st legitimate open market trades that are executed at prevailing market prices do not communicate in accurate information to the market and therefore cannot constitute market manipulation as a matter of law and  government failed to present any part of them and that scheme no your honor which is to say that market manipulation focuses on the relevant market activity there is no disagreement between us and the government about th standard that the supreme court has a stablished for market manipulation definition is whether or not the activity on the market is quote designed to deceive or to fog investors by controlling or artificially affecting the price of secur think critical fact for purposes of market manipulation is that there has to be some artificial or inaccurate information that is communicated to the market either by representation or by the activity in question and the problem with the government theory in this case is that the government does not before this court attempt to make any argument that these were somehow sham trades like wash sales or match trades and the like the government's theory and said seems to be a theory of pri inflation or maintenance but the problem is that the government may no effort to present any evidence at trial regarding the price movements to actually show that the price would have been lower absent this activity and that artificial information was communicated to the market and indeed argument address only the securities fraud no i think it goes to wire fraud you can't narrow wire fraud well it goes to wire fraud judge loken because the charge scheme for both the securities fraud and the wire fraud was market manipulation and if you take a look at the charge scheme now you're talking about the indictment language where the government opening or its closing well i would go right actually to the jury instructions such look and pages thirty two and thirty four of the addendum and with regard to both the scheme to defraud for purposes of the wire fraud statute and the manipulative or deceptive device for purposes of securities fraud it's quite clear that the relevant scheme was this the market manipulation in particular the manipulation of the market during the st twenty days of trading and so just look and if you look at i just don't see how you can how you can constrict wired the broader crime of wire fraud i don't think we are in any way constricting the definition of wire fraud my point is simply that the relevant scheme that was instructed here in this game manipulate the market and i don't read the government to be suggesting otherwise i think the government concedes that it has to establish market manipulation and because the government makes no effort to suggest that there were sham trades or anything like that it has to fall back on a theory of price inflation or maintenance but again the problem is that the government made no expert even through its it made no effort even through its expert to present evidence with regard to these price movements and the uncontroverted evidence indicated that these trades were taking place on the open market they were taking place at market prices the vast majority of sure metes purchases which is really the conduct that could potentially inflate the price took place out or actually below the price of  again the government has to show something more than that and i would just say sorry judge tell you what looked like you had a question a lot of what i say one other thing on this i think that the danger with the government's theory and i think the danger with which this court should be very concerned is the danger that if you adopt a standard that suggests that merely encouraging someone to purchase stock constitutes market manipulation that would allow the government to prosecute no end of corporate officers and others totality of facts and circumstances was a manipulator a scheme that had the effect of market manipulation i think you have to say that judge loken because tellingly the government we may have to respect the grade of disagree on this but i think that when you look at the government's allegations with regard to what constitutes the market manipulation leaving aside all of its allegations concerning the so called bonus may not review jury verdicts fretting over the government's allegations or even its arguments but what you should fre about i would respect most uncertain well and what you should find the case that your side correct you should fret about that you should also fret about whether the factual allegations constitute market manipulation whether they establish materiality as a matter of law name correctly or he said that this these were not purchases that made financial sense for me or for my clients and i was directed to do that by your client doesn't no different than if a corporate executive say called up a friend and said look i really it would be great if you would invest in my company is that the testimony is the testimony oh just hey here's a great stock why don't you buy some i understood and maybe i you can correct me if i'm wrong but i thought the testimony was a little stronger than that that it was a direction to do something that he was not going to otherwise yeah well even if it's a direction i still think that the fundamental point is that what he did was to trans and of course when you're determining whether this market manipulation you look at that from the perspective of the market is artificial information being communicated and there's no dispute gifts and they do this there's gifts in effect to the inside of a coach if i have my players right and there's gifts of stock to make it go what about that so on the sell side it is certainly true that mr hoskins obtained shares as a finder's opportunity as part of the reverse merger the government does not argue that there is anything improper with shares being given to friends and family as part of a reverse merger but the transactions on the south side if anything would have had the effect of depressing prices not increasing prices there is no suggestion as this case comes to the court that there were somehow match trades these trades took place on the open market and to a trial it opened mar i'm sorry well go i was going to get back to shore meadows testimony because i think that the other aspect of  twelve dollars but the shares were being transacted on an open market dakota plains was not google it was not being traded