Milbank Litigation partner Antonia Apps discusses the Martoma insider-trading decision in her latest article published by the New York Law Journal. The August 23, 2017 ruling by the United States Court of Appeals for the Second Circuit found that there is no longer a need for the government to show a “meaningfully close personal relationship” between the provider of insider information and the recipient of the tip, overruling a portion of a previous Second Circuit decision in US v Newman.
In the article, Ms. Apps explains that while the “expectation to trade” concept is not new to insider-trading jurisprudence, and is routinely included in jury instructions for the offense, the Martoma decision represents a significant development because it removes the additional hurdle for prosecutors imposed by Newman’s “meaningfully close personal relationship” requirement. Absent a rehearing en banc, which Ms. Apps expects is unlikely given that only non-senior members of the circuit are eligible to vote for a rehearing, it will be left to lower courts to fully develop how or whether the court’s gift-giving approach to personal benefit limits future insider trading prosecutions.
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