Hedge Fund Manager's Insider Trading Trial Continues
The prosecution continues its case Thursday against a Menlo Park hedge fund manager, as part of a federal crackdown on insider trading.
Prosecutors in New York are questioning former research consultants who say they provided illicit information to Doug Whitman of Whitman Capital.
Although it’s not the biggest case, scholars say it tests current legal boundaries. A U.S. Supreme Court precedent protects some uses of insider information, depending on whether there's a breach of fiduciary responsibility.
“It is very important because it tries to expand the reach of insider trading cases,” says Stavros Gadinis, assistant professor of law at UC Berkeley. “And it’s trying to also expand the scope into an area that has so far been kind of a gray area.”
Whitman’s lawyers say there’s no proof he knew the information he got was illegal, and he provided no payoffs to his sources.