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Is Insider Trading Legal Following Appeals Court Tossing Out Two Hedge Fund Convictions
In a stunning rebuke of Preet Bharara's insider-trading prosecutions record, Businessweek reports a federal appeals court overturned and threw out the guilty verdicts of two hedge fund managers, Todd Newman and Anthony Chiasson, ruling jury instructions tainted their verdicts and imperiling other cases brought in his multiyear probe. In a 28-page decision that could rewrite the course of insider trading law, sharply curtailing its boundaries, the United States Court of Appeals for the Second Circuit in Manhattan tossed out the case on technicalities which could also lead to the release of SAC's Michael Steinberg - Bharara's signature prosecution - as Steinberg's lawyer remarked, "it sends a loud and clear message that the government will be rebuked when it tries to turn innocent conduct into a crime." So insider-trading is legal now... with the right lawyer and judge.
A federal appeals court threw out the guilty verdicts of two hedge fund managers central to Manhattan U.S. Attorney Preet Bharara’s investigation of insider trading, ruling jury instructions tainted their verdicts and imperiling other cases brought in his multiyear probe.
Level Global Investors LP co-founder Anthony Chiasson and ex-Diamondback Capital Management LLC portfolio manager Todd Newman argued their convictions should be overturned because jurors weren’t required to find they knew the source of their illegal tip received some benefit in exchange, an essential element in proving insider trading. The investigations led to the shuttering of the two hedge funds.
The government said jurors only needed to find the men knew the tip was material nonpublic information, and that the tipper was breaching a fiduciary duty by revealing it.
In a 28-page decision (below) that could rewrite the course of insider trading law, sharply curtailing its boundaries, the United States Court of Appeals for the Second Circuit in Manhattan tossed out the case against two former hedge fund traders, Todd Newman and Anthony Chiasson. Citing the trial judge’s “erroneous” instruction to jurors, the court not only overturned the convictions but threw out the cases altogether.
“We conclude that the jury instructions were erroneous and that there was insufficient evidence to support the convictions,” a three-judge panel wrote.
...
For now, the decision imperils at least one other of Mr. Bharara’s milestone insider trading convictions: Michael Steinberg, of SAC Capital Advisors, the once-giant hedge fund Mr. Bharara indicted last year. The judge who presided over Mr. Steinberg’s trial, Richard J. Sullivan, also handled the trial of Mr. Chiasson and Mr. Newman.
In a statement, Mr. Chiasson’s lawyer applauded the decision and its wider consequences.
“Today’s decision is a resounding victory for the rule of law and for Anthony Chiasson personally,” the lawyer, Gregory Morvillo, said. “He is deeply gratified that the decision issued today unequivocally re-establishes his innocence under the law – consistent with what Anthony has steadfastly maintained for the duration of this ordeal.”
Mr. Steinberg’s lawyer, Barry Berke, predicted a similar outcome for his client. “The Second Circuit’s decision clearly means that Michael Steinberg is innocent of any crime and his conviction will be vacated as well,” Mr. Berke said. “It sends a loud and clear message that the government will be rebuked when it tries to turn innocent conduct into a crime, as it did in the case of Mr. Steinberg.”
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We wonder how many shipments of Picassos to the three appeals court judges did the verdict cost Steve Cohen?
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Full Decision Below
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Such a fine "justus" system...
Not Picasso's,
Franklins...
franklins? how bout st. gaudens?
It's legal as long as you're not an uppity broad with home improvement franchise. It's also very important to "not recall" when talking with feds . . or just take da fif.
proving its impossible to police 'insider trading' when there's 'insider justice'
OT: If anyone else saw this...
http://www.infowars.com/kentucky-residents-complain-of-low-flying-milita...
Some testing / preps being done in KY? Reminds me of the emergency WH message a few months ago. 2015 is gonna be fun. Lock and load folks...
We need to nail gun some folks, for the holidays.
BOYCOTT ALL WALL ST PRODUCTS AND THEIR SNIVELING MINIONS.
