Hedge fund manager Todd Newman’s successful career was upended when he was prosecuted for insider trading. After his conviction was thrown out on appeal, the case became a landmark in Wall Street regulation. An inside look at what it’s like to be stalked by the feds—and not back down. The phone call that changed Todd Newman’s life came without warning. It was 8:45 on a Monday morning in November 2010. Newman was at his desk at Diamondback Capital Management, a hedge fund based in Stamford, Conn. He had arrived 15 minutes earlier at the firm’s office in One Landmark Square—coincidentally, a building Newman’s grandfather had developed years earlier—after commuting that morning from his home outside Boston, where he lived with his wife and daughter. Newman was a portfolio manager at Diamondback. He ran a long/short book of about $150 million, trading mostly in the stocks of technology companies. http://fortune.com/todd-newman-diamondback-insider-trading/?xid=nl_daily
This is a typical case where an overzealous prosecutor uses the secret Grand Jury system and abuses his prosecutorial discretion to obtain an indictment. "On Dec. 10, 2014, a three-judge panel on the Second Circuit agreed with Newman and threw out his conviction as well as that of Chiasson. The panel ruled that the prosecution’s argument was flawed and that Sullivan had erred in advising the jury. The appeals court ruled, importantly, that the prosecutors presented “no evidence” at trial that Newman and Chiasson “knew that they were trading on information obtained from insiders in violation of those insiders’ fiduciary duties.”" Newman should have never been indicted, period.
You know what sickens me most in this article: That Newman had $10.2 million in legal fees!! What...the.....hell....
Can you imagine if he did not have insurance through Diamondback to pay 95% of those $10.2M legal fees, where he would be today? He would be in jail.
Even with the Appeal Court ruling in his favor, he has already been severely damaged: over $500K in legal fees, his reputation damaged, future employment in the industry will be difficult if not unlikely, his marriage destroyed, his relationship with his child impacted, etc. All because an overzealous prosecutor wants a "win".
There are very serious problems having to do with conflicts of interest throughout the United States Justice System, both civil and criminal, from the Federal level on down to the state and local levels. These have only just begun to be addressed in any meaningful way. Bernie Sanders is the first politician within my memory to bring up the subject in a national campaign. Ms Clinton seems to have taken a clue from him, whereas Mr. Trump appears to have no interest in the topic. Justitia, the Roman Goddess of Justice would be very unhappy with the current state of affairs within the U.S. Justice System. Something will have to be done. Step one is to acknowledge the problem. We seem to be stuck at step one.
Preet isn't the only one. Guiliani made his debut on fictitious insider trading charges. But it's a tough position. If the prosecutors weren't so tough more criminals would be free.
Back in the day that was just considered information , Fidelity, Steinhardt, Julian Robertson were getting fed that type of info all the time and trading discreetly on Instinet...This whole inside info crack down is a joke..who remembers 1st call and whisper numbers and after that whisper-whisper numbers?
Yes, and that's the problem when you have a secret Grand Jury system where the transcripts are sealed, and where there is no defense attorney present and no defense witnesses. Newman can't even sue the U.S. Attorney, because they are immune, and even if he tried, he would have to prove malicious intent, which is almost impossible. The thread is titled "The Hedge Fund Trader Who Beat The Feds" however Newman didn't really "beat" anyone, he simply was able to get a weak case thrown out on appeal, at a massive cost, both personal and financial. Newman unfortunately had an employee, Tortora, who retaliated against him. Newman fired Tortora but still paid him $700k for "poor performance" and that's even after Tortora made $2 million the prior year! "Tortora pleaded guilty and agreed to help the prosecution make its case against Newman. Newman says Tortora “burned through all his money, and he didn’t have a choice” but to cooperate with the government. At trial, Tortora testified that he had lost hundreds of thousands of dollars day-trading and gambling." His best option now is to write a book about his ordeal and shed light on the system, and hopefully recoup some of his losses due to legal fees. The article also cites the following, which is a good thing: "He plans to start a business to help others make it through experiences similar to his own."