The general principles of insider trading and tipper-tippee liability are fairly well-established. It is clear that for an insider to be held liable for tipping material non-public information, the insider must breach a fiduciary duty to hold that information in confidence and must receive some personal benefit from the tip. It is also clear that the recipient of the inside information – the tippee – must know that the tipper violated a fiduciary duty in providing that information. What has been unclear is what the tippee needed to know, if anything, about the benefit to the tipper. The U.S. Court of Appeals for the Second Circuit recently issued an important decision throwing out the convictions of Anthony Chiasson and Todd Newman, who were portfolio managers at Level Global Investors and Diamondback Capital Management, respectively. The decision has direct and potentially profound implications for the research and investment activities of hedge fund managers. This article provides a thorough discussion of the factual background and legal analysis in the decision. For coverage of the civil enforcement actions relating to the alleged insider trading, see “SEC Files Civil Insider Trading Complaint Against Diamondback Capital Management, Level Global Investors and Seven Individuals Based on Trading in Dell and Nvidia; Diamondback Strikes Non-Prosecution Deal with U.S. Department of Justice and Settles with the SEC for $9 Million,” Hedge Fund Law Report, Vol. 5, No. 4 (Jan. 26, 2012); and “SEC’s Insider Trading Suit against Former Level Global Trader Illustrates the Risk of Retaining a Former Public Company Employee as a Consultant,” Hedge Fund Law Report, Vol. 6, No. 47 (Dec. 12, 2013).