Else you get all the butt reaming that you deserve.
p.s. If you're a US Subject (Citizen or Perm. Resident) and > 58, you can withdraw from your 401k and IRS, without penalties. You will have to claim it on your Income Tax, if it's not a Roth IRA. If you're not a US Slave/Subject, count your lucky stars, and stay out of the Roach Hotel that Wall St is.
Why not - no one else is going to jail - why not jail break all the buddies? The Law and Crime and Punishment - what quaint notions - those don't exist when people are doing god's work!
It is the obvious plan to get the fincos in trouble then buy them off, where they now "owned" by the fed.
That's how they got more control. I give you enuff leash to hang yourself on and then tell you what you are going to have to do to get out of jail and continue living the high life. Fucking brilliant. Evil bastards.
.... and of course the elected ruling ppolitical elite turds voted and passed a bill in which it was hidden that made it legal for the elected turds to inside trade....
Gummint: ctrl-alt-del
"Government isn't the solution. Government is the problem." Ronald Reagan
Also, isn't it time they freed Jon Corzine?
Yep, free him from his earthly bonds please!
And, relieve him of his material burden...
The Jewdiciary system only protects one ethnic group of people. Righteousness dont stand a chance.
riiiight! just look at bernie madoff in prison for the rest of his life
He was doing great until he ripped off some of his tribal cohorts. Bad move. The previous comment stands.
if madoff didnt rip off any jews he'd be a free man
he ripped off too many wealthy jews, thats what his problem was
fuck with the bull, get the horns
bow down to your jewish slave masters you stupid goyim!
Read the rules. Then look at his client list.
Looks like this is the current MO. Charge them so the plebes will think the government is "gettin' them bad guys" and then overturn everything months later.
"A federal appeals court said the U.S. government had waited too long to prosecute three formerGeneral Electric Co bankers for conspiring to defraud cities in a municipal bond bid rigging scheme, and ordered the case to be dismissed.
Monday's ruling by a panel of the 2nd U.S. Circuit Court of Appeals in New York was issued 13 days after the court reversed the May 2012 convictions of the three bankers.
The 2-1 decision, which a dissenting judge called "misguided," is a setback for government efforts to patrol the $3.7 trillion municipal bond market, including when cities and towns might be facing financial harm long after the purported corruption took place."
http://www.reuters.com/article/2013/12/09/ge-bidrigging-decision-idUSL1N...
"How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape"
Read more: http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620#ixzz3LWVUbGUd
Follow us: @rollingstone on Twitter | RollingStone on Facebook
Laws for thee, but not for me...
The 1% takes good care of its own.
The .01%.
But New York would not be bankrupt if not for these folks? I don't understand. They've put at least another ten trillion on the balance sheet here! WINNING!
Damned straight! If its good enough for congress, its good enough for me!
Do you think it is possible the judge may have purposely screwed up giving jury instructions. It is a hard one to call when considering the intelligence level of a number of judges.
You are fucking kidding right?
All animals are created equal, it's just that some animals are "more equal" than others.
SAME AS IT EVER WAS!!!!!!
You have a lighter sentence killing folks, but never rob a bank. They make sure you never see the sun again.
The only crime that exists today, is a crime against a bank? Makes sense.
Theft, rape, assault, all legal. Our boy, Barry..
I tell people all the time to pay attention of crimes and there sentences, and then compare it to a bank robbery sentence. Just by observing the difference , anyone can easily see how the system works.
Newman and Chiasson also argued that, even if the corporate insiders had received a personal benefit in exchange for the inside information, there was no evidence that they knew about any such benefit. Absent such knowledge, appellants argued, they were not aware of, or participants in, the tippers’ fraudulent breaches of fiduciary duties to Dell or NVIDIA, and could not be convicted of insider trading under Dirks...
Holy fuck.
...so, not guilty but... do they have to return any profits from the tipped (even if not criminally tipped) trades?
You didn't steal that.
Why should insider trading be illegal, it's perfectly legal for CONgress and other government officials? No law for me that doesn't apply to thee. Riiiiiiigggghhhttt!?!?
Fact is, there is no rule of law any longer, unless you consent to its application. All law enforcement now come from the end of a gun, or vice versa.
