What The Newman Insider Trading Case Will Mean

A look at last month’s Second Circuit Court of Appeals decision in United States v. Newman and its implications, from McDermott, Will & Emery attorneys Todd Harrison and Eugene Goldman. That decision made it significantly more difficult for the prosecution to make an insider trading case, in part by narrowing the definition of what constitutes the personal benefit the tipper must receive for there to be an infraction. In short, there must be real and tangible quid pro quo. The defense is warned, however, this decision could also result in the the government putting more effort into obtaining direct evidence by wiretaps or other kinds of surveillance. “Newman is the most important insider trading ruling in recent years,” the authors write.