In This Issue:
- Main Article:
..Insider Trading After United States v. Newman, the Second Circuit’s Landmark Decision Limiting Liability of Downstream Recipients of Insider Information
- Noted With Interest:
..Bribery Settlements in 2014: A Record-Setting Year
- Practice Area Notes:
..Appellate Litigation Update
..Class Action Litigation Update
..Product Liability Litigation Update
..Trial Practice Update
- Victories:
..Standards-Essential Patent Victory for Marvell
..Second Circuit Arbitration Victory
..Complete Defense Victory for Michael Milken
- Excerpt from Insider Trading After United States v. Newman, the Second Circuit’s Landmark Decision Limiting Liability of Downstream Recipients of Insider Information:
The Second Circuit recently dealt a major setback to federal prosecutors’ recent crackdown on insider trading, overturning two high-profile convictions and simultaneously placing the most significant new limits on insider trading liability in decades. The classic tipper-tippee scenario in insider trading prosecutions involves a corporate insider (the tipper) who, in exchange for a personal benefit, discloses material nonpublic information to an outsider (the tippee), who subsequently trades on the basis of this information (or passes the information to another tippee). For years, courts have permitted increasingly remote tippees to become ensnared, based on increasingly vague “personal benefits” allegedly received by tippers.
The Second Circuit’s decision in United States v. Newman addressed both issues. It substantially reduced the potential liability of remote tipees by holding that a tippee cannot be convicted unless the tippee “knows of the personal benefit received by the insider in exchange for the disclosure.” In addition, Newman held the “personal benefit” received by the tipper “must be of some consequence” and must be a true quid pro quo, rejecting the notion that mere friendship and association could meet this requirement.
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