Disbarred Ex-BigLaw Associate Wins Pro Se Appeal of $600K Fine in Insider-Trading Case
After pleading guilty in 2007 to an insider-trading conspiracy, a former associate at Thacher Proffitt & Wood lost a parallel civil case brought by the U.S. Securities and Exchange Commission on summary judgment.
However, Amir Rosenthal apparently spent at least some of his 33-month sentence to good purpose in the prison law library before being released early last year. Representing himself pro se, he successfully argued before the New York City-based 2nd U.S. Circuit Court of Appeals that a $600,000 civil penalty imposed in the SEC case should be overturned, the New York Law Journal reports in an article reprinted in New York Lawyer (reg. req.).
Because he made no profit and avoided no loss in the scheme, which allegedly was operated by his father and also involved his brother, the relevant provisions of the Exchange Act—§21(d)(3) and §21A(a)(2)—did not permit a penalty to be imposed, Rosenthal successfully argued.
The SEC contended, to no avail, that the two provisions provided alternative schemes for imposing a fine. However, the three-judge appellate panel said §21(d)(3) does not authorize fines in insider-trading cases, the article explains, and, under §21A, the amount of the fine is to be no more than three times the amount of the illegal profit.
Adopting the SEC’s argument, said Judge Robert Katzmann in the court’s written opinion (PDF), would lead to an “absurd” situation in which “a violator who made no profit [would] face a penalty of up to $120,000 per violation … while a violator who profited by $1,000 would be exposed to a penalty of no more than $3,000.”
Earlier coverage:
ABAJournal.com: “N.Y. Lawyer Sentenced”
