Guy Convicted Of Insider Trading Still Convicted Of Insider Trading

Shortly after his first, now seemingly inconsequential, defeat at an insider-trading trial, Preet Bharara turned his energy to the former chief information officer of Foundry Networks, David Riley, who Preet thought was a little too free with said information with a hedge fund manager buddy. And while a jury agreed with the prosecutor, Riley figured that the Manhattan U.S. Attorney’s defeat on appeal by two other hedge fund managers amounted to a “get out of jail free” card. Or, in this case, a “don’t go to jail at all” card, since Riley won’t be sentenced until next month.

Alas, Riley doesn’t have quite as much distance between himself and the source of the inside stuff, since, you know, he was the source of the inside stuff, and, you know, he was the one with the fiduciary duty. These are the sorts of details that judges tend to notice, and, well….

While acknowledging that her jury instructions would have been different, U.S. District Judge Valerie Caproni in Manhattan said in a decision late on Tuesday that evidence introduced at trial "left no reasonable doubt of Riley's guilt…."

Riley said Caproni's jury instructions were defective, in light of the later 2nd Circuit decision, because they suggested he could obtain a personal benefit by leaking information for the purpose of "maintaining or furthering a friendship."

Caproni, though, said Riley obtained at least three "concrete" personal benefits: contacts for a side business he was developing, investment advice, and help securing a new job.

"The evidence was more than sufficient to support the jury's conclusion that Riley tipped inside information in anticipation of receiving a personal benefit," Caproni wrote.

U.S. judge upholds insider trading conviction despite law change [Reuters]