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US Supreme Court To Decide What Constitutes Insider Trading
For former SAC-linked traders Todd Newman and Anthony Chiasson, the last three years have been an emotional rollercoaster: the two portfolio managers, who had previously worked at funds affiliated with Steve Cohens'SAC Capital, were charged and found guilty of insider trading in 2012. Convicted and given lengthy prison sentences, Newman and Chiasson appealed their convictions and won in a landmark decision by the Second Circuit Court of Appeals which also put into doubt just what insider trading is and under what conditions the US can prosecute.
As Bloomberg recently reported, in reversing their convictions, the appeals court turned insider trading law on its head for defendants who are more than one person removed from the source of a tip. From now on, the court ruled, the government would have to prove that such a trader was aware that whoever disclosed information from inside a company knew that it was confidential information and that they had leaked it in exchange for some kind of benefit. Oh, and by the way, the court added, the benefit has to be something tangible, almost akin to a financial payment. Simple friendship isn't enough.
The decision sent shock waves through Wall Street. Suddenly, for such cases, it was much, much harder to prove illegal insider trading. The SEC's phones started ringing with traders who had been convicted or who had settled civil cases, asking for their settlements to be overturned. Bharara's near-perfect record of more than 80 convictions and guilty pleas came under threat. One high-profile conviction, that of former SAC portfolio manager Michael Sternberg, is expected to be overturned if the Newman-Chiasson ruling stands. The appeals court turned down Bharara's request to rehear the case in April, which leaves the Supreme Court as the only remaining legal option.
After the denial for a reheating, many on Wall Street (ostensibly those who may have engaged in comparable conduct) had been wondering whether U.S. Attorney Preet Bharara would ask the Supreme Court to consider an appeals court ruling that could taint his legacy as the policeman of Wall Street. "The deadline for Bharara to make a decision was July 2. But in a sign of how complex that decision is, the solicitor general just requested that it be extended to Aug. 1."
Today, with just one day to go until Bharara deadline runs out to plead the SCOTUS to opine on redefining what "insider trading" means , we found out why Bharara had requested the extension: as Reuters reports, the U.S. Justice Department asked the Supreme Court on Thursday to reverse a federal appellate court's ruling that authorities said limited their ability to pursue insider trading cases.
Solicitor General Donald Verrilli filed a petition seeking review of a December ruling by the 2nd U.S. Circuit Court of Appeals in New York that had reversed the insider trading convictions of hedge fund managers Todd Newman and Anthony Chiasson.
So in addition to being the ultimate arbiter on Obamacare, and same sex marriage, the US Supreme Court will now have to decide just what constitutes insider trading.
What happens next, aside for Newman and Chiasson putting their future on hold yet again?
Bloomberg laid out the potential pitfalls of the case as follows: "Asking the country's highest court to consider the case is a risky move in itself. No single federal law defines insider trading, which means that it has been defined, over the years, through court decisions and SEC regulations. If the Supreme Court agrees to hear the case, it could well issue a ruling that's even worse for Bharara than what he has to work with now. The court could even decide that insider trading isn't a crime. In that worst-case scenario, the Justice Department would have to look to Congress to pass a bill that makes it illegal."
In retrospect, a decriminalization of insider trading may just be what the US needs: after all, when it comes to crime on Wall Street, it has been exhibited time and again that employees of Too Big To Fail banks will never, under the current captured legal regime, be prosecuted - that's what civil penalties and government funding settlements are for. Push too far, send an executive to prison, and some Congressman or Judge just may not be collecting their year-end bonus from their favorite Wall Street donor.
So it would be only "fair" if the stigma of Wall Street's oldest "crime" is also removed from those entry and mid-level employees who are most often entangled in insider trading cases. After all, what better way to get rich fast and attain a "Too Big to Prosecute" badge than by making some serious cash on a few "sure thing" transactions.
As for the rest of the US population, it would hardly care: it is already comfortably numb from all the crime it has seen over the past 7 years on Wall Street, most of which goes unpunished, and which leads to what the Times reported earlier today, that "Banks ‘fail to learn’ from rigging scandal." Well, how are they expected to learn when nobody ever does any prison time (except for a certain Indian "spoofer") and where shareholders foot the civil penalty bill - without any fear of a proportional response the crimes will continue.
So maybe the best option is indeed to make the playing field equal for all without pre-judgment: even here the biggest perpetrators of insider trading crimes, the Steve Cohens of the world, never saw any actual punishment, and were forced to at most sell a few Picassos to foot the civil penalty.
Finally, with the US and global capital markets already a centrally-planned laughing stock in which only algos spoof each other to boring oblivion, perhaps one last trading hurrah will finally emerge when traders trade on nothing but "tips" and "sure things."
