Michael Feldberg Quoted in Law360 on Insider Trading Defense Strategy

Partner Michael Feldberg, a former federal prosecutor in the Southern District of New York, was quoted in Law360's article, "Insider Trading Defense May Draw On 'Varsity Blues' Playbook," offering his perspective on how defendants are likely to fight one of the most high-profile white collar cases to come out of Boston since the college admissions scandal.

The case centers on allegations that lawyers at major firms misappropriated confidential deal information and tipped off others about pending mergers and acquisitions. A total of 30 defendants were charged across two indictments, with prosecutors claiming the scheme touched nearly 30 M&A deals shepherded by some of the country's largest firms.

Drawing on his experience as a prosecutor, Michael explained that one of the most traditional defenses in insider trading matters is that the trades were made on information already in the public domain. He expects the defense to scour every available source for signs that the deals had generated public buzz before they became official.

 "Maybe there was a blog post that said some transaction is likely to happen, or there is public speculation or an analyst wrote a report that said 'it's likely that there will be a transaction involving XYZ company,'" Feldberg said. "The tippee can say, 'That was why I traded. It's public information, anyone could have had it.'"

Because prosecutors allege that the two lead defendants received kickbacks rather than trading themselves, Michael noted they could make a similar argument that they did nothing more than communicate public information.

 "Let's say there is a lawyer working on a deal at a firm, and he doesn't say to his friends, 'I am working on a deal.' Instead he says, 'You know, you ought to look at a blog post on XYZ corporation,'" Feldberg said. "The lawyer is likely to argue, 'All I did is point him to public information.' The prosecution is likely to argue, 'Yeah, you did it knowing that a transaction was being worked on by lawyers.'"

With prosecutors pointing to burner phones, encrypted applications, and coded language, Michael also anticipates a lengthy fight over what the defendants actually communicated to one another. He expects an "extended back-and-forth" about what was said.

"If the tipping was done by chat or direct message, it may be relatively easy to discern what exactly was said," he said. "But it may require some interpretation. Maybe there is shorthand, maybe there is code, maybe it's a couple of friends chatting with each other."

Read the full Law360 article here (note: subscriber access only).