Judge J-PAT out.
There’s been a lot of talk about the impartiality of the SEC’s in-house judges. One of them, Jason Patil, has no doubt heard it, seen the statistics and the like. But Jason Patil is nobody’s puppet. He looks at alleged Wells Fargo insider-trader and brah extraordinaire Joseph Ruggieri and says, “What’s the big deal? Props, you crushed it.” And he looks at Preet Bharara’s nightmare—you know, the one his bosses have said is wrongly decided—and says, “Looks good to me, biatchhhhh.” What was that now about home-field advantage?
Judge Patil adopted the benefit analysis of the decision in the Newman case, rejecting the S.E.C.’s argument that it should not apply. He then concluded there was not a sufficiently close relationship to support finding a benefit to Mr. Bolan from passing along the information to Mr. Ruggieri. Thus, even though the evidence supported the conclusion that Mr. Ruggieri had traded on four stocks on inside information from Mr. Bolan about his ratings changes, there was no violation.
On the question of whether the Newman decision is consistent with the tipping analysis in the Dirks decision, Judge Patil expressly disagreed with the Justice Department’s position that the appeals court had altered the law in a way that required the Supreme Court to step in. “I do not, however, read Newman as conflicting with Dirks, but rather as clarifying the standard where proof of a personal benefit is based on a personal relationship or friendship,” he wrote.