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Showing posts from February, 2015

Latest Developments in Insider Trading

The Gray Area between Friend and Fiduciary
In a landmark decision, the United States Court of Appeals for the Second Circuit, an influential court in securities litigation, provided clarity on the elements required to hold a tippee liable for insider trading. The decision by the Second Circuit on December 10, 2014 to reverse the charges, with prejudice, in United States v. Todd Newman, Anthony Chiasson sets a new definition for who can be held liable for insider trading. Before Newman, insider trading was broadly defined. This decision narrows the scope. The Government now must tangibly prove whether an investment professional knew that information had been disclosed in breach of a fiduciary duty in exchange for a personal benefit. The Government’s impending efforts to combat and thwart those tippees who are alleged to be involved in insider trading activities now must first determine, and later prove, whether the material nonpublic information was obtained from a friend with benefits