Watershed Insider Trading Ruling. In what may be viewed as a watershed event in insider trading jurisprudence, the Second Circuit unanimously struck down the convictions of Todd Newman of Diamondback Capital Management LLC and Anthony Chiasson of Level Global Investors. The court found that in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he or she did so in exchange for a personal benefit. The court also found that the Government’s evidence of any personal benefit received by the alleged insiders was insufficient to establish the tipper liability from which defendants’ purported tippee liability would derive, and that even if the evidence offered on the issue of personal benefit was sufficient (which the court concluded it was not), the Government presented no evidence that Newman and Chiasson knew that they were trading on information obtained from insiders in violation of those insiders’ fiduciary duties, because they did not know that the alleged sources of the inside information had disclosed the tips in exchange for a personal benefit. The ruling could have a major impact on many of the other insider trading convictions that the SDNY US Attorney’s office has secured in the past few years, and lead to changes in what needs to be shown in order to secure an indictment or conviction for insider trading. Insider Trading.
US may consider banker bonus caps. Bloomberg summarized comments made by the Vice Chair of the US Federal Deposit Insurance Corporation, Thomas Hoenig. Hoenig said that US oversight of banker compensation is possible if other efforts to reform the industry fail. (12/8/2014) Bonus caps.
CSA releases IIROC oversight report. The Canadian Securities Administrators released the “Oversight Review Report,” which assesses the self-regulatory activities of the Investment Industry Regulatory Organization of Canada. (12/4/2014) CSA press release.
CSA proposes harmonized approach to clearing agency requirements. The Canadian Securities Administrators published for comment “Proposed National Instrument 24-102 Clearing Agency Requirements”, which adopts international standards for Canadian financial market infrastructures. Comments should be submitted by February 10, 2015. (11/27/2014) CSA press release.
OSC publishes existing security holder prospectus exemption. The Ontario Securities Commission published an existing security holder prospectus exemption for reporting issuers listed on the Toronto Stock Exchange, TSX Venture Exchange, Canadian Securities Exchange or Aequitas NEO Exchange (upon the effective date of its recognition order). Subject to Ministerial approval, the exemption will come into effect on February 11, 2015. (11/27/2014) OSC press release.