Back in May of last year, Titan Capital Management’s Steven Slawson set himself a goal: To become the first person in recent memory to win an acquittal on insider-trading charges. He had a few things going for him, notably that he was being charged in Atlanta, which means Preet Bharara and his winning streak were not a factor. But he also had some things going against him, like the fact the Preet Bharara has shown that juries are absolutely eager to throw the book at hedge fund managers painted to look like cheating scumbags.
Alas, the wheels of justice do not turn swiftly, and that deprived Slawson of pioneer status. For just months after he proclaimed his eagerness to prove his innocence at trial, Raj Rajaratnam’s little brother won the coveted plaudit of “first!” and did it by ending Preet’s streak, at that. Then, a few months later, a federal appeals court asked whether all of those things Preet said were insider-trading were in fact insider-trading, setting a few more people free.
Federal prosecutors in Atlanta charged him with violating a different securities fraud statute,18 U.S.C. § 1348, which was adopted in 2002 as part of the Sarbanes-Oxley Act. The Justice Department argued that this law did not require proof of a benefit being passed to the tipper….
The trial court agreed, so the jury instructions made no reference to finding Mr. Slawson’s knowledge that the tipper received a benefit in exchange for the information, or that one was even given to the source.