Judge Ends SEC Insider-Trading Suit Against Newman, Chiasson

Updated on
  • SEC doesn't fight ex-fund managers' bid to throw out case
  • Dismissal follows appeals court victory tossing convictions

A judge dismissed an insider-trading lawsuit against two former fund managers after the U.S. Securities and Exchange Commission said it didn’t oppose the move.

Todd Newman, formerly of Diamondback Capital Management, and Anthony Chiasson, co-founder of Level Global Investors, won reversal of their criminal convictions in December in an appeals court ruling that makes it more difficult for prosecutors to prove insider trading. U.S. District Judge Shira Scheindlin in Manhattan Wednesday ruled the SEC’s parallel civil case should also be thrown out.

The SEC said in an Oct. 16 letter to the judge that while it wouldn’t contest dismissal of its suit, it doesn’t agrees with all of the former fund managers’ legal arguments.

“Mr. Chiasson is pleased that the SEC recognized that it could no longer pursue this doctrinally novel insider-trading case,” his lawyer, Gregory Morvillo, said in an e-mailed statement. “After successfully discrediting the legal theory advanced by the government, it is clear Anthony Chiasson acted with the utmost integrity in his role as co-founder and leader of Level Global’s most profitable and consistent business team.”

The case is Securities and Exchange Commission v. Adondakis, 12-cv-00409, U.S. District Court, Southern District of New York (Manhattan).