|
 Prosecutors under Manhattan U.S. Attorney Preet Bharara asked the
2nd U.S. Circuit Court of Appeals to grant a rehearing in the case
of hedge fund managers Todd Newman and Anthony Chiasson, who in
December won the reversal of their insider trading convictions.
Prosecutors sought a rehearing by both the three-judge panel that
ruled for Newman and Chiasson as well as the full appeals court,
potentially 15 judges under its rules.
In their petition, prosecutors argued the decision broke with U.S.
Supreme Court precedent and "threatens the effective enforcement of
the securities laws."
Gregory Morvillo, Chiasson's lawyer, said he had "great confidence
in the opinion" and would await the court's response. Newman's
lawyer declined to comment.
The 2nd Circuit ruling held that prosecutors need to prove a trader
knew that the original source of a tip received a benefit in
exchange for the information.
It also narrowed what constitutes a benefit, saying it must be of
"some consequence" and cannot be only friendship - a holding
prosecutors wrote would "dramatically limit" their ability to pursue
cases.
Prior to the ruling, Bharara's office had secured 86 people's
convictions for insider trading since October 2009. In its wake,
several defendants have sought to take advantage of the decision in
their own cases.
On Thursday, U.S. District Judge Andrew Carter in Manhattan threw
out the guilty pleas of four men accused of engaging in insider
trading ahead of IBM Corp's <IBM.N> 2009 acquisition of SPSS
Inc.[ID:nL1N0V12VE]
[to top of second column] |
Carter on Friday asked prosecutors to provide details about their
evidence as he considers whether to dismiss the case altogether.
Newman, 50, and Chiasson, 41, were found guilty in 2012 for their
roles in a scheme prosecutors said reaped $72 million through
trading on inside information about computer maker Dell Inc [DI.UL]
and chipmaker Nvidia Corp <NVDA.O>.
Prosecutors said both men traded on tips they received from analysts
working at their hedge funds who belonged to a "corrupt circle" of
investment firm analysts that traded non-public information obtained
from employees at various companies.
Prior to winning the appeal, Newman, a former portfolio manager at
Diamondback Capital Management, and Chiasson, co-founder of Level
Global Investors, had been sentenced to 4-1/2 years and 6-1/2 years
in prison, respectively.
The case is U.S. v. Newman, 2nd U.S. Circuit Court of Appeals, No.
13-1837.
(Reporting by Nate Raymond; Editing by Chris Reese and Lisa
Shumaker)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
