Legal News

2nd Circuit Says SEC Can Recoup Money Even Where Insider Trader Didn’t Have Direct Benefits
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

 

Earlier this week, a divided (2-1) 2nd U.S. Circuit Court of Appeals passed a ruling that allows the U.S. Securities and Exchange Commission to cover an important loophole and move to recoup money from insider trading profits, where the insider trader did not have direct personal benefits.

  
What
Where


Writing for the majority, Circuit Judge Gerard Lynch wrote, “Whether the defendant’s motive is direct economic profit, self-aggrandizement, psychic satisfaction from benefiting a loved one, or future profits by enhancing one’s reputation as a successful fund manager, the insider trader who trades for another’s account has engaged in a fraud, secured a benefit thereby, and directed the profits of the fraud where he has chosen them to go.”

The ruling was given in the matter of Joseph Contorinis, former portfolio manager of Jefferies Group Inc., who had been convicted in 2010 for insider trading. Contorinis will have to pay back $7.26 million of alleged illegal profit he made for the firm’s Paragon Fund, along with an interest of $2.42 million.

In the court of first instance, U.S. District Judge Richard Sullivan in Manhattan had ordered Contorinins to forfeit $427,875 in the associated criminal case. In its ruling, the 2nd Circuit upheld the penalty imposed by Sullivan.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




Contorinis had argued that the profit made by Paragon due to his machinations was not within his personal control and he should not be liable to disgorge that profit.

In his dissent Judge Denny Chin agreed with Contorinis’ argument and said, “While Contorinis undeniably deserved to be punished, disgorgement was not the proper mechanism.” Chin was of the opinion that disgorgement should be remedial and not punitive.



Contorinins, 49, is currently serving a six-year prison term stemming from his conviction for securities fraud and conspiracy over trades in supermarket chain Albertsons Inc ahead of its buyout in 2006.



 

Interesting Legal Sites You May Like


BCG FEATURED JOB

Locations:

Keyword:



Search Now

Mid-Level Commercial Business Litigator

USA-CA-Los Angeles

Los Angeles office is seeking a commercial business litigation attorney with 2-5 years of experience...

Apply Now

Senior Level Litigator

USA-CA-Woodland Hills

Woodland Hills office is seeking a litigation attorney with 5-7 years of experience and a background...

Apply Now

Litigation Associate Attorney

USA-CT-Stamford

Stamford office of our client seeks litigation associate attorney with 3+ years of experience. The c...

Apply Now

Experienced Estate Planning Attorney

USA-CA-Torrance

Torrance office is seeking an estate planning attorney with 7-10 years of experience.

Apply Now

RELEVANT JOBS

Associate Attorney

USA-CA-Sacramento

A civil plaintiff’s law firm is hiring for an associate attorney, preferably with strong resea...

Apply now

Associate Attorney

USA-TX-Sugar Land

Insurance Defense firm seeks an Associate Attorney with a MINIMUM of 3-5 years\' experience in litig...

Apply now

Associate Attorney

USA-TX-San Antonio

One of Texas\'s largest Personal Injury Law firm seeks a highly motivated associate attorney with 3-...

Apply now

Associate Attorney

USA-TX-Dallas

One of Texas\'s largest Personal Injury Law firm seeks a highly motivated associate attorney with 3-...

Apply now

SEARCH IN ARCHIVE

To Top