Citing 'Salman,' Second Circuit Finds Its Own Insider Trading Ruling Not 'Good Law'
The U.S. Court of Appeals for the Second Circuit found Wednesday that its own prior interpretation of insider trading precedent was "no longer good law" after the U.S. Supreme Court's ruling last year in 'U.S. v. Salman'.
August 23, 2017 at 06:02 PM
6 minute read
The U.S. Court of Appeals for the Second Circuit found Wednesday that its own prior interpretation of insider trading precedent was “no longer good law” after the U.S. Supreme Court's ruling last year in United States v. Salman.
In a reversal of its 2015 decision in United States v. Newman, the majority panel of Chief Judge Robert Katzmann and Judge Denny Chin found that the relationship between the parties in an insider trading case needn't be of a specifically close relationship for a jury to convict. The panel's clarification of a major point in the ongoing development of insider trading law came as it upheld the conviction in United States v. Martoma, 14-3599, of former SAC Capital Advisors portfolio manager Mathew Martoma on Wednesday, even as a lengthy and vigorous dissent by Judge Rosemary Pooler showed the issue remained unsettled in the circuit.
Newman previously held that a necessary close, personal, meaningful relationship between tippers and tippees, and an exchange of something of a “pecuniary or similarly valuable nature” for the tipper was required to prove insider trading violations.
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