2013 witnessed several long-anticipated developments in the world of insider trading, punctuating another year of aggressive enforcement in the United States and abroad. After years of pursuit, DOJ indicted SAC Capital Advisors LP, and secured a guilty plea pursuant to which the hedge fund agreed to pay a combined record-breaking penalty of $1.8 billion to DOJ and the SEC. In an earlier victory, the SEC also secured against Rajat Gupta a hefty $13.9 million penalty – the statutory maximum of three times the gains made on tips received from him. In contrast, 2013 also saw Mark Cuban triumph in his nearly decade-long war with the SEC.

More broadly, insider trading enforcement in 2013 continued to follow many of the trends of years past identified in our prior Reviews. Most notably, defendants who had entered into cooperation agreements with the government continued to receive the tangible benefits of little to no prison time (and reduced fines). The Southern District of New York's unbeaten streak in criminal insider trading trials remained intact with the mid-December conviction of SAC's Michael Steinberg.

The U.S. Court of Appeals for the Second Circuit will undoubtedly remain a key focus of 2014 as it once again addresses tipper and tippee liability in the pending appeals of the insider trading convictions of Rajat Gupta, Todd Newman and Anthony Chiasson. Looking ahead, we may also see increasing efforts to limit high-frequency traders' preferential access to publicly disseminated information – a practice New York Attorney General Eric Schneiderman has branded "Insider Trading 2.0."

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Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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