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News Oct 05, 2015

Supreme Court Declines to Hear Insider Trading Case

The US Supreme Court has declined to rehear the government’s case against Todd Newman, a hedge fund trader who was found guilty of insider trading but later exonerated by an appeals court.

The Supreme Court’s decision not to reexamine the appeals court’s decision represents a big victory for Mr. Newman -- and for his attorneys, Shearman & Sterling Litigation partners Stephen Fishbein and John Nathanson -- and effectively ends the government’s quest to overturn the Second Circuit’s landmark decision overturning Mr. Newman’s conviction. 

In a joint statement, Fishbein and Nathanson said, “We are thrilled that the Supreme Court has chosen to let stand Todd Newman’s complete vindication on the charges against him. The Second Circuit not only reversed Mr. Newman’s conviction, but it found that there was no evidence that he knew there was anything wrong with the information he received. That result has now survived government challenge all the way to the highest court in the land. Unfortunately, this victory comes only after years of government over-reaching, including baseless raids on hedge funds that led to hundreds of innocent employees losing their jobs. Having endured nearly five years of baseless prosecution, and a trial in which neither the jury nor the judge followed the law as it has now emphatically been explained by the Second Circuit and left undisturbed by the Supreme Court, Mr. Newman is hopeful that the decision today will help ensure that others avoid a similar fate.”

Back in April, Shearman & Sterling secured another major victory for Mr. Newman, formerly of Diamondback Capital, when the Second Circuit Court of Appeals denied the government’s petition for rehearing en banc without dissent. Just four months prior to that, in a momentous decision on December 10, 2014, the Second Circuit overturned Mr. Newman’s insider trading conviction with instructions to the District Court to dismiss the indictment against him with prejudice. The Second Circuit’s decision was significant because it clarified the scope of what constitutes insider trading.