Over to you, "impartial" Supreme Court judges.
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This is redundant.
Now to get a $6 haircut.
I'm sure it's not illegal when the fat cats do it.
Do the Supremes and their staffers disclose what they own and/or day-trade? ;-)
Looney
When you really really really really fuck up, you need the SCOTUS to bail you out.
Like Obamacare.
pods
... I don't understand the logic behind insider trading laws ... and such laws, which was supposedly created to promote a "fairer" stock market, is rather delusional. Each day, stock market players trade stocks based on bullshit information and in most transactions, only those "privileged" institutional investors obtain "tipped" information from various "sources" leaving regular mom & pop investors crying in the dust.
It would only be possible to prosecute insider trading "criminals" when a trader decides to buy a stock based on that stock's favourable information. However, the decision not to buy a "tipped" stock should also constitute a "crime". If the "more-than-likely-paid" inside source at a company (whose stock is not owned yet by the privileged investor) gives a tip or a little peek at a financial statement, and the "tip" is rather disappointing, causing the privileged investor to decide not to buy that stock, that "decision" should also be classified and counted as an illegal transaction; albeit would be very difficult to prove in court.
... so, why even prosecute insider traders when we all know that only the little guys would go to jail ... otherwise, those sinators and tongressmen would not receive their regular campaign contributions if they jail those privileged investors who, regularly, are being fed with "tips" on which stocks to buy or sell ...
Wonder when the Supreme Court is going to rule that corporations infiltrating government and the Just-Us (justice) system for profiteering is illegal?!
Nice to see Goldbeard Sachs and their merry band of modern day poltitical pirates are helping the supreme court figure out how to placate the public on the issue.
Principles aside, it sure as shit don't include politicians and bankers
And why are we going through the charade. Nobody enforces laws anymore except against enemies of the state
Her leaders judge for a bribe,
her priests teach for a price,
and her prophets tell fortunes for money.
Micah 3:11
It's a Criminally Corrupt system. Run by Criminals & owned by Criminals. Period!
Insider Trading is just an expression of 'Free Speech'
Yep, bracing for another stupid fucking decision out of the Supreme kangaroo Kourt.
It will decide what the NSA asks it to decide. No branch of government is independent of the Deep State in the land of the free,
As Snowden revealed:
The most extraordinary passage in the memo requires that the Israeli spooks “destroy upon recognition” any communication provided by the NSA “that is either to or from an official of the US government.” It goes on to spell out that this includes “officials of the Executive Branch (including the White House, Cabinet Departments, and independent agencies); the US House of Representatives and Senate (members and staff); and the US Federal Court System (including, but not limited to, the Supreme Court).”
The stunning implication of this passage is that NSA spying targets not only ordinary American citizens, but also Supreme Court justices, members of Congress and the White House itself. One could hardly ask for a more naked exposure of a police state.
https://www.wsws.org/en/articles/2013/09/13/surv-s13.html
Russ Tice already spelled it out in 2013 on BFP:
http://www.boilingfrogspost.com/2013/06/19/podcast-show-112-nsa-whistleb...
Real Politik.
Sibel Edmomds, a true Hero in every sense of the word.
"Hooray! More big government!"
-Everyone that's ever loved tyranny, ever.
Arguing how many angels can dance on the head of a pin, well the confusion will continue till the fat lady sings.....
Meanwhile SAC himself was never charged with anything. Pays to be top dawg and have an "insider" last name.
Insider trading is when insiders make money by cheating.
Illegal is when insiders are not involved in the cheating!
Just release the info on Facebook so that the masses can benefit...
Court lost all credibility in allowing illegals to vote.
No sovereign country would permit that.
We have no USSC anymore.
Because we have no government.
We have a government , but its a failed government
Because we have no government.
We are an occupied country.
Why did WTC7 fall down?
Fall to your knees and worship Satan.
And maybe he'll kill you fast.
You pathetic human.
911 was a blood sacrifice to Satan.
The last 15 have convinced me that Satan is real and exists.
Jesus will return to kick your ass.
Jesus will return to kick your ass.
For asking why WTC7 fell down? And return from where?
@ Chuck,
You're absolutely right. What we have is a Criminal Fraud entity aka the UNITED STATES, CORP. INC. "posing" as a functional Governemt of the people, for the people & by the people.
Headed by a Criminal Fraud CEO & Board of Trustees aka CONgress.
By the way Chuck, those Yankee teams of Mid 90's were a dominat force.
Ruling: Insider trading applies to everyone except the 3 branches of Government, their crony's heirs or assigns, intelligence agencies and the banks.
Doesn't apply to illegals.
