Matt Levine, Columnist

Insider-Trading Law Comes for More Golf Buddies

But the best golfer of the bunch was just an innocent bystander.

May 20, 2016 at 2:19 PM UTC

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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In 2014, the U.S. Court of Appeals for the Second Circuit decided an important insider trading case, U.S. v. Newman, ruling that a person who trades on tips from a corporate insider isn't guilty of insider trading unless (1) the insider got some sort of quid pro quo for the tips and (2) the "tippee" knew about the quid pro quo.1463689832002 So the Second Circuit overturned the convictions of two hedge fund managers who traded based on inside information, but who got it fourth-hand and had no idea where it came from or why. I wrote at the time:

I have since moderated my opinion somewhat,1463691653288 but Preet Bharara, the U.S. Attorney for the Southern District of New York, has not. He still seems to regret his inability to imprison people for trading based on hot tips from their golf buddies. A particularly galling Golf Buddy That Got Away is Phil Mickelson, the three-time Masters winner who is almost certainly the best golfer ever to be mentioned in connection with an insider trading case. Mentioned, but not charged: