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.”
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The US District Court for the Northern District of California recently dismissed with prejudice a securities fraud class action against Electronic Arts, Inc. (EA) and its officers, holding that the plaintiffs’ amended complaint failed to identify any actionable misstatements by the defendants. The court had dismissed the plaintiffs’ prior complaint in 2014 with leave to amend.
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The US District Court for the Eastern District of Pennsylvania recently denied a motion to dismiss filed by Urban Outfitters, Inc. and its senior executives in a securities fraud class action. The court found that the plaintiffs’ claims were sufficiently particularized under the heightened pleading standard of the Private Securities Litigation Reform Act of 1995 (PSLRA).
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The US District Court for the Southern District of New York recently denied two defendants’ motion to dismiss a Securities and Exchange Commission complaint alleging that they committed insider trading, holding that the complaint adequately pleaded a receipt of personal benefit to the tipper as required by the US Court of Appeals for the Second Circuit’s recent decision in U.S. v. Newman, 773 F.3d 438 (2d Cir. 2014).
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The United States Sentencing Commission recently adopted new guidelines for sentencing in cases involving fraud and economic crimes, seeking to better account for the actual harm to victims, individual culpability and the offender’s intent. The revised guidelines will be submitted to Congress on May 1 and will go into effect November 1 unless Congress disapproves of the amendments.
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