EVEN a non-decision by the Supreme Court can cause waves. On October 5th, as part of its routine disclosure of upcoming cases, the Court declined to take up a petition related to insider trading. The Justice Department had wanted it to overturn an appeals court’s decision in December to throw out the conviction of two hedge-fund managers. That means the decision will now stand, setting an important legal precedent.
This is not only a blow to Preet Bharara, the federal prosecutor with jurisdiction over Wall Street who had brought the original case, but also an attack on an aggressive and—up to that point—successful approach to insider trading. Since his appointment in 2009 as the US Attorney for the Southern District of New York, Mr Bharara’s office has had a remarkable record in insider-trading cases: 87 findings of guilt, and only one acquittal.
This record is all the more impressive given the stature, connections and legal resources of the defendants. Among the most prominent were Rajat Gupta, who sat on the boards of Goldman Sachs and Procter & Gamble, and once led McKinsey, a consultancy; Raj Rajaratnam, head of Galleon, once...Continue reading
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