Judge John Walker
From 2006 until 2008 Jiau operated an insider trading scheme involving a pair of tippers working at publicly traded companies, and a pair of hedge fund manager tippees. Jiau’s scheme was to obtain earnings data from her tippers’ companies and convey that data to her tippees before the companies publicly released their quarterly financial results. Jiau promised the tippers inside information for their own trading and also engaged in her own trading. Convicted of one count of insider trading as well as conspiring to engage in insider trading. Jiau was sentenced to 48 months in prison and ordered to forfeit $3.118 million. Second Circuit affirmed conviction and sentence, but vacated and remanded the forfeiture determination. The circuit agreed with the district court that telephone conversations with her coconspirator tippee hedge fund managers—recorded in the ordinary course of business—were admissible under 18 USC §2510(5)(a)(i), as well as under §2511(2)(d). Further, evidence of nonpecuniary benefits conferred on Jiau’s insider-tippers—including gifts, restaurant meals, and an invitation to join Jiau’s investment club—proved the tippers’ personal benefit form the insider trading conspiracy.
