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SEC© is reviewing appeals court insider ruling

Publisher: WSJ
Author: Andrew Ackerman

The top US Securities regulator says it is reviewing a federal appeals court ruling that overturned two criminal insider-trading convictions and effectively made prosecuting the crime more difficult. There’s no question it’s a significant decision,” said Mary Jo White, Chairman of the SEC.

She said her initial sense is that the opinion from Wednesday took an “overly narrow view” of the insider trading law.

“That is a concern but we are continuing to review it,” she said.

On Wednesday, a three-judge panel of the Second U.S. Circuit Court of Appeals said prosecutors must prove traders knew that the person who provided an inside tip gained some sort of tangible reward for doing so.

The judges also said it may be legal to trade on inside information, even if it gives an investor an unfair advantage in the markets, as long as the tipper didn’t commit an illegal breach of his or her duty.

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