which had overturned the convictions of two hedge fund managers accused of insider trading. In an unexpected development, on the first day of the Supreme Court’s 2015-16 term, the Court declined take up the case.
The following guest post from the Paul Weiss law firm takes a look at this development and analyzes the implications. I would like to that the authors for their willingness to publish their article on this blog. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the Paul Weiss firm’s guest post.
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Yesterday, the United States Supreme Court declined to hear the petition for a writ of certiorari (the “Petition”) filed by the United States Department of Justice (“DOJ”) in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), a landmark decision that dismissed indictments against two insider trading defendants. By declining to hear the Petition, the Supreme Court ensured that the Second Circuit’s decision in Newman will remain binding in the Second Circuit and influential across the country.
As we explain below, two of Newman’s holdings are particularly important: first, that the government must prove that a remote tippee knew or should have known of the personal benefit received by a tipper in exchange for disclosing nonpublic information; and second, that the benefits alleged by the government in United States v. Newman were not sufficient to support a conviction, as they were not sufficiently “consequential.”
Continue Reading Guest Post: Supreme Court Declines To Consider Second Circuit’s Landmark Insider Trading Ruling