Guilty Pleas Hang In The Balance Following Insider-Trading Ruling

Dec 12 2014 | 1:16pm ET

The reversal this week of the guilty verdicts against two hedge-fund managers convicted of insider-trading is already having an impact beyond that case.

A federal judge in Manhattan has scheduled hearings for next week to consider whether the vindication of Anthony Chiasson and Todd Newman “affects” the guilty pleas of four others accused of insider trading. On Wednesday, a federal appeals court in Manhattan rejected the convictions of the Level Global Investors co-founder and former Diamondback Capital Management trader, finding that prosecutors must show that the accused in insider-trading had knowledge that the sources of their inside information received a personal benefit for revealing it.

The ruling is widely expected to affect the conviction of former SAC Capital Advisors trader Michael Steinberg. U.S. District Judge Andrew Carter thinks it may also affect the guilty pleas of four men accused of trading on advanced knowledge of International Business Machines’ 2009 deal for SPSS Inc.

The guilty pleas covered by Carter’s hearing are those of former Euro Pacific Capital traders Daryl Payton, Thomas Conradt and David Weishaus, and former Royal Bank of Scotland Group analyst Trent Martin.

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