That would be racist!
https://www.integrity-research.com/key-provision-of-stock-act-gutted/
Please end the farcical law. It's never been defined. No one has ever agreed on anything. It was created in a fury after watching an Oliver Stone movie in the 1980s. It has only ever been used by federal prosecutors to bilk people of political donations to the parties. And they only ever "prove" that it when they have someone dumb enough to write it down for the incriminating evidence.
Get rid of it. Then the rumor mill and "insider" network will be destroyed. No one will think there's any value to rumors if you make the supply of rumors costless. Some douche will come up to you and say "I've got a tip." And you'll say "what? Did you pick that up off Twitter?" And the guy is fucked whether it's true or not. He's got nothing.
Problem solved.
Everything will constitute insider trading with the exception of:
1.) Naked shorts to suppress the price of precious metals.
2.) PPT purchases of S&P futures to prop up the price of the stock market, and firms that front run these rescues.
3.) Purchase of default credit swaps by firms's proprietary desks selling securities that have been formed from known bad originating loans to parties that can't possibly repay. (GS and Greece.)
etc, etc. (please feel free to add to the list)
Translation: We want the SCOTUS to " clarify" the law so that insider trading can be defined capriciously and arbitrarily to suit the needs of the elites.
now go get your shine box
What will happen is that there will no longer be "insider trading". Just trading.
Nothing.
Blue Horseshoe Loves Anacott Steel
And this guy that is the antithesis of the law and justice will help the Justices craft the language in it!
Oh no, no, end the Federal Government? Why? These guys really understand the constitution and the need to change it to suit the current societal trends.
http://amishoutlaws.com/amish_steppin805.jpg
Congress critters get to trade on inside info and most of them get rich or richer doing so. Why not the rest of us?
Because the rest of us aren't insiders, perhaps?
It's a tax.
If they take the case, watch it turn into another 5 to 4 coin flip non-decision. What a joke this system is!
C'mon! This is the court that brought you the Citizens' United decision. Big money put the USSC justices there, and they didn't do it so that their interests could be circumscribed.
No brainer how this is going to turn out. I'm guessing they won't take the case, given that the lower court has already effectively ruled that insider trading won't be prosecuted.
Citizens' United decision
A 5-4 "non-decision" that ruled propaganda was legal ... right up to the day of an election.
Never forget, polls are a measure of the effectiveness of propaganda. And democracy depends on propaganda to educate the voters.
Democracy is a ridiculous concept on its face.
I am of the opinion that "every" decision made at the supreme court level should be unanimous or rendered undecidable. If a general law is not obvious at that level, how can it not be totally ambiguous in more detailed instances?
Insider trading laws are essentially an arbitrary political charge.
And if you're investing on the assumption that there isn't insider trading going on everywhere all the time, you're an idiot.
Instead of putting themselves into the impossible situation of having to read people's minds to determine motives, why not just make it easier and ban ALL people in this field from playing the markets at all? In other words, if you are on or work for either team, you can't bet on the outcome of the game. Period.
If you want to, then you leave that job first.
There have to be some basic ground rules. If it's too hard to use discernment, or we are writing vague and obtuse laws, then maybe we should just make things real simple for everyone.
Obviously we can't have credible markets for all if it is common knowledge that 'insiders' always have an edge over everyone else. A perception like that doesn't even have to be true to do its damage...just the IDEA of it keeps many away...When an idea can tank your markets, you MUST manage perceptions. The fact that one would-be trader is stymied in his pursuit of wealth is of less importance than the 1,000 who decide their money is safer elsewhere because markets are 'rigged'.
To misquote the Queen of Mean: "Rules are for the little people."
How can you trust a Supreme Court with 3 Jews and a "wise Chicana?!?"
Is it like porn? (They know it when they see it?)
Still, not a good sign, those robed elites can't see tyranny when it looks them straight in the eye, so...
Yeah, they'll eff this one up too.
I ignore the edicts of treasonous scum!
NEWS FLASH - Supreme court decides that insider trading is whatever the insiders decide it is.
This is a very easy and simple decision to make: insider trading is illegal if you don't have strong enough political connections.
Then why did Martha go to jail?
It was a chaotic time. Someone had to be thrown under the bus. Jon Corzine is a much better example of how this stuff has played out since then.
Everything Goldman, JPM and Citi do is based on insider trading.
When you own the politicians, regulatory bodies and operate above the law, you can do that.
Breaking News ,,,,,
USSC to decide who is allowed to breathe.
Terrorists would breathe a sigh of relief - all that 'suspicious' trading before a terrorist event couldn't be prosecuted. lol
What a shitshow!
The South was right!
The US legal system is a joke.
Are they exempt along with congress, and they decide?
Fox in hen house much?