The prosecution of insider trading in the U.S. Court of Appeals for the Second Circuit has been reshaped by the decision in United States v. Newman.1 The appeals court held that the government is required to prove that a recipient, or tippee, of material, non-public information knew that the tipper had received a “personal benefit” for disclosing such information, and, further, the court made it harder for the government to prove that a tipper had received a personal benefit for making the tip—a requirement for tipper/tippee insider trading liability.
From the start, Newman has been controversial. The government has assailed Newman as an “erroneous redefinition of the personal benefit requirement [that] will dramatically limit the Government’s ability to prosecute some of the most common, culpable, and market-threatening forms of insider trading.”2 In contrast, securities law experts have argued that Newman set down important limits on liability: The government’s expansive view of the personal benefit standard would deter important communications between corporate employees and market analysts and thereby undermine the efficiency and integrity of the capital markets.3
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
