EPILOGUE

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ON DEC. 10, 2014, THE 2ND Circuit Court of Appeals ruled in U.S. v. Newman that insider trading requires that insiders who passed confidential tips did so in exchange for personal benefits of some consequence. Essentially, the ruling forces the government to prove that the tippee had knowledge that the tipper breached his fiduciary duty in providing the material nonpublic information.

The ruling overturned the convictions of hedge fund managers Todd Newman and Anthony Chiasson, whose trial was also overseen by Sullivan. The appeals court said Sullivan instructed jurors incorrectly on the law.

The Newman case also resulted in the overturn of the conviction of Michael Steinberg, who was tried and convicted in front of Judge Sullivan. An additional seven defendants also had their convictions overturned.

In March of 2015, Michael Kimelman filed a motion to have his conviction overturned as well. Citing the similar facts of his case and the incorrect jury instructions provided by the same Judge Sullivan, Kimelman asked that his conviction also be set aside. Under the law, the motion must be made to the same judge that originally ruled on his case—Judge Sullivan. The motion has sat on Judge Sullivan’s desk for almost two years and has not been ruled on as of the time of this writing.