The US Supreme Court on Monday rejected a US Justice Department bid to restore the insider trading convictions of two hedge fund managers and reverse a lower court's ruling that prosecutors contend will make it harder to bring such cases.
In a blow to federal prosecutors, the justices left in place a December ruling by the 2nd US Circuit Court of Appeals in New York that threw out the 2012 convictions of hedge fund managers Todd Newman and Anthony Chiasson for trading on insider tips about Dell Inc and Nvidia Corp.
In court papers asking the justices to hear an appeal of that ruling, US Solicitor General Donald Verrilli said the appeals court decision was a "roadmap for unscrupulous insiders".
The high court rejected the case without comment.
Gregory Morvillo, Chiasson's lawyer, said the justices rejected "the government's efforts to rewrite well-settled insider trading law".
In a joint statement, Newman's lawyers, Stephen Fishbein and John Nathanson, welcomed the court's action, which they said came only "after years of government over-reaching, including baseless raids on hedge funds that led to hundreds of innocent employees losing their jobs".
"Newman is hopeful that the decision today will help ensure that others avoid a similar fate," his lawyers said.
Newman, a former Diamondback Capital Management portfolio manager, and Chiasson, co-founder of Level Global Investors, were convicted in 2012 and sentenced to 4-1/2 years and 6-1/2 years in prison, respectively.
