Ex-Apple Lawyer Calls Insider Charges Unconstitutional
Ex-Apple Lawyer Calls Insider-Trading Charges Unconstitutional
(Bloomberg) --
A former Apple Inc. in-house attorney says his insider-trading prosecution is unconstitutional because no specific criminal law bars such conduct.
Gene Levoff on Monday asked a New Jersey federal judge to dismiss his 2019 indictment in which prosecutors accused him of repeatedly trading on information he gleaned about Apple’s revenue and earnings dating back to 2011.
“The definition of insider trading is wholly judge-made: Every element of the crime and the scope of regulated individuals subject to it was divined by judges, not elected legislators,” Levoff’s lawyer Kevin Marino said in a filing. “This alone renders the criminal prosecution of insider trading unconstitutional.”
Courts for years have upheld criminal indictments in insider-trading cases brought by prosecutors. But Marino argued that despite numerous opportunities to examine the constitutionality of a federal common law of insider trading, courts have refused to do so.
That argument isn’t likely to hold up, said Miriam Baer, a professor at Brooklyn Law School. The Supreme Court dealt with an insider-trading case as recently as 2016. That case was on different grounds, Baer said, “but if they thought the way insider trading law has been developed was unconstitutional, you’d think this would have come out by now.”
Baer said it would be “good policy” for Congress to draft laws that specifically prohibit insider trading. “But urging Congress to enact new statutes is a far cry from arguing the status quo is unconstitutional.”
The U.S. Attorney’s Office in New Jersey declined to comment on Levoff’s filing.
Levoff has been charged under the U.S. Securities Exchange Act that prohibits “manipulative or deceptive devices or contrivances” but doesn’t mention insider trading. He’s also charged with wire fraud.
Levoff’s trades based on the inside information led to about $227,000 in profits, while allowing him to avoid $377,000 of losses, according to prosecutors. Levoff was Apple’s senior director of corporate law when the company fired him in September 2018 after placing him on leave two months earlier.
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