Category: Insider Trading
In a decision extolling jurors’ use of “common sense” to evaluate insider trading charges, the Second Circuit affirmed the conviction of Robert Schulman in United States v. Klein (Schulman), No. 17-3355. Though the government’s case rested on only one piece of direct evidence—a statement by Schulman to a friend that he’d like to be “king for a day,” the Court (Katzmann, Kearse, Chin) rejected Schulman’s challenge to the sufficiency of evidence that he intended to pass on inside information to his investment advisor for purposes of trading. The standard of review for sufficiency of the evidence on appeal is very deferential to the government, drawing all permissible inferences in favor of guilt. Here, even one “boastful, impudent” remark has resulted in a criminal conviction.
Earlier this week, we discussed the Second Circuit’s summary order in the insider trading appeal by Rajat Gupta. Gupta was convicted in SDNY as part of the string of successful prosecutions brought during the tenure of U.S. Attorney Preet Bharara. The summary order affirmed the denial of Gupta’s 2255 petition, thereby leaving in place his conviction. The Second Circuit, without explanation, has withdrawn the summary order and published the same decision as a per curiam opinion. Other than the correction of minor typos, there appear to be no changes in the Court’s ruling. A link to the published opinion is here.
In a brief summary order issued yesterday, the Second Circuit denied Rajat Gupta’s collateral attack on his insider trading conviction in Gupta v. United States, Nos. 15-2707(L), 15-2712(C). In a decision reminiscent of the recent summary order in Whitman v. United States, the panel (Kearse, Wesley, Droney) passed on the opportunity to develop the law on the “personal benefit” element of insider trading and instead denied Gupta’s habeas petition on the primary ground that he procedurally defaulted by failing to raise the issue on direct appeal.
In a short summary order issued on October 25, 2018, the Second Circuit (Newman, Lynch, Droney) affirmed the denial of a habeas petition in the case of Whitman v. United States. This case could have given the Second Circuit an opportunity to address again a complicated area of insider trading law, but the Court instead rejected the appeal based on procedural grounds, holding that procedural default prevented the district court from granting the petition.