Westlaw Journal Publishes Akin Gump Article Analyzing 2nd Circuit’s Martoma Decision

Westlaw Journal White Collar Crime has published the article “U.S. v. Martoma: The Second Circuit reconsiders the personal benefit rule in insider trading cases and announces the partial abrogation of Newman,” written by Akin Gump litigation partners James Benjamin and Michael Asaro, senior counsel Peter Altman and associate Elizabeth Rosen.

The article, previously published as an Akin Gump client alert, examines a recent decision by the U.S. Court of Appeals for the 2nd Circuit in which the court held that there is no requirement for a “meaningfully close personal relationship” in an insider trading case between a tipper and tippee in order for the tipper to reap a personal benefit from the disclosure sufficient to give rise to criminal liability for insider trading, regardless of whether the parties otherwise qualify as relatives or friends.

The 2-1 decision also held that “at least in a criminal case, the government must prove that the tippee knew that the tipper breached a duty and received a personal benefit in order to be liable for insider trading.”

After providing some background on the case, the authors conclude that “compliance professionals should take a conservative view and should counsel against trading in a scenario that involves the possession of material non-public information, at least without extremely careful analysis of questions of duties, motivations and personal benefit.”

To read the full article, please click here.