Two rulings last week ordered the SEC to stop administrative proceedings in two cases, pending the Second Circuit's ruling on the constitutionality of its administrative forum. The Second Circuit stayed the SEC's prosecution of Lynn Tilton, pending appeal of her case. Tilton v. SEC, No. 15-2103 (2nd Cir. Sept. 17, 2015). The same day, Judge Richard Berman, denied the SEC's motion to allow its administrative case to proceed (by staying his preliminary injunction). Duka v. SEC, No. 15 Civ. 357 (USDC S.D.N.Y. Sept. 17, 2015). Judge Berman cited the "goose/gander" rule, noting the ...
The US Second Circuit this Wednesday narrowed the scope of "tippee" liability for insider trading, rejecting the "doctrinal novelty" of recent government prosecution theories. In United State v. Newman, Nos. 13-1837-cr c/w 13-1917-cr (2nd Cir. Dec. 10, 2014), the Court reversed the insider-trading and conspiracy convictions of two portfolio managers. They were downstream tippees, who traded on information passed along from corporate insiders to securities analysts and, ultimately, Newman and Chaisson. The Court of Appeals reversed, because the jury instructions had ...