U.S. judge tosses former SAC Capital trader's insider trading guilty plea
Reuters
Published Jun 21, 2019 03:32PM ET
U.S. judge tosses former SAC Capital trader's insider trading guilty plea
By Jonathan Stempel
NEW YORK (Reuters) - A federal judge in Manhattan on Friday threw out the 2013 insider trading guilty plea of a former trader at SAC Capital Advisors LP, the hedge fund once run by billionaire Steven A. Cohen, saying recent changes in the law meant there were not enough facts to support the plea.
The trader, Richard Choo-Beng Lee, 62, had been a major cooperating witness and one of the first to plead guilty in former Manhattan U.S. Attorney Preet Bharara's insider trading crackdown, which began in 2009 and led to more than 80 guilty pleas and convictions.
While rejecting Lee's claim that new evidence showed he was actually innocent, U.S. District Judge Paul Gardephe found no evidence that Lee knew of any personal benefits that insiders at Yahoo (NASDAQ:AABA) Inc and 3Com Corp might have received by divulging confidential information on which prosecutors said he traded.
Gardephe said such knowledge was central to establishing insider trading liability for accused "tippees" like Lee, under decisions issued in 2014 by the federal appeals court in Manhattan and 2016 by the U.S. Supreme Court.
"There is no reason to believe that Lee - in using the phrase 'breach of fiduciary duty' during his 2013 allocution - understood that phrase to include the liability components" in the later decisions, Gardephe wrote. "His guilty plea must be vacated."
James Margolin, a spokesman for U.S. Attorney Geoffrey Berman in Manhattan, declined to comment. Lee's lawyer did not immediately respond to requests for comment. Gardephe scheduled a July 10 conference to discuss the next steps in the case.
The decisions Gardephe cited had previously led to the overturning of several insider trading guilty pleas and convictions won by Bharara, including the conviction of former SAC portfolio manager Michael Steinberg.
Another convicted former SAC portfolio manager, Mathew Martoma, is serving a nine-year term.
Now called Point72 Asset Management LP, SAC pleaded guilty to fraud and paid $1.8 billion in U.S. criminal and civil settlements. Cohen was not criminally charged.
Lee helped manage $1.25 billion at SAC before admitting to securities fraud and conspiracy charges, court papers show.
U.S. District Judge Kevin Castel sentenced him in 2015 to three weeks in prison, which Lee's lawyer at the time called "unfair" given his client's cooperation.
In asserting his innocence, Lee said he would not have pleaded guilty had he known about instant messages uncovered in 2017 that showed many of his Yahoo trades were based on news of a planned partnership with Microsoft Corp (NASDAQ:MSFT) that had already been widely disseminated.
Get The News You Want
The case is U.S. v. Lee, U.S. District Court, Southern (NYSE:SO) District of New York, No. 13-cr-00539.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.