A former partner at Fox Rothschild LLP was recently found guilty by a Pennsylvania federal jury for trading ahead of an insurance industry merger that the firm helped handle.
Evidence that Herbert Sudfeld violated internal policies by buying and selling stock of a publicly held client by walking in on a conversation about his firm's work on an imminent $760 million merger between Harleysville Group Inc. and Nationwide Mutual Insurance Co., along with testimony from Fox Rothschild attorneys and its managing partner, likely helped sway jurors.
Michael Dicke, co-chair of Fenwick’s securities enforcement group, offered his perspective to Law360 about the case. Prior to joining Fenwick, Dicke served as the Associate Regional Director for Enforcement in the SEC’s San Francisco regional office.
Dicke mentioned that establishing a violation of internal policy is one of the first steps the government will take when pursuing an insider trading case. Dicke told Law360, "You figure out if they broke any of those internal rules. While we know as lawyers that's not the same thing as breaking the law, that's always something we knew we could hammer and use as a very effective piece of evidence to show wrongdoing."
Dicke also talked to Law360 about the possibility that jurors could conflate internal policy breaches and criminal activity. He mentioned that jury instruction to some extent negated the risk of conflating policy breaches with criminal activity, but that instructions were often dense and there was no guarantee that it would be completely absorbed by jurors.
“There is absolutely that risk, but it is mitigated somewhat of course by the jury instructions and the role of the judge,” said Dicke.
The full article is available through the Law360 website.