Second Circuit: Court Vacates Insider Trading Convictions in Landmark Case

December 11, 2014

In United States v. Newman et al., the U.S. Court of Appeals for the Second Circuit held that "in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit." This landmark decision heightens the standard for prosecuting individuals who are not directly connected to the source of confidential information in insider trading cases, and calls into question a number of criminal convictions and guilty pleas secured by the office of the U.S. Attorney for the Southern District of New York.

CGR Memo - Second Circuit - Court Vacates Insider Trading Convictions in Landmark Case