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MiMedx Group, Inc. Message Board

  • alicecooper_love alicecooper_love Apr 17, 2014 6:04 AM Flag

    Pete's trial date

    Any one knows when is Pete's trial date ?

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    • You will know soon for its covering time!!!! #$%$ like you should be put on trial not Pete

      Sentiment: Strong Buy

    • related to new products and FDA adoption I think it's difficult to drive a large amount of net

      • 1 Reply to clo.kumar307
      • note this nytimes articleBUSINESS DAY

        Loosening the Rules on Insider Trading
        APRIL 24, 2014
        Photo

        Anthony Chiasson, a former hedge fund trader, is questioning whether the judge in his trial erred when instructing jurors. Credit Brendan Mcdermid/Reuters
        High & Low Finance
        By FLOYD NORRIS
        Continue reading the main storyShare This Page
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        Insider trading laws used to be for amateurs. Professional traders knew how to avoid being caught.

        Then prosecutors changed the rules. They put wiretaps on traders’ phones and won a series of convictions.

        Now, however, it appears that the rules are about to change again, making it possible for smart professionals to escape liability even if they are caught.

        That change seems likely to be ordered by a three-judge panel of the United States Court of Appeals for the Second Circuit, which heard arguments this week on whether to reverse the convictions of two hedge fund managers, Todd Newman, a portfolio manager at Diamondback Capital Management, and Anthony Chiasson, a co-founder of Level Global Investors.

        The evidence on which they were convicted showed they had made millions of dollars trading on inside information in two companies, Dell Computer and Nvidia, and that they knew the information came from company employees who breached their obligations to their employers. It showed those employees did so in return for receiving “things of value.”

        The managers were, in the words of one of their lawyers, “remote tippees,” having heard the tips from analysts rather than from the original sources themselves, or even from the first people tipped by those insiders. The evidence showed the managers were intensely concerned with being assured that the tips on quarterly earnings came from insiders who were in position to know. And it showed the tips were valuable because the shares moved sharply when the information became public.

        Was that enough for a conviction?

        Federal District Court Judge Richard J. Sullivan thought so. He refused to instruct the jury that the defendants could not be convicted unless they knew the leakers had received a benefit when they violated a “fiduciary duty or other relationship of trust and confidence” by providing the information. After they were convicted, Mr. Newman and Mr. Chiasson appealed, arguing the judge was wrong when he refused to give that instruction.

        They received a sympathetic hearing from at least two of the three judges on the appellate panel, who focused on Supreme Court rulings that have said that trading on inside information is legal unless it is obtained from someone who violates a duty to keep it secret and receives something of value. The ultimate hypothetical example of legal insider trading — one that does not appear ever to have happened — involves a secret merger plan that happens to blow out of a limousine window and is picked up by a passer-by.

        The defendants argued that corporate leaks were common and that traders might not know which ones were improper. Mr. Chiasson’s lawyer, Mark F. Pomerantz of Paul, Weiss, Rifkind, Wharton & Garrison, said “the record was replete” with evidence of authorized leaks from Dell to selected analysts.

        Confidential information, he said, is “the coin of the realm in securities markets.”

        That struck me as a cynical view, one that called into question the basic integrity of the United States stock market.

        That was not how the judges reacted, however.

        Judge Barrington D. Parker talked of the need for a “bright line” to enable hedge fund managers to know whether they were violating the law when they traded on inside information. Otherwise, he asked, wouldn’t prosecutors be able to indict anyone they wanted?

        If the defendants prevail, hedge fund managers will be given a road map to evading the insider trading law. It won’t matter whether the government can prove the information came from an insider who was paid off and that the trader knew an insider was the source as long as there is no evidence the trader knew about the payoff.

        Hedge fund managers will be careful not to ask about such things. After all, there is no reason for them to want to know. What they want to know is whether the information is reliable.

        Making this even more absurd is that the hurdle for “something of value” is extremely low. Friendship has been deemed enough. One of the insiders in this case received cash, but the other got little more than help with his résumé and a job recommendation. But not knowing about that may be enough to free the defendants.

        Before Preet Bharara became the United States attorney for the Southern District of New York, insider trading cases almost always singled out amateur, unsophisticated investors. That was because of the way such cases were usually uncovered. After some news — of a takeover, perhaps, or an earnings collapse — caused a big stock swing, investigators looked for trades that seemed to have been prescient.

        If the investigation found someone who rarely traded stocks but made a killing on one trade, suspicions were aroused. If it turned out that investor knew a corporate insider, and that phone records showed the two talked just before the suspicious trades, the trader faced questions.

        A typical civil insider trading case was announced by the Securities and Exchange Commission the day before the appeals court heard the fund managers’ appeal. That case involved an official of a small pharmaceutical company who had encouraged a medical school classmate, who had become an emergency room physician on Long Island, to buy shares in her company because it was developing a promising drug. When confidential tests showed the drug did not work, the official tipped off her friend, who immediately sold his shares and relayed the tip to a patient who had also bought the stock. When the test results became public, the share price plunged. It appears that it was the patient who confessed what was going on and was rewarded for his cooperation with a reduced penalty.

        That kind of investigation is unlikely to turn up a professional trader. Even if investigators find that a hedge fund made a large prescient trade, it might not stand out. After all, the fund made a lot of trades and can undoubtedly come up with explanations that do not involve inside information.

        Back in the 1980s, Rudolph W. Giuliani, the United States attorney in Manhattan at the time, established his reputation by going after Wall Streeters. Those cases began with the normal procedure. The big break came when investigators noticed that a customer of a Swiss Bank branch in the Caribbean had made trades just before several takeover offers were announced. The customer, a high-ranking official at Drexel Burnham, an investment bank that financed a lot of hostile offers, had relied on Swiss bank secrecy laws to keep his identity confidential. When that did not work, he eventually named Ivan Boesky, a prominent speculator in takeover stocks, as someone to whom he had provided tips. A cascade of charges followed.

        It seems unlikely that hedge fund traders are still talking about insider trading on the phone, now that they know the government may be listening. But even if they are, a ruling overturning the convictions of Mr. Newman and Mr. Chiasson could make it hard for prosecutors to ever win convictions. Traders will be careful never to discuss the actual payoffs to sources.

        Call it the “plausible deniability” defense.

        In trying to persuade the appellate judges to sustain the convictions, Antonia M. Apps, the prosecutor who won the convictions, referred at one point to the “sophistication” of the defendants. Judge Parker leapt on that, asking whether there was to be one rule for sophisticated traders and another for the unsophisticated.

        If the judges rule that those who trade on inside information can be convicted only if the government can prove they knew something that in fact is irrelevant to the traders — whether or not the leaker was paid off — there will be two such rules.

        People like the emergency room physician on Long Island, who made what the S.E.C. called “illicit gains of approximately $64,000,” will be penalized. People like Mr. Chiasson, whose hedge fund made $54 million by shorting Dell stock based on inside information, will not

        Sentiment: Buy

 
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