The Second Circuit has made it easier for federal prosecutors to bring insider-trading cases. In United States v. Blaszczak, decided on December 30, 2019, the Court held that the personal-benefit test—a judge-made rule that the government must prove a tipper expected to receive some benefit in exchange for disclosing confidential information—does not apply to insider‑trading prosecutions brought under certain federal criminal fraud statutes. The Blaszczak decision thus opens the door to insider-trading prosecutions where a “personal benefit” would be difficult or impossible to prove. The decision contained another notable holding: a government agency’s confidential regulatory information can constitute “property,” such that its misappropriation can be the basis for an insider-trading prosecution under the criminal fraud statutes. This holding—which triggered a dissent by one of the panel members—could facilitate insider‑trading prosecutions involving so-called “political intelligence” consultants, like Blaszczak, who collect and analyze information concerning government agency activity that can be used in making securities trading decisions.
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