The SEC’s Insider Trading Case Falls Further Apart

Five years ago, the SEC came crashing into the offices of Level Global Investors accusing it of engaging in illegal insider trading. The firm agreed to pay $21.5 million in settlement money to resolve that insider trading investigation. Now it wants its money money back.

SEC Seal 2

When it comes to insider trading, it’s not the firm doing the trading, it’s individuals. The individuals fought the charges of illegal insider trading. Anthony Chiasson, was implicated in the insider trading charges and was convicted at trial.

But the verdict was overturned and the federal appeals dismissed the charges. That ruling by the United States Court of Appeals for the Second Circuit (U.S. v. Newman and Chiasson, 773 F.3d 438 (2d Cir. 2015)), made it more difficult to pursue insider trading cases. The Newman decision changed the SEC’s view of what constitutes illegal insider trading. The government now requires the government to prove a higher level of benefit than before.

The SEC appealed to the US Supreme Court, but it decided not to hear the appeal.

With the underlying charges gone, the Level Global feels it’s entitled to get its settlement back. The SEC is not contesting and a federal judge agreed to vacate the settlement.

Although the Supreme Court decided not to hear the Newman appeal, it did agree to hear another insider trading case with a similar issue.

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