Now it's time for our daily Bloomberg Law Brief, exploring legal issues in the news, and today we discuss former sac Capital Adviser's portfolio manager Matthew Mark Thomas lost a bid to overturn his insider trading conviction. It's giving a boost a federal prosecutor seeking to clean up a legal
behavior on Wall Street. For more in the case and its implications for a future insider trading litigation, Bloomberg Law hosting Grosso speaks with John Coffee, a professor at Columbia Law School, and Robert Howckett, a professor at Cornell University
Law School. John, the question of what has to be proven in an insider trading case has gone all the way up to the Supreme Court, So take us on a short journey to explain where it stands fair enough and it really does change the law significantly to favor
the prosecution. Prior to this case, the Supreme Court, both in its Dirk's decision back in and in the Solomon decision that had handed down last year, both emphasized that the prosecution had to prove not so plea that the defendant used material and non public information to trade, but that the tipper had received some personal benefit from the tippy. Other words, that was distinguishing between mere gossip and a kind of predatory theft where you bribed an insider to
get the information from the company. They recognized also both those decisions that there could be a special exception, a gift by an insider to his relatives or close friends. That seemed like a small case. What's now happened is that even after Dirk's and Solmon, the Martoma decision says that any time information is given to anyone who is likely to trade based on it, that you expect will trade based on it, that will be treated as a gift.
The prior case law, or at least the Newman decision in the Second Circuit, had said that it's only when you gave information to someone with whom you had a meaningful close relationship. That's gone. Now. It could be a casual acquaintance, it can be anyone that you know if you have a reason to believe they're likely to trade
on this information. So we will have the prosecution using a totally different theory, never having to prove a personal benefit, but just saying this was a gift of information and therefore they are liable. Bob and tell us about Martoma's appeal. The appeal is essentially based on the change in the law that John just mentioned right. So, at the time that the original conviction was one, the jury was instructed to make its decision on the basis of the law
as it then stood. So what we have now is the destendant arguing that, well, the law has actually changed during the course of his appeal from the earlier decision, and that therefore, since the law has changed during the course of that appeal, there should be a new trial with a new jury that will be instructed to pursue
it to the dictates of the new law. As Robert Hawckett, a professor at Cornell University Law School, and John Coffee, a professor at Columbia Law School, speaking with Bloomberg Law Houster in Grosso. You can listen to Bloomberg Law weekdays at one pm all street time here on Bloomberg Radio, and that is this morning is Bloomberg Law Brief. You can find more legal news at Bloomberg Law dot com and Bloomberg BNA dot com. Attorneys will find exceptional legal
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