The Sheriff of Wall Street has had one of his guns taken away, and he is not happy about it.
US Attorney Preet Bharara, often called the ‘”Sheriff of Wall Street,” in December gave up on a big insider trading case.
That was the direct result of an earlier, successful appeal against the SEC’s case against Diamondback Capital Management’s Todd Newman and Level Global fund manager Anthony Chiasson.
The appeals court ruled that “the government failed to present sufficient evidence that the defendants wilfully engaged in substantive insider trading or a conspiracy to commit insider trading in violation of the federal securities laws.”
The US Supreme Court in October refused to review that ruling, marking the end of a lengthy legal battle and what some consider to be a shift in the law.
On Friday, CNBC’s Andrew Ross Sorkin interviewed Bharara. He asked him whether the Supreme Court ruling in the Newman case had made it harder to bring an insider trading case.
He started out by saying that he thought the Newman decision was wrong and changed the law, and that some kinds of cases will still be able to be bought as they were before.
It will make it hard and arguably, very, very hard if not impossible to bring a certain kind of insider trading case. For example, if you have the CEO of a company, who has in advance knowledge about what the numbers are going to be for the quarter and decides to gift that information to a college buddy, or a nephew, or a son, and say, “You know, we are going to beat the numbers by a dollar. Knock yourself out.” And arguably, under the Newman decision, which has changed the law, that person can basically gift 50, $60 million of profit on a relative or a friend if he is not getting something of pecuniary benefit back — and I’m not sure that reasonable people will think that is a good state of affairs.
There is now a need for clarity, according to Bharara, who said having Congress write a clear insider trading law would not “necessarily be a bad thing.”
“You know, a judge — recently a prominent judge in the Southern District of New York gave a speech recently about his view that maybe Congress should act on this,” he said.
“And you know, clarity is always good.”
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