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Insider Trading: Does Payton Begin the Erosion of the Newman Tipping Test?

The Second Circuit’s decision in U.S. v. Newman, 773 F. 3d 438 (2 nd Cir. 2014) [ an enhanced version of this opinion is available to lexis.com subscribers ] regarding the personal benefit test in insider trading either radically altered the law or just reaffirmed the Supreme Court’s decision...

CIO Sentenced for Insider Trading

David Riley, formerly the Chief Information Officer of Foundry Networks, Inc. was sentenced to serve 60 months in prison and pay a $50,000 fine based on insider trading charges. He was found guilty by a jury following a 13 day trial. U.S. v. Riley, Case No. 1:13-cr-00339 (S.D.N.Y.) The charges centered...

The Impact of Newman on SEC Enforcement: Part I

This is the first segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases Introduction In seeking rehearing and an en banc hearing before the Second Circuit Court of Appeals the Manhattan U.S. Attorney’s Office told the...

The Impact of Newman on SEC Enforcement: Part II

This is the second segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases The Immediate Impact of Newman The most immediate impact of Newman is on pending criminal and civil cases. This is illustrated by the decisions in U...

The Impact of Newman on SEC Enforcement: Part III

This is the third segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases Post Newman SEC Actions In the wake of Newman the SEC has three apparent options: 1) Comply with Newman’s pleading requirements; 2) bring its actions...

The Impact of Newman on SEC Enforcement: Part IV

This is the fourth segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases Post Newman SEC Actions (continued) 2. Administrative proceedings A second option for the SEC is to avoid the potential impact of the decision by...

The Impact of Newman on SEC Enforcement: Part V

This is the fifth and concluding segment of a five part series discussing the impact of the Second Circuit’s ruling in Newman on SEC insider trading cases Analysis The impact of Newman on the SEC and the DOJ may be significant. If the decision is adopted and followed by other circuits it...

Another SEC Insider Trading Case: Does It Comply With Newman?

The SEC continues to bolster its allegations regarding the relationships between tipper and tippee in insider trading cases as well as the knowledge of the tippee. Whether those allegations will be sufficient to meet the Newman personal benefit test remains to be seen. The Commission’s latest insider...

SEC Insider Trading Case Brought as Administrative Proceeding Enjoined

The SEC’s shift to administrative proceedings in recent months has spawned a series of suits against the agency challenging its forum selection authority. The suits have generally met with little success. Nevertheless, earlier this week, Judge Leigh Martin May, sitting in the Northern District...

SEC, USAO File Parallel Insider Trading Charges

The SEC brought an insider trading case against a senior corporate official and a chain of tippees that starts with his brother-in-law broker who then tipped his friend, another broker. Others, not named as defendants, were also tipped. SEC v. Fefferman, Civil Action No. 15 CV 1276 (S.D. Cal. Filed June...

SEC Settles Another Insider Trading Case Tied to Brocade Deal

The acquisition of Foundry Networks, Inc., a networking hardware company, by Brocade Communications System, Inc., a technology company specializing in data and storage networking products, announced on July 21, 2008, has spawned two enforcement actions by the Commission and two criminal case. The first...

SEC Files Settled Insider Trading Case as Administrative Proceeding

One question in the wake of the Second Circuit’s decision in Newman regarding the personal benefit test for illegal tipping has been how the SEC would respond to a decision the U.S. Attorney told the Court would significantly undermine insider trading enforcement. To date it has been mixed –...

Former Qualcomm Executive Sentenced for Insider Trading

Jing Wang, a former Qualcomm Inc. Executive Vice President began by constructing a cover-up. Then he engaged in insider trading, using inside information taken from his employer. The scheme failed. Mr. Wang has been sentenced to 18 months in prison and directed to pay a $500,000 fine after pleading guilty...

Judge Rakoff, Newman and Illegal Tipping

One of the questions regarding U.S. v. Newman, 773 F. 3d 438 (2 nd Cir. 2014) ( here ) and its personal benefit test for illegal tipping is its application outside the Second Circuit [subscribers can access an enhanced version of Newman : lexis.com | Lexis Advance ]. When applying Newman, Judge Rakoff...

Dirks, Newman, Tippees and the Government’s Cert Petition

The Government filed its long awaited Petition for a Writ of Certiorari with the Supreme Court in the Newman insider trading case. The Petition presents three key issues which were generally presaged in the request for rehearing en banc : 1) The Second Circuit’s decision is contrary to Dirks, adding...

DOJ Files For Cert in Newman

Since the financial crisis in 2008, the DOJ has been teaching yet another generation of insider traders the important lesson that one shall not trade on confidential inside information. However, that campaign took a big - one might say devastating - hit when the Second Circuit overturned Judge Rakoff...

SEC ALJ: No Sanction For Compliance Official Who Violated Statute

Amid all the concern regarding the selection by the SEC of an administrative rather than a district court forum for bringing agency enforcement action comes a decision which has the potential to change the tenor of the debate, at least temporarily. Administrative Law Judge Cameron Elliot issued an Initial...

SEC, Insider Trading and Cyber Security: An International Hacking—Insider Trading Ring

Cyber security is a key focus for virtually everyone these days. The SEC, for example, has been issuing releases discussing disclosure requirements and offering guidance for a number of years. Prominent issuers have reported breaches as has the U.S. Government. Now the SEC has brought an enforcement...

SEC, DOJ Charge Investment Bank Analyst With Insider Trading

The SEC and the Department of Justice announced insider trading charges against a former investment banker and his longtime friend centered on two deals. The SEC’s complaint also named a third person alleged to have been a second tier tippee. SEC v. Aggarwal, Civil Action No. 2:15-cv-06460 (C.D...

Newman: Respondent’s Opposition to Supreme Court Review

The battle lines are now clearly drawn over Newman and what constitutes impermissible tipping in violation of Exchange Act Section 10(b) ( here ). Previously, the Government filed a petition for certiorari arguing that Newman , which addressed the requirements of the Dirks personal benefit test put an...

SEC ALJ Dismisses Insider Trading Claims Based on Dirks-Newman

When the Second Circuit handed down Newman the SEC joined with the Manhattan U.S. Attorney seeking rehearing en banc and arguing that the case would significantly hinder insider trading enforcement. Many wondered if the agency would move all it cases in-house. To date that trend has not developed, perhaps...

U.S. Supreme Court Won’t Hear Appeal in Newman Insider Trading Suit

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today declined review of a Second Circuit U.S. Court of Appeals ruling overturning the conviction of two portfolio managers alleged to have engaged in an insider trading scheme ( United States of America v. Todd Newman, et al. , No. 15...

Supremes Refuse Insider Trading Case- Prosecutions Now Tougher

Earlier this month, the US Supreme Court said it would not hear a case in which the appeals court overturned two insider trading convictions. By refusing to hear the case, they effectively let stand the decision below, which many say will make it much tougher to prosecute insider trading cases. As is...

SEC – Broker From Grand Central Insider Trading Scheme Settle

The scheme was perfect . Broker Vladimir Eydelman of Oppenheimer & Co. would place the trades; law school graduate Steven Metro, a clerk at Simpson Thatcher, would misappropriate the inside information; mortgage broker Frank Tamayo, a law school class mate of Mr. Metro would be the go-between –...

SEC Partially Settles Insider Trading Action Based on Gift to Romantic Partner

The SEC filed an insider trading action in which the tipper partially settled the action. While the complaint alleged that the tippee knew of the breach of duty and that the information was gifted to him by his romantic partner, he did not settle. SEC v. Spivak, Case No. 1:15-cv-13704 (D. Mass. Filed...