Yes, exactly, spot on. Our consent is the only thing that keeps this show going. That may, and should, lead to some uncomfortable introspection.
When trading on the inside, is there an injured party?
I would say no.
You'd be wrong. There are two parties to every trade and in the case of insider trading, one party is being defrauded.
No such luck for the fat Sri Lankan.
I've always said if it's good enough for the assholes in Congress, than its good enough for everyone else..
"Blue Horseshoe Loves Anacott Steel"
But how much was blue horseshoe paid and who paid them to love Anacott Steel?
THEN it would be a crime.
Lulz. Reminds me of the SCOTUS lecturing the gov lawyers on how they would lose their case unless O-care was a tax.
pods
since when does the insider source have to receive a benefit in exchange for insider information to make it illegal??
legalized racketeering. as long as the left doesn't know what the right is doing it's all good. here's your bonus, but nobody knows how you earned it. :wink:
And it now looks like the banks are getting away leaving the derivative exposure on the taxpayer once again as this bill gets rammed through.
http://www.washingtonpost.com/blogs/post-politics/wp/2014/12/09/whats-in...
"Democrats agreed to make some of the biggest changes yet to the 2010 financial regulatory reforms. In a deal sought by Republicans, the bill would reverse Dodd-Frank requirements that banks "push out" some of derivatives trading into separate entities not backed by the Federal Deposit Insurance Corporations. Ever since being enacted, banks have been pushing to reverse the change. Now, the rules would go back to the way they used to be. But in exchange, Democrats say they secured more money for the enforcement budgets at the Commodity Futures Trading Commission and the Securities and Exchange Commission."
My takewway: Who needs Republicans when you have Democrats to do the dirty work for the aristocracy?
The CFTC and the SEC. Two jokes with built-in punchlines.
moar money for the cftc and the sec, that's just moar bribe money for the maggots. they double plus rape the taxpayer and that's supposed to be a good thing?
I was thinking they could upgrade to the full HD porn sites.
full HD porn, now you're talking!
Its not gay if the sacks dont touch. In HD
The key for the Wall Street guys is to make the crime so big and wide spread, that it's basically considered "industry standard". Just like HFT. It has always been considered illegal to "front run" clients, to execute "wash trades" and to enter "spoof" orders that you intend to retract with a view to mislead.
To steal a line from Laws of Physics, fraud is so clearly the status quo, including (or perhaps especially) at the highest levels, whether it is Draghi saying "Whatever it takes" (apparently he didn't mean it) or Yellen saying QE has stopped (without explaining that the buying is simply performed by other entities) or Bernanke saying the Fed will not monetize the debt.
Whatever it takes to keep the illusion going another day.
These guys are golden!!
And we are on the hook.
said Rep. Chris Van Hollen, D-Md. "I find it surprising that some people are threatening to shut down the government in order to extract big benefits for big banks at the expense of consumers and taxpayers."
Sen. Elizabeth Warren, D-Mass., a favorite of progressives, blasted the measure as "a deal negotiated behind closed doors that slips in a provision that would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.
"These are the same banks that nearly broke this economy in 2008 and destroyed millions of jobs. The same banks that got bailed out by taxpayers and are now raking in record profits," Warren said.
Even the Senate's No. 2 Democrat, Dick Durbin of Illinois, said he's undecided despite being an author of the measure's defense title. "It is just an invitation for another financial disaster," Durbin said.
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If you think the market volume is low now, wait until more grey hairs like my mud'da hear of this.
They'll not only take their marbles and go home, they'll never come to play, again.
Yuck it up boys… Yuck. It. Up.
•?•
V-V
you can jail 99.9% of them if you even find one guy who is in 00.1%
and they say there's no protected class
There is no class warfare, either. It was won a few decades ago, when we experienced the glorious Reagan Revolution.
-1 for failing to see both parties are the same.
FYI, Ronnie Raygun had a Dem controlled house his entire 8 year reign and a dem controlled senate the last 2.
Get off your red team, blue team bullshit.
All apologies aside, things really did change under Reagan. Sure, he had a Democrat Congress throughout much of his tenure, but he and his partners-in-crime truly did alter the landscape of politics in this country forever.
