I can't claim to have read every article today about the Supreme Court's denial of cert yesterday in the Newman case, but I have read a bunch of them. As examples, there is the New York Times article, the New York Post article, and one in the New York Law Journal. All of these (as well as others I have read) pitch the story as whether the prosecution of insider trading is now going to be "harder" or "more difficult." None of these ever mentions the most important issue, which to my mind is whether Congress has ever passed a law making non-insider insider trading a crime. Damn right it should be "more difficult" for prosecutors to put people in jail for something that no law passed by Congress says is a crime. How about making it "impossible"?
For an opinion coming at least close to the mark, there is the Wall Street Journal editorial page. They almost (but not quite) say that there never was a statute making this conduct illegal, although not quite in those words:
U.S. Attorney Preet Bharara['s . . .] prosecutions of Wall Street have pushed aggressive interpretations of insider-trading law.
For the other news organizations, although it's no excuse, perhaps they were led astray by the fact that Mr. Bharara, undoubtedly panicked by the looming damage to his reputation, held a conference call for reporters yesterday afternoon to pitch his spin of the story. Here's a quote of Bharara's spin from the New York Post:
"The [Todd] Newman decision goes some way to creating an obvious roadmap for unscrupulous investors," Bharara said Monday. "You can think of this as a potential bonanza for friends and family of rich people with access to material non-public information."
For Bharara, it's all about stirring up anger and jealousy over income inequality, and he will never address the issue of whether it is acceptable conduct for a prosecutor to seek to put somebody in jail for something that no statute says is a crime. Hey, these traders are "rich" and in my personal opinion they are "unscrupulous." Therefore I will turn the full resources of the federal government on them to put them in jail whether or not they violated any actual law.
Still, even Bharara's outrageous statement does not support the Post's headline, which is "Roadmap to Steal." How exactly is non-insider insider trading "stealing"? Even Bharara did not claim that. At the Times, the lede is:
The Supreme Court on Monday refused to review an appeals court decision that made it harder to prosecute insider trading and threatens to undermine a number of convictions.
In the New York Law Journal article, the lede is:
Southern District U.S. Attorney Preet Bharara has lost his last chance to reverse a decision that makes it more difficult for prosecutors to win convictions in insider trading cases.
There is no recognition in either the Times or Law Journal articles that the so-called "insider trading" that will now be "harder" or "more difficult" to prosecute is actually trading by people who are not insiders at all; nor is there any recognition that the statute under which these people were convicted doesn't mention "insider trading," let alone insider trading by non-insiders, and only prohibits "any manipulative or deceptive device or contrivance." How again was this conduct supposed to by "manipulative"? And who was supposedly "deceived," and by what false statement? They just don't find these questions at all interesting.
As reported by the Post, Bharara claimed in his conference call that after the fallout from this decision he would still have a conviction rate of 90 percent. I don't know how he's coming up with that, but I'll believe that when I see it. Most likely he will just never mention the subject again and hope that nobody is able to put together a count. But there is one area where we can put together a count, and that is of Bharara's convictions for insider trading after trial. In 2014, Bharara claimed six insider trading convictions after trial without a loss. Then in July 2014 Rengan Rajaratnam was acquitted by a jury. Now Newman and Chiasson have been cleared. The conviction of Michael Steinberg is totally undermined by the Newman/Chiasson reversal (Steinberg was in the same information chain as Newman and Chiasson, but one more level removed from the original sources). That looks to me like the conviction rate will shortly be 3 out of 7, or 42.8% -- and that's assuming that all of the remaining three survive. Not very impressive if you ask me. And I'm definitely not impressed by convictions through strings of guilty pleas, when the prosecutors present people with cases that take many millions of dollars to even attempt to defend, and they forum shop for favorable judges who are known in advance to buy into legal theories not supported by the underlying statute, meaning that to defend successfully you must first live through a trial and suffer a wrongful conviction and then appeal for years, and they threaten you with a sentence three times as long if you go to trial and lose than if you take the guilty plea. Sorry, Mr. Bharara, but your real conviction rate is 42.8%.
Really, wouldn't life be just so much more perfect and fair if the federal prosecutors could make up the criminal law as they go along, based on their own personal sense of what is "unscrupulous"?