Speaker 1: Now it's time for our daily Bloomberg Law Brief, exploring
Speaker 1: legal issues in the news, and today we discuss former
Speaker 1: sac Capital Adviser's portfolio manager Matthew Mark Thomas lost a
Speaker 1: bid to overturn his insider trading conviction. It's giving a
Speaker 1: boost a federal prosecutor seeking to clean up a legal
Speaker 1: behavior on Wall Street. For more in the case and
Speaker 1: its implications for a future insider trading litigation, Bloomberg Law
Speaker 1: hosting Grosso speaks with John Coffee, a professor at Columbia
Speaker 1: Law School, and Robert Howckett, a professor at Cornell University
Speaker 1: Law School. John, the question of what has to be
Speaker 1: proven in an insider trading case has gone all the
Speaker 1: way up to the Supreme Court, So take us on
Speaker 1: a short journey to explain where it stands fair enough
Speaker 1: and it really does change the law significantly to favor
Speaker 1: the prosecution. Prior to this case, the Supreme Court, both
Speaker 1: in its Dirk's decision back in and in the Solomon
Speaker 1: decision that had handed down last year, both emphasized that
Speaker 1: the prosecution had to prove not so plea that the
Speaker 1: defendant used material and non public information to trade, but
Speaker 1: that the tipper had received some personal benefit from the tippy.
Speaker 1: Other words, that was distinguishing between mere gossip and a
Speaker 1: kind of predatory theft where you bribed an insider to
Speaker 1: get the information from the company. They recognized also both
Speaker 1: those decisions that there could be a special exception, a
Speaker 1: gift by an insider to his relatives or close friends.
Speaker 1: That seemed like a small case. What's now happened is
Speaker 1: that even after Dirk's and Solmon, the Martoma decision says
Speaker 1: that any time information is given to anyone who is
Speaker 1: likely to trade based on it, that you expect will
Speaker 1: trade based on it, that will be treated as a gift.
Speaker 1: The prior case law, or at least the Newman decision
Speaker 1: in the Second Circuit, had said that it's only when
Speaker 1: you gave information to someone with whom you had a
Speaker 1: meaningful close relationship. That's gone. Now. It could be a
Speaker 1: casual acquaintance, it can be anyone that you know if
Speaker 1: you have a reason to believe they're likely to trade
Speaker 1: on this information. So we will have the prosecution using
Speaker 1: a totally different theory, never having to prove a personal benefit,
Speaker 1: but just saying this was a gift of information and
Speaker 1: therefore they are liable. Bob and tell us about Martoma's appeal.
Speaker 1: The appeal is essentially based on the change in the
Speaker 1: law that John just mentioned right. So, at the time
Speaker 1: that the original conviction was one, the jury was instructed
Speaker 1: to make its decision on the basis of the law
Speaker 1: as it then stood. So what we have now is
Speaker 1: the destendant arguing that, well, the law has actually changed
Speaker 1: during the course of his appeal from the earlier decision,
Speaker 1: and that therefore, since the law has changed during the
Speaker 1: course of that appeal, there should be a new trial
Speaker 1: with a new jury that will be instructed to pursue
Speaker 1: it to the dictates of the new law. As Robert Hawckett,
Speaker 1: a professor at Cornell University Law School, and John Coffee,
Speaker 1: a professor at Columbia Law School, speaking with Bloomberg Law
Speaker 1: Houster in Grosso. You can listen to Bloomberg Law weekdays
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Speaker 1: and that is this morning is Bloomberg Law Brief. You
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