Mr. Bharara's argument for dropping the case, which will have to be approved by a federal judge, is that a court last year found that prosecutors had stretched the limits of the insider-trading law and in doing so undermined the legal foundation of those cases.
The charges that are being dropped are only for Mr. Steinberg and will not affect the insider-trading convictions of the six other former SAC employees or the 2014 guilt plea by the firm itself. The agreement of SAC to plead guilty in 2014 was a rare instance of a hedge fund being criminally charge for insider trading. The plea included taking responsibility for Mr. Seignberg and the handful of other former employee's actions.
This case dismissal is a bigger deal then it initially seems; it opens up the opportunity for other such cases to be redressed. Earlier in October the Justice Department asked the U.S. Supreme Court to review the ruling made last year that Mr. Barabara forecasted "would hamper prosecutors' pursuit of insider trading" The ruling stated that it is not enough for "prosecutors to show that someone who received an inside tip traded on material nonpublic information about a corperation." In other words, there has to be a personal relationship between the tipper and the tipped for a prosecutor to be able to prove anything. However, the request was ignored and therefore the ruling was left as the law of the land. As a result Mr. Baharara did not have much of a choice but to drop the case. While the court decides whether or not to approve the case dismissal, criminal insider-trading has potential to skyrocket with this new loop-hole.
http://www.wsj.com/articles/u-s-attorney-moves-to-dismiss-insider-trading-charges-in-sac-capital-advisors-case-1445545210?cb=logged0.7623965330421925
Do you agree with the court's clarification of what evidence a prosecutor needs to accuse someone of insider trading? Supreme Court should have taken this case? Do you think insider-trading will increase?
2 comments:
This dismissal of the case is a dangerous turn of events, in that criminals trading with other people's money and committing corporate espionage may be able to finagle their way out of sentencing, or indeed, conviction. The basis of law and its impartiality is important, but so is the punishment of wrong-doing on the large scale. Corruption in Wall street must be addressed and rooted out, not only for the sake of justice, but also the economy. If those in charge of hedge funds and other large investment groups are not held accountable to illegal acts, then the abject corruption such unchecked greed creates may spur another economic downturn.
I agree with the4th3rd in that the dismissal of this case is very worrying. Moreover the ruling made by the Second Circuit U.S. Court of Appeals that prosecutors must show that an individual charged with insider trading knew an insider had turned over secret information for financial gain was held. The Justice Department wrote in a brief that they wouldn’t review the ruling, “Because the widely publicized ruling in this case raises the bar to prosecuting insider trading, it increases the chances that such conduct will proliferate.” However I believe that this case of Steinberg and the other six is a perfect example of how this ruling is failing. Steinberg was part of SAC Capital, once the country's most successful hedge fund, which had pleaded guilty to insider trading charges in 2013. The court's clarification of what evidence the prosecutors need in order to accuse someone of insider trading limits the prosecutors and is in essence protecting inside traders. The Supreme Court should lake this case because it is widely publicized and deals with a major issue facing the United States economy. As the4th3rd said, “Corruption in Wall Street must be addressed and rooted out, not only for the sake of justice, but also the economy.” I think that insider trading will increase exponentially until the justice system cracks down or the economy takes a major downturn due to the greed. Hopefully it is not the latter of the two.
http://money.cnn.com/2015/10/22/news/michael-steinberg-insider-trading-charges-dismissed/
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