Second Circuit Overrules Limitation on Insider Trading Liability

Established in US v. Newman

HARRY S. DAVIS, MARC E. ELOVITZ, DAVID K. MOMBORQUETTE, GARY STEIN, PETER H. WHITE AND MARK L. GARIBYAN, SCHULTE ROTH & ZABEL

Last week, a divided panel of the US Court of Appeals for the Second Circuit issued another in a series of important insider trading decisions regarding the personal benefit requirement in the context of gifting confidential information, sustaining the conviction of Mathew Martoma, a former portfolio manager. In doing so, the panel expressly overruled a significant aspect of the Court’s 2014 decision in United States v. Newman, holding that a “meaningfully close personal relationship”...

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