Former Hedge Fund Manager Cleared of Insider Trading Charges

Aug 18 2015 | 7:08pm ET

A former hedge fund manager has been acquitted of charges he traded in shares of children’s clothing maker Carter's using inside information. 

A federal jury in Atlanta exonerated Steven Slawson, co-founder of Titan Capital Management in New York, of all 34 counts he faced. In addition to the insider trading accusations, the charges included securities fraud, wire fraud and conspiracy, according to Reuters. 

The trial lasted more than two weeks and featured testimony from three cooperating witnesses as well as Slawson. The jury needed only three hours to declare him innocent. 

The verdict is a rare win for financial industry defendants charged with insider trading, an offense that has received tremendous scrutiny in recent years. The so-called Newman ruling by a New York appeals court in July has been interpreted as potentially making it much harder for prosecutors to prove insider trading. 

Prosecutors were unable to prove Slawson knew that others were illegally obtaining confidential information he was receiving from Carter's.

Slawson was indicted in 2014 for allegedly engaging in a $1.7 million insider trading scheme from 2005 to 2010.  Prosecutors contended that Slawson obtained information about Carter's financial results from a paid consultant, former Credit Suisse analyst Dennis Rosenberg, who in turn had gleaned them first from Carter's vice president of investor relations and subsequently the company’s VP of operations. 

Both Carter’s employees eventually pleaded guilty of conspiracy and were sentenced in May to two years and one and a quarter years in prison, respectively, as well as fines. Ultimately, eight individuals were charged as part of the scheme. 

Slawson continues to face a related SEC civil lawsuit, which had been put on hold pending the criminal case's resolution, according to Reuters. 

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