A former hedge fund portfolio manager, currently serving five years in prison for insider trading, was a "faithless servant" under New York law. See Morgan Stanley v. Skowron, 2013 WL 351193, (S.D.N.Y. 12/19/13). As such, the defendant must repay to his prior firm the entire $31,067,356.76 in compensation he received during the period of the fraud.
The court concluded that he was a faithless servant under even the more stringent of two New York standards. The court stated the insider trading abused his position and privileges. The court also said that his conduct exposed his employer to government investigations, direct financial losses, and reputation damage.
In sum, the court rejected any effort to insulate the bad actor or from holding him unaccountable.
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