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Ian Roffman, chair of the firm’s Litigation Department and a former senior trial counsel in the SEC’s Boston regional office, was quoted by Law360 in “Litigators Fear Congressional Fixes To Newman” on April 1. The article discusses three proposed insider trading bills and how securities litigators are apprehensive towards a congressional answer to the Second Circuit’s landmark Newman decision, which overturned the insider trading convictions of two hedge fund managers and significantly narrowed the scope of what makes insider trading a crime.

Ian notes that clarity may not be that easy or practical to achieve. “The more simple and straightforward the statue, the less confusion there is likely to be but the more likely the statute is going to make illegal trading that shouldn’t be,” he said.

Federal law does not currently consider insider trading as a specific crime, and prosecutions have been based on years of court rulings and SEC rules developed on top of anti-fraud provisions of federal securities laws. Under Newman, the government needs to prove that an insider was entrusted with a fiduciary duty, and that the insider breached the duty by disclosing confidential information in exchange for personal benefit. The government must also prove that the tippee knew the information was confidential and disclosed for a benefit, and used that information to trade or for benefit.

“Insider trading law tries to balance between competing interests of, on the one hand, facilitating more information in the market, and on the other hand, restricting sources of information that are somehow deemed to be inappropriate,” Ian said. He points out that all three of the proposed bills “move the needle” toward restricting information, in direct response to the Newman decision.

To view the article, click here.