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There was obviously a reason that the tippers (Dell & Nvidia insiders) leaked confidential information to the defendants, two hedge fund managers named Newman a

There was obviously a reason that the tippers (Dell & Nvidia insiders) leaked confidential information to the defendants, two hedge fund managers named Newman and Chiasson. I don't see why it's material whether this reason was friendship/status-boosting or some sort of tangible, cash benefit. The hedge fund managers benefited a great deal from the information, and thus the tippers benefited by extension as they now had stronger ties to two successful hedge fund managers. If the tippers benefited from leaking confidential information, they breached a fiduciary contract with their shareholders by using company property (information) for their own gain.

ksherlock 11y ago
"In each case, Newman and Chiasson were several steps removed from the original leak, receiving the inside information only after it had been first relayed between at least two or three other people."
- roymurdock 11y ago
  This is inconsequential. If I were a hedge fund manager looking for insider info, I wouldn't be dumb enough to go directly to people within the company, unless I was out golfing with the CEO and he let something slip in conversation. I would hire an analyst with ties to any employees in the organization to ask around. Which is probably what happened here. What other reason would there be for the analysts to acquire information and then go to the hedge fund managers with it? You can't wash your hands clean by proxy if you still know what you are doing is wrong. "The judge also agreed with the government that it was required to show only that the defendants [Newman and Chiasson] knew that insiders had leaked the information in violation of their duties to the company – the government did not have to prove the defendants actually knew the insiders had received a personal benefit in exchange." - this was the original logic under which they were convicted, and I think it makes a lot more sense than the final ruling.
maxlybbert 11y ago
> There was obviously a reason that the tippers ... leaked confidential information to the defendants ... > I don't see why it's material whether this reason was friendship/status-boosting or some sort of tangible, cash benefit. Mainly because they're facing prison time. I can think of other laws that make similar distinctions. For instance, the punishment for receiving stolen goods will depend on the value of the goods in question. Why should somebody get a lighter punishment for receiving, say, an iPod compared to a car? In both cases, they knew the person giving them the item wasn't the owner. In this case, it isn't a question of how harsh the punishment is, but whether the people will be punished at all. However, if the SEC wishes to create lesser penalties to cover this kind of thing, it has the regulatory authority to do so. If that's not enough, Congress can always reconsider the law, but I can't imagine people getting all that worked up about it.
- roymurdock 11y ago
  I would imagine that it would be in the interest of any shareholder of a publicly held company to be very concerned about insider trading laws.

ksherlock 11y ago

"In each case, Newman and Chiasson were several steps removed from the original leak, receiving the inside information only after it had been first relayed between at least two or three other people."

roymurdock 11y ago
This is inconsequential. If I were a hedge fund manager looking for insider info, I wouldn't be dumb enough to go directly to people within the company, unless I was out golfing with the CEO and he let something slip in conversation. I would hire an analyst with ties to any employees in the organization to ask around. Which is probably what happened here. What other reason would there be for the analysts to acquire information and then go to the hedge fund managers with it? You can't wash your hands clean by proxy if you still know what you are doing is wrong. "The judge also agreed with the government that it was required to show only that the defendants [Newman and Chiasson] knew that insiders had leaked the information in violation of their duties to the company – the government did not have to prove the defendants actually knew the insiders had received a personal benefit in exchange." - this was the original logic under which they were convicted, and I think it makes a lot more sense than the final ruling.

maxlybbert 11y ago

> There was obviously a reason that the tippers ... leaked confidential information to the defendants ... > I don't see why it's material whether this reason was friendship/status-boosting or some sort of tangible, cash benefit. Mainly because they're facing prison time. I can think of other laws that make similar distinctions. For instance, the punishment for receiving stolen goods will depend on the value of the goods in question. Why should somebody get a lighter punishment for receiving, say, an iPod compared to a car? In both cases, they knew the person giving them the item wasn't the owner. In this case, it isn't a question of how harsh the punishment is, but whether the people will be punished at all. However, if the SEC wishes to create lesser penalties to cover this kind of thing, it has the regulatory authority to do so. If that's not enough, Congress can always reconsider the law, but I can't imagine people getting all that worked up about it.

roymurdock 11y ago
I would imagine that it would be in the interest of any shareholder of a publicly held company to be very concerned about insider trading laws.