The second U.S. Court of Appeals in New York has rendered a decision which expert say may harm future insider trading prosecutions. In fact, the Department of Justice has already dropped charges against several defendants accused of trading on inside information, including some who pleaded guilty saying they could not prove the cases under the new legal precedents.
In December, the appellate court overturned the 2012 convictions of former hedge fund traders Todd Newman and Anthony Chiasson. The Court said that prosecutors must prove traders knew the person who gave them an inside tip gained some tangible reward for giving the tip. This week, the court declined to re-hear the case.
It is expected that many recently prosecuted for insider trading will seek dismissal of their case base don the ruling. Some observers suggest the decision might also lead the way for legislation.
Jeffrey Newman represents whistleblowers