It could be the perfect crime.
A federal appeals court on Wednesday ruled that Wall Street traders can’t be convicted of insider trading by merely possessing and trading on privileged info — they have to know that the original tipster benefited from the leak.
But on Wall Street, inside info generally travels a circuitous route from insider to end user. And there is little way a trader like Anthony Chiasson or Todd Newman would know if an insider — three or four people up the food chain — benefited.
“Insider trading is now unprosecutable against those who insulate themselves by going through a middleman,” securities lawyer Mark Rifkin told The Post on Wednesday.
The opinion has legal minds scratching their heads.
“What the court seems to say here is there has to be a money trail for there to be a violation of securities laws,” said Rifkin.
There is no law against insider trading, just a general prohibition against fraud and manipulation that has been interpreted through the courts.
And if most investors expect US securities laws to promote transparency and a level playing field, this case will make them think again.
“Nothing in the law requires a symmetry of information in the nation’s securities markets,” the appellate judges wrote.
Said Rifkin: “It’s a bad day for investors and a bad day for the capital markets.”