SEC to Return Insider Trading Settlement Payment to Level Global

The U.S. Court of Appeals for the Second Circuit’s landmark decision in U.S. v. Newman has had many implications for prosecuting inside traders; it has led the DOJ and SEC to revisit, and in many instances vacate, a number of other recent insider trading settlements, convictions and guilty pleas. See our two part series on the “Supreme Court’s Denial of Cert in Newman”: Part One (Oct. 29, 2015); and Part Two (Nov. 5, 2015). In an unusual twist, Level Global Investors, L.P. (Level Global) – one of the casualties of the SEC’s multi-year battle to root out insider trading in the hedge fund space – sought to vacate its settlement with the SEC, even demanding that the SEC refund its settlement payment. The SEC did not oppose Level Global’s motions, and on January 26, 2016, the court vacated the settlement against Level Global and ordered the SEC to refund its settlement payment of approximately $21.5 million. This article provides a brief overview of the litigation, Level Global’s motion and the ensuing order. For another insider trading action arising out of the SEC investigation of Level Global, see “SEC’s Insider Trading Suit Against Former Level Global Trader Illustrates the Risk of Retaining a Former Public Company Employee as a Consultant” (Dec. 12, 2013).

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