A federal jury in the District of Massachusetts recently convicted Eric McPhail of securities fraud — one of the first criminal insider trading convictions since the US Court of Appeals for the Second Circuit’s decision in United States v. Newman.
The allegations arose out of information Mr. McPhail received from a close friend— an executive at American Superconductor Corporation (AMSC) — who was a member of the same country club and went on golf and other trips together. This information allegedly included nonpublic information about AMSC’s business activities. According to the government, Mr. McPhail then gave this information to other friends of his, who made trades based on the information and earned more than $500,000. Mr. McPhail is alleged to have tipped those friends in return for golf tournament fees and meals, and to have told one of them after a tip that he “like[s] Pinot Noir and love[s] steak…looking forward to getting paid back.”