Shapiro Arato Moves to Vacate Insider Trading Conviction Under Newman
On March 12, 2015, Shapiro Arato LLP filed a motion on behalf of our client, Michael Kimelman, to vacate his 2011 conviction and sentence for insider trading. The motion argues that Mr. Kimelman did not commit any crime and is actually innocent under the Second Circuit’s recent decision in United States v. Newman, 773 F.3d 438 (2d Cir. 2014). (Shapiro Arato successfully represented one of the appellants who was acquitted by the Second Circuit in Newman; additional information about our work on that appeal can be found here and here.).
In Newman, the Court held that a tippee cannot be criminally liable for trading on material nonpublic information unless he knew that the information was originally disclosed for a personal benefit, and it dismissed the indictment with prejudice on that basis (among others). The government alleged that Mr. Kimelman traded on the basis of information that he received as a remote tippee, several steps removed from the original sources, but there was no evidence that he had ever met the individuals who allegedly leaked the information or that he knew that anyone was paying them for information. The jury, however, was not instructed to make any finding about whether Mr. Kimelman knew that the sources had disclosed the information for a personal benefit. Mr. Kimelman’s motion argues that his conviction and sentence should be vacated because the jury instructions were fatally flawed under Newman and because there was no evidence that Mr. Kimelman had the required knowledge. As a result, he was wrongfully convicted of conduct that is not a crime.
Alexandra Shapiro and Daniel O’Neill, who both also worked on the Newman appeal, drafted the motion, which can be found here.
The following is a sample of press coverage of Mr. Kimelman’s motion:
Another Convicted Insider Trader Challenges Ruling Based On Newman Decision
Accused insider trader, freed from prison, seeks to void conviction