A federal appeals court threw out the guilty verdicts of two hedge fund managers central to Manhattan U.S. Attorney Preet Bharara’s investigation of insider trading, ruling jury instructions tainted their verdicts and imperiling other cases brought in his multiyear probe.
Bloomberg News reports that Level Global Investors co-founder Anthony Chiasson and ex-Diamondback Capital Management portfolio manager Todd Newman argued their convictions should be overturned because jurors weren’t required to find they knew the source of their illegal tip received some benefit in exchange, an essential element in proving insider trading. The investigations led to the shuttering of the two hedge funds.
The government said jurors only needed to find the men knew the tip was material nonpublic information, and that the tipper was breaching a fiduciary duty by revealing it.
The U.S. Court of Appeals in New York Wednesday favored the fund managers. By essentially exonerating the two men, the court undercut the conviction of SAC Capital Advisors fund manager Michael Steinberg, whose jury got the same instructions.
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