Bharara Unhappy With Insider-Trading Reversal

Dec 12 2014 | 1:18pm ET

His broad theory of insider-trading shot down by a federal appeals court, the U.S. Attorney in New York warns that the ruling could severely impair his office’s efforts to combat financial fraud.

“We are still assessing the Court’s decision, which appears in our view to narrow what has constituted illegal insider trading,” Bharara said.

The U.S. Second Circuit Court of Appeals on Wednesday overturned the convictions of two hedge-fund managers, Anthony Chiasson and Todd Newman. The court found that prosecutors must show that those accused of insider trading knew the sources of their information were receiving a personal benefit for revealing it.

In spite of his disappointment, Bharara insisted that the ruling “affects only a subset of our recent cases, and in those cases—as in all our criminal cases—we investigated and prosecuted misconduct based on our good faith assessment and understanding of the facts and the law that existed at the time.”

Bharara’s office has won more than 80 insider-trading convictions in recent years—mostly through guilty pleas.

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