SEC v. Christopher Clark, No. 22-1157 (4th Cir. 2023)
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The Securities and Exchange Commission sued Defendant for trading Corporate Executive Board, Inc. (“CEB”) stock using inside information. The Commission alleged that Defendant aggressively traded CEB stock after he received inside information about a potential merger from co-Defendant, Defendant’s brother-in-law and CEB’s Corporate Controller. At trial, Defendant moved for judgment as a matter of law under Rule 50(a)1 at the conclusion of the Commission’s case. He argued the Commission failed to present evidence that co-Defendant possessed inside information about the merger at the time Defendant began the relevant trading. And if co-Defendant had no such information at that time, Defendant contended, co-Defendant could not have passed it on to Defendant The district court agreed and granted judgment for Defendant.
The Fourth Circuit reversed and remanded. The court explained the right to a trial by jury is enshrined by the Seventh Amendment. And the Federal Rules of Civil Procedure require that juries, not judges, decide cases so long as there is evidence from which a reasonable decision can be made. Here, evidence existed from which a reasonable jury could infer that Defendant engaged in prohibited insider trading beginning on December 9, 2016.
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