(MENAFN- AFP) The US Supreme Court rejected Monday a challenge by the Obama administration to a lower-court ruling that threw out insider-trading convictions of two portfolio managers and could overturn additional cases.
The highest US court, without comment, let stand a December 2014 US court of appeals ruling that reversed the convictions of Todd Newman of Diamondback Capital Management and Anthony Chiasson of Level Global Investors, two hedge fund figures targeted in the government's multi-year crackdown on insider trading.
A three-judge panel of the appeals court said Newman and Chiasson were too far away from the original leak of insider information and may not have realized the information, which came from corporate insiders at Dell and Nvidia, was obtained improperly and not through legitimate industry analysis.
The panel also held that prosecutors had not shown that Newman and Chiasson knew that insiders at Dell and Nvidia disclosed secrets "in exchange for a personal benefit."
The appeals court ruling was a major blow to the insider-trading crackdown led by President Barack Obama's administration, and particularly to the efforts of US Attorney Preet Bharara in New York City, who had a lengthy winning streak on prominent cases including figures from the hedge funds Galleon and SAC Capital.
The Obama administration in July filed a petition for a writ of certiorari to reconsider the appeals decision, saying it conflicted with Supreme Court precedent and that the ruling would cheat legitimate financial analysts and investors and create "an obvious roadmap for unscrupulous insiders and tippees."
The Supreme Court's response to the appeal had been closely eyed by defendants in other major insider cases. Bloomberg News reported that as many as 10 convictions could be overturned as a result of the Supreme Court's move.
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