With the Securities and Exchange Commission charges against hedge fund king Leon G. Cooperman, the government has loudly announced that insider trading prosecutions are far from over. Following a major 2014 ruling on insider trading by the Second Circuit, the government dropped all criminal charges against Thomas Conradt and Daryl Payton for trading on advance information about a deal. The court said that to prove insider trading, the government needed to show traders didn’t merely know they were trading on confidential information but also that the information came from someone who had been rewarded in exchange.
The Securities and Exchange Commission has a lower burden of proof in the civil cases it pursues and it starts the process. Frequently after damaging information is found, the Department of Justice takes over and prosecutes the claims.
Although the SEC has brought a civil case against Cooperman, the US Attorneys Office in New Jersey suspended a criminal investigation of him awaiting a decision on a pending insider trading case before the Supreme Court, according to the WSJ. That case is reviewing the Second Circuits decision on insider traders. The case is United States v. Newman (no relation to me) and oral arguments are scheduled for next month.
The SEC case against Cooperman alleges misappropriation of information. Mr. Cooperman manages Omega Advisors and the SEC wants return of ill gotten gains and wants to bar him from serving as an officer or director of a public company. Omega manages over $5 billion in investments.
Jeffrey Newman represents whistleblowers.