In 2014, Supreme Court Justice Antonin Scalia made clear that he was just itching to gut him some insider trading laws. In January, it looked like he would get the chance, when the Court decided to weigh in on Salman v. U.S., in which Jed Rakoff politely insisted that insider-trading was still a thing in the West, no matter what those meddlesome members of the Second Circuit Court of Appeals said. Alas, it was not to be for Nino. He died a month later, after scratching an itch to gut himself some quail.
Now, the question of what constitutes a benefit is left to a court bereft of his deciding vote. Worse yet, there’s an actual circuit split now that practically screams for the Big Guns to get involved. And given the way things are going, the deciding vote in that case won’t be from a Scaliaphile, but from Merrick Garland or whatever pinko judicial activist Madame President nominates on Jan. 20 whose appointment is breezily ratified by Senate Majority Leader Chuck Schumer.
The United States Court of Appeals for the Second Circuit in Manhattan roiled the world of insider trading in December 2014 in United States v. Newman when it overturned the conviction of two hedge fund managers charged with profiting on information passed through a chain of tippees, as the providers of information are known. The appeals court found insufficient evidence that the defendants knew about any benefit provided to the tippers, a requirement to prove a violation….
The United States Court of Appeals for the First Circuit in Boston takes a more relaxed view of what is necessary to show the benefit. Last week, in United States v. McPhail, it upheld the conviction of a defendant who tipped off his golfing buddies at a country club outside Boston about developments at American Semiconductor that he learned from another golfing friend who worked for the company.