Summary: The Second Circuit decision to overturn the 2012 convictions of two former hedge-fund traders has dangerous consequences for how the government can monitor Wall Street trading.
The ruling last year December by a New York federal appeals court that overturned two insider-trading convictions has made it difficult for the Justice Department to monitor Wall Street. The ruling also gave justification to critics of Manhattan U.S. Attorney Preet Bharara and other prosecutors that they feel have taken things too far in their search of crime.
U.S. Solicitor General Donald Verrilli has asked the Supreme Court to review the ruling to the hopes of the Obama administration that the Second U.S. Circuit Court of Appeals decision won’t be final. Mr. Verrilli’s request states that the decision by the Second Circuit clashes with a long-standing standard and has disconcerting effects of how the government can keep taps on Wall Street.
Mr. Verrilli’s petition went on to state “The effect of the new rule will be to hurt market participants, disadvantage scrupulous market analysts, and impair the government’s ability to protect the fairness and integrity of the securities markets.”
Currently the ruling contradicts other rulings, giving the Supreme Court a reason to consider looking at it. Last year’s ruling overturned the convictions of Todd Newman and Anthony Chiasson, both former hedge-fund traders. The Second Circuit said the prosecutors needed to provide evidence that the traders knew the person giving them a tip would gain a reward in exchange.
Source: http://blogs.wsj.com/law/2015/07/30/insider-trading-debate-heads-to-high-court/
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