United States v. Contorinis
2012 U.S. App. LEXIS 17376
| 2d Cir. | 2012Background
- Contorinis convicted by jury in SDNY for conspiracy to commit securities fraud and insider trading; district court ordered forfeiture of $12.65 million.
- Stephanou, UBS insider, provided confidential information to multiple tippees, including Contorinis; Contorinis traded ABS stock repeatedly based on those tips.
- Evidence included contemporaneous trades by other tippees; defense objected under Rule 403.
- Contorinis challenged the jury instruction defining material, nonpublic information as inadequate.
- Court affirms conviction, vacates the forfeiture order, and remands for proper forfeiture calculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jury instruction on material nonpublic information sufficient? | Contorinis argues instruction failed to convey materiality/nonpublic nuances. | Contorinis contends instruction misstates law; requests omitted language about obvious info not material. | Instruction adequate; standard conveyed material/nonpublic concepts. |
| Admission of other-tippee trades under Rule 403? | Prosecution evidence of other trades probative of insider-sharing; not unduly prejudicial. | Evidence risks unfair prejudice; disproportionate to issue. | Admission within district court’s broad discretion; potential limiting instruction not requested. |
| Forfeiture amount properly calculated? | Proceeds from all profits belonging to the Fund, attributable to Contorinis’ acts, may be forfeited. | Cannot forfeit funds never possessed or controlled by Contorinis or co-conspirators. | District court erred; forfeiture vacated and remanded to determine proper amount. |
Key Cases Cited
- Dirks v. SEC, 463 U.S. 646 (U.S. 1983) (duty to insiders and reliance on material nonpublic information)
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (materiality in securities law)
- Cusimano, 123 F.3d 83 (2d Cir. 1997) (materiality and nonpublic information concepts)
- Elkind v. Liggett & Myers, Inc., 635 F.2d 156 (2d Cir. 1980) (upholding tailored inquiries into tip materiality)
- Mayhew, 121 F.3d 44 (2d Cir. 1997) (reliability of insider information affects materiality)
- Abelis v. United States, 146 F.3d 73 (2d Cir. 1998) (burden on defendant to propose accurate instruction)
- McDermott v. United States, 245 F.3d 133 (2d Cir. 2001) (Rule 403 and evidentiary discretion)
- U.S. v. Uddin, 551 F.3d 176 (2d Cir. 2009) (definition of proceeds for forfeiture)
- Kalish, 626 F.3d 165 (2d Cir. 2010) (forfeiture based on offender’s gain)
- Fruchter, 411 F.3d 377 (2d Cir. 2005) (co-conspirator foreseeability in forfeiture)
- Hamilton v. Atlas Turner, Inc., 197 F.3d 58 (2d Cir. 1999) (forfeiture principles and civil/criminal distinctions)