It really was a revolution. It affected everything in this country, especially the Democrat Party, which decided it needed to turn to the center-right in order to win another Federal election again. All politics may be local, but winning elections locally means nothing if you can't win them nationally.
Nothing has been the same since.
BTW, I don't participate in red team vs. blue team BS. I'm just stating fact.
But it is fun to watch the right wingers on the interwebs go into orbit if you say anything negatory about the red team.
Jewbris
Matt Levine from Bloomberg View was trying to push the innocent meme back in April to try and sway public opinion no doubt.
He has NO credibility AT ALL:
He has worked as an investment banker at Goldman Sachs and a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz
http://www.bloombergview.com/articles/2014-04-23/these-greedy-wall-stree...
amazing how the smartest guys never know anything is illegel...never.... Officer I didn't know it was a 25 mph zone....has worked for anyone?
And a man that didn't even have two nickels to rub together was killed over TAXES on cigarettes. Our government is run by the most corrupt bunch of assholes. It's sickening.
Blankenstein: And a man that didn't even have two nickels to rub together was killed over TAXES on cigarettes. Our government is run by the most corrupt bunch of assholes. It's sickening.
Hey man, suck it up. Keep voting and give your consent. Red team blue team....
Notice how the Republicans voted for the 1T budget, slid through funding for Obamacare, DHS, "Amnesty" and everythig else.
They actually pulled a Pelosi "we have to vote for it before we read it" Pretty much fire fucking congress, who holds the purse strings...
Still think there is a two party system?
Congress and Republicans have the lip lock on King O's cock now. They're not gonna spill a drop.
LOL
Why do you vote?
Of what possible USE is FEDGOV now other than to place a boot on your throat?
Me?
I'm checkin' out.
Red Team Blue Team? Where the hell did you get that? I meant ALL GOVERNMENT cronies!! Geeze did you really interpret "the government is run " to mean only Obama? Because you sure went on the defensive laying out how bad the Republicans are. It appears that YOU are the one that is falling for the false left/right paradigm.
Or was that to distract from the story at hand - the laws don't apply to rich Wallstreeters.
Edit: I even had written assholeS, with an S. More than one person. duh
It would help if the judge wasn't such a douche on this during jury instructions.
He failed to tell the jury that in order to convict for insider trading, the tippee has to know that the information is non-public. The government has to prove that. They did not.
Not guilty
It goes to the extreme ridiculousness of insider trading. You have to demonstrate a knowledge of what a defendent knows at the time they tip information AND that they know this information is being given to benefit themself. Absent an email chain or a direct link to an insider telling you something, it's impossible to prove.
Plus this was about an insurance company being investigated for fraud. Fuck them. Let insider trading reign. Fucking over your insured needs to be swift punishment in the equity and bond markets.
If Investors are damaged by Insider Trading and all the other Financial Fixing going on, reported since 2008...
Well it should dampen Investment, but since there is a monopoly run by Bankers, Big Bankers, who then don't invest in the USA in Recessions...
Well we should take back the power to finance and begin to provide ourselves with the Credit we need to go through life.
Public Banking & the Treasury should create money and finance the Federal Government since Moral Hazard has not been reduced by having Banks perform credit ratings and control credit.
https://en.wikipedia.org/wiki/Bank_of_North_Dakota
http://www.publicbankinginstitute.org/
http://www.publicbanksolution.com/
http://www.nytimes.com/roomfordebate/2013/10/01/should-states-operate-pu...
http://www.nytimes.com/roomfordebate/2013/10/01/should-states-operate-pu...
http://www.motherjones.com/mojo/2009/03/how-nation%E2%80%99s-only-state-...
Debt Free Money is another Idea.
http://neweconomicperspectives.org/2014/07/debt-free-money-zirp-forever.... (Scott Fullwiler)
http://www.nakedcapitalism.com/2014/07/debt-free-money-non-sequitur.html (Yves Smith & Randall Wray)
http://www.progress.org/tpr/two-reforms-that-will-solve-virtually-all-ou... (Altman)
Well, the lawyer's and the judges all benefit from this insider trading, do they not? They would not have a job or a pension if it was illegal. They know that now. So now, participating in a criminal act is a good thing as long as it helps them.
