First Circuit Affirms Another Insider-Trading Conviction

The U.S. Court of Appeals for the First Circuit yesterday affirmed another conviction in a pair of appeals arising from insider-trading prosecutions. The decision in United States v. McPhail confirms that, under current First Circuit precedent, a tipper of inside information can receive "personal benefits" based on expectations of a free dinner, wine, and a massage parlor, on "kickbacks" from a tippee-friend's trades, and on his tippee-friends' "general gratitude for his largesse."

Factual Background

The McPhail case involved allegedly material, nonpublic information that a corporate executive had provided to McPhail. The executive and McPhail had allegedly had a close relationship and a history, pattern, and practice of sharing professional and personal confidences so that the executive purportedly had reason to believe that McPhail would not disclose the confidences. McPhail did not trade on the information from the executive, but he allegedly told several