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Appeals court adopts new legal standard for insider trading cases

The law is constantly in flux. Changes in legislation as well as new court decisions can quickly turn established legal standards on their heads. Because of this, those who are charged with crimes must remain informed of their rights and defense options under the most current interpretations of Pennsylvania and federal laws.

In a recent ruling, the U.S. Court of Appeals for the Second Circuit adopted a new, stricter legal standard for insider trading cases. The decision, which overturned the criminal convictions of insider trading for two hedge fund traders, states that a person who receives an investment tip must be provided with a reward that is somewhat tangible. Absent evidence of this, a person will not be considered to have committed an insider trading violation. 

The Securities and Exchange Commission and the Justice Department are trying to determine what impact this ruling may have on other cases, including the civil counterparts to the hedge fund traders’ criminal convictions.

Some people who were previously convicted for insider trading have indicated that they may be revisiting their cases and attempting to have their convictions overturned. Those who have already served some or all of their sentences may seek to have their convictions removed from their records.

If you are facing criminal charges for a white collar crime such as identity theft, embezzlement or securities fraud, you may want to consult with a lawyer. Attorneys must remain on top of the most recent developments in the law and can provide you with the counsel you need to make an informed decision about your defense strategy.

Source: The New York Times, “Fallout for the S.E.C. and the Justice Dept. From the Insider Trading Ruling,” Peter J. Henning, Dec. 15, 2014 

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Gregory R. Gifford
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