Perhaps looking to put Newman in the rearview mirror, the U.S. Attorney for the Southern District of New York (“USAO/SDNY”) and the Securities and Exchange Commission (“SEC”) recently brought charges against former Barclays Bank PLC director Steven McClatchey alleging that tips that he provided to a plumber, Gary Pusey, relating to at least ten impending M&A deals resulted in illicit gains of $76,000. The allegations are a distinct departure from the “misappropriation” claims pursued pre-Newman and demonstrate the pursuit of more traditional insider-trading theories reminiscent of those popularized in films such as 1987’s “Wall Street,” with the USAO/SDNY and SEC focusing on in-person meetings between Messrs. McClatchey and Pusey at a Long Island marina where cash was exchanged in a gym bag for tips on the yet-to-be-announced transactions. It will be interesting to see over the coming months whether federal authorities will test the limits of Newman and bring misappropriation cases or whether they will limit their focus to more traditional insider-trading cases.

The SEC’s press release also indicates that it identified the suspicious trading through its Analysis and Detection Center, a group within the Enforcement Division’s Market Abuse Unit that uses data analytics to identify patterns of suspicious trading. It is likely that Mr. Pusey’s alleged repeated successful trading prior to deal-related announcements led to the SEC’s discovery of the trading even though his cumulative profit was only $76,000. While the federal authorities may be more timid about bringing misappropriation cases in the future, it is likely that as the SEC will continue to use and refine data analytics to identify traditional insider-trading cases.