Nothing New, Man!—The Second Circuit’s Clarification of Insider Trading Liability in United States v. Newman Comes at a Critical Juncture in the Evolution of Insider Trading

Abstract

On December 10, 2014, in United States v. Newman, the U.S. Court of Appeals for the Second Circuit clarified what is required for remote tippees to be liable in insider trading cases. The government has argued that the Newman decision is unprecedented and will make it far more difficult to prosecute insider trading defendants. This Note argues that the Newman decision is consistent with precedent and the principles of criminal law and comes at a critical juncture where the SEC’s prosecutorial tactics do not square with the common law. Importantly, Newman reins in prosecutorial overreaching aimed at those who are least culpable and will hopefully shift the government’s focus to the crux of the problem: corporate insiders who tip material, nonpublic information for a personal benefit.