Ex-Apple Lawyer Stuck With ‘Classical’ Inside Trading Indictment

A former Apple Inc. attorney’s alleged conduct represents “a ‘classical’ case of insider trading,” so his indictment for trading on nonpublic information stands, a New Jersey federal judge said.

Gene Levoff, who worked for Apple from 2008 to 2018, argued that the indictment should be tossed because there’s “no statute that explicitly criminalizes insider trading,” the U.S. District Court for the District of New Jersey said.

But the Securities and Exchange Commission “did promulgate a rule barring classical insider trading,” and Levoff’s “alleged conduct fits squarely within” it, Judge William J. Martini said Wednesday.

Levoff, who earned his J.D. from Stanford Law School, allegedly ran an insider trading scheme from 2011 to 2016 in which he traded Apple securities based on information he learned as a member of the company’s Disclosure Committee before it became public. He purportedly realized profits of $227,000 and avoided losses of $377,000.

Prosecutors called the argument a “Hail Mary” and urged the court to reject Levoff’s dismissal bid in May.

Levoff incorrectly characterized insider trading as a federal common-law crime, Martini said. Congress has “repeatedly ratified interpretations of” the relevant provision of securities law “to include Supreme Court precedent on insider trading,” the opinion said.

“The fact that judicial precedents help define the contours of what does, and does not, fall within the statutory and regulatory terms is not unique to insider trading,” Martini said. “Instead, it is completely typical.”

Levoff also argued that the indictment goes “beyond the scope of criminal law” because the SEC’s insider trading rules don’t fit within the authority Congress delegated to the agency. “He is incorrect,” the opinion said.

Congress gave the SEC the power to regulate toward fair and honest securities markets, and the agency promulgated a rule banning manipulative and deceptive devices. “Though the term ‘insider trading’ is not included, the regulations outline the nature of the illegal behavior; trading based on material, nonpublic information,” Martini said. “Levoff is accused of participating in this exact behavior.”

Marino, Tortorella & Boyle PC represented Levoff.

The case is United States v. Levoff, D.N.J., No. 19-cr-00780, motion to dismiss indictment denied 8/12/20.