Another victory for the tribe. They almost have complete control of everything in this country. Simply amazing!
hell ... if insider trading was illegal then half the con-gress man/woman would be in prison ...
Yeah, for example Feinstein. But she's just one. Harry Reid another.
Shows you it is harder to prove and prosecute crooked judges then insider trading.
So does this mean that the banksters really didn't have to knock off 36 of their own?
Lots of negative comments regarding the courts and wallstreet. For the record, I hate wallstreet and completely despise the prison industrial complex. Both are dangerous to liberty. But the courts did the right thing here regardless of who came out on top.
Not according to this ex-Securities and Exchange attorney (from the Businessweek article):
"This ruling looks like a free pass for those trading on inside information,” said Peter Henning, a law professor at Wayne State University and ex-Securities and Exchange attorney. “It’s going to make prosecutors’ jobs more difficult.”
Most likey why he is ex-SEC.
If too much time had passed then the judge should have said so before it went to court. I call BS.
Remand with instructions to "Dismiss with PREJUDICE"......
after a Jury Verdict in Criminal Jurisprudence one of the RAREST actions of a Court of Appeals, be it State or Federal.....
Less than 1 % of the Time....
It is well settled that the Court of Appeals must uphold the Verdict even if they don't Concur with its finding.....
The General Standard of Review on Appeal of a Jury Verdict is that a Verdict Must Be Upheld if there is any Reasonable Basis by which the Jury could have reached its Verdict.....
With "Prejudice" means that the Prosecution is forever barred from any further action in the matter.....
For the Layman, this is the "Nuclear Option" in a Criminal Case..........Literally almost never exercised....
On the same token however, EACH OF THE ELEMENTS of any Crime must be Proved Beyond a Reasonable Doubt.....
Failure to Prove even ONE ELEMENT renders the Conviction invalid.....
The Crux of the Decision is that the Court of Appeals found that in "Insider Trading" cases the Government must PROVE that the party that gave them the "Tip" received some Personal Benefit, and that the Defendant's had KNOWLEDGE of that Benefit......
Absent that KNOWLEDGE and PROOF thereof, they are Holding that an Insider Trading Conviction of a Peripheral Party will not stand.....
To compare, in a Receiving Stolen Property case, KNOWLEDGE is NOT REQUIRED that the item is Stolen to support a Conviction; KNOWLEDGE can be implied....
For example if you Buy a TV in a Parking Lot that would normally cost $ 2000. for $ 100., that is Sufficent to Uphold the Conviction......
This is indeed an interesting holding......
However, having said all of this, Anyone Trading on "Tips" is incompetent and will eventually Pay back their Gains, with Interest.......
What the fuck is with this decision? Since United States v. O'Hagen there is no need for the tipper to receive a benefit so long as he breached a fiduciary duty.
So, A tells B who tells C, who trades.
C benefits, A does not and B doesn’t know it is private information.
Then on another day:
C tells A who tells B, who trades.
Then
B tells, C who tells A who trades.
In an ethnic or crony network, this should work out just fine!
Simple as A,B,C.
why not just make insider trading legal for bankers and brokers and government employees only
A country of laws.....
In an investigation about two years ago 60 Minutes uncovered evidence of several instances of insider trading among prominent government officials. In a hurry then to save our public servants from embarrassment, President Barack Obama jumped on board. "Send me a bill that bans insider trading by members of Congress," the president declared in his 2012 State of the Union address. "I will sign it tomorrow."
The bill sailed through the Senate on a 96-3 vote, passed the House 417-2 and Obama promptly signed it, noting that its disclosure, and accountability requirements would apply to and demand transparency from virtually everyone in government who had access to inside financial information. Now this has been undone, my tip off was a April 27th 2013 Chicago Tribune editorial that reported Congress had voted to repeal part of the STOCK Act that recently became law. More on this dirty little secret in the article below.
http://brucewilds.blogspot.com/2013/04/washington-insider-trading-is-bac...