United States v. Chow, No. 19-0325 (2d Cir. 2021)Annotate this Case
The Second Circuit affirmed the district court's amended judgment following defendant's conviction for one count of conspiracy to commit securities fraud in violation of 18 U.S.C. 371, one count of securities fraud in violation of 18 U.S.C. 1348 and 2, and six counts of insider trading in violation of 15 U.S.C. 78j(b) and 78ff, 17 C.F.R. 240.10b-5 and 10b5-2, and 18 U.S.C. 2.
In viewing the evidence in the light most favorable to the government, the court concluded that defendant's execution of confidentiality agreements with a company whose acquisition he was exploring was sufficient to subject him to prohibitions against insider trading. In this case, there is no dispute that defendant signed two nondisclosure agreements (NDAs) with the company; that in both NDAs, each party agreed not to disclose any confidential or proprietary information of the other; and that the fact that the parties' exploration and evaluation of the potential acquisition of the company was explicitly classified as "Proprietary Information" that was to remain "Confidential." Therefore, the evidence was sufficient to support inferences that defendant knowingly and intentionally breached his duty of confidentiality by disclosing material nonpublic information as to the prospects for a merger agreement between the company and his fund, intending for the third party to make trades based on that information. Furthermore, defendant's challenges to his convictions for securities fraud and conspiracy to commit such fraud also fail. Finally, venue was proper in the Southern District of New York.