The Supreme Court on Monday declined to revisit the federal insider trading case against hedge fund managers Todd Newman and Anthony Chiasson, whose convictions were overturned in December by the 2nd U.S. Circuit Court of Appeals in New York.
Solicitor General Donald Verrilli Jr. had asked the high court to reconsider the case, but the Supreme Court justices declined, without comment.
Mr. Newman's attorneys, Stephen Fishbein and John Nathanson of Shearman & Sterling, said in a statement the case against their client was government overreach, “including baseless raids on hedge funds that led to hundreds of innocent employees losing their jobs. … Mr. Newman is hopeful that the decision today will help ensure that others avoid a similar fate.”
McDermott Will & Emery partner Todd Harrison, who in August successfully defended an insider trading case against hedge fund manager Steven Slawson of Titan Capital Management LLC, thinks it will. “It's a pretty resounding message from the Supreme Court. They decided that the 2nd Circuit case had been decided correctly. It's putting the government on notice” about what it takes to bring cases against people receiving information from downstream tippees, Mr. Harrison said in an interview. “The interesting question is will the Department of Justice quickly integrate this into their charging decisions nationwide?”
Federal prosecutors won convictions in May 2013 for the two hedge fund portfolio managers, whom they said profited by trading on inside information about several high-tech companies. The appeals court overturned the convictions, saying that the government failed to present sufficient evidence that the defendants willfully engaged in substantive insider trading.