in the same volume as a massive public company but it was being traded over the counter with a market maker and so there is no way that somebody could come in and purchase above the market price it would be like my telling a stock broker purchase google shares at a one thousand dollars if google is actually trading at five hundred dollars the trader maintains part judge looking which is that i think it has to be something more than that for the reason that i suggested to judge kelly in other words merely encouraging someone to buy can't be enough because of course as a matter of supply and demand any purchase potentially has the price of the  effect of raising the price above what it otherwise would have been and that's just supply and demand the government has to show something more than that again that inaccurate artificial information is being communicated to the market and again i don't think that the government has a case that stands for the proposition that merely encouraging someone to purchase when you have a profit motive would be improper because if that were true any c e o who had stock options or whose compensation was tied to the stock price could be engaged in criminal securities fraud simply for encouraging a friend to invest in a company in which he or she only said if you combine that with his actions at the beginning with hoskins where he different light on on those purchases no because i think that the conduct on the selling side with regard to mr hoskins can't be market manipulation both for the reason that i gave judgment and because it would have the effect of depressing the price but but it's hard to see why that actually it makes sense if the counterparty has no idea with whom he or she is trading now so why why not do it yourself  seven testified of course the jury convicted him that he testified that he was providing this opportunity to his friend but i think the critical point is that to the extent the government's theory is that there was something nefarious about this transaction they can't link that i'm sorry i'm not i'm not following up on what right if you have no i just was trying to say is house testimony and the text and his testimony enough to solve it and really make it both a fraudulent scheme and a coverup well i don't think so and if anything the fact that house himself testified in terms of this constitutes manipulation is of course are grounds for arguing for at a minimum a new trial here because the supreme court has indicated that manipulation is a term of art and i don't think that there can be any issue of metairie our submission is quite simple the government presented no evidence that any misstatement or omission was material and critically this case went to the jury on the pages that i cited earlier on the theory that there has to be both market think aware of the fact that if it's proceeding on an emissions theory it has to show a duty you know to the market or to defend it controls half the shares are we close to materiality right off the bat no i don't think so because this is not simply a case in which the jury was charged true market manipulation the government has to identify either an omission which requires both materiality and a duty or a affirmative misrepresentation the government now seems to proceed on the misrepresentation theory but none of the misrepresentations that there referring to have anything to do with the market at all and the government made no effort even when it was examining customers who purchase shares to establish the element of materiality and this court has made quite clear that the government cannot rely on inference or speculation to establish materiality and the last thing i would say on the issue of restitution which is obviously independently a very important issue to my client is that the restitution award here cannot stand because under the n p r a restitution has to flow from the criminal conduct that occurred in the course of the fraud you want scheme the supreme court as indicated in the human cases criminal conduct has to be the crime of conviction and it is quite clear that the jury convicted here on the basis of this scheme of market manipulation and notwithstanding the government's late breaking efforts to argue that the inclusion of the so called bonus provision was part of the fraudulent scheme the court has to look at the crime of conviction and this case the defendant secretly rigged the price of dakota plain stock in order to inflate and prop up the stock price and trigger a bonus payment fana didn't raise the price i mean let's stick with market reality here he he attempted to get to mit to prop it up in maine maybe the effect of his access at actions but i mean you start out with what to me is a great misstatement suggesting that this wasn't a publicly traded defendant did actually increase the price of the stock and he certainly maintained it if you look at the trading records if you look at what happened mr hoskins the defendant nominee was the largest single seller of stock during the st twenty days of trading  also controlled over half the float of the stock half the freely trading shares and the government presented asked at expert testimony how this pratima an opportunity to have a massive effect on the price of the stock mr shaw matta the defendant buyer the stock broker in minneapolis northland securities was the largest single buyer of stock and we know that when he purchased stock at or near twelve dollars a share he didn't do so because that was the prevailing market price you know that because he testified that well why doesn't someone who's just a super short trader fall under your theory a super short short short trading is i do ok so some i just decide short trade short trade short trade short trade short trade short trade i think it's covered by your theory there's no deception there to buy a twelve dollars a share he didn't tell mr schmidt a to buy at the really market price he told them i wanted to trade at twelve dollars a share and mr traumatic testified that when he purchased stock of the limit order typically does that's right help someone redeem prop up the price of the stock by matching orders and that's what happened it's clear mr hoskins owed fifty thousand dollars shares of dakota plain stock mr schmidt his order on the nd day trading was to buy fifty thousand dollars shares at twelve dollars that's trial and after conviction we view it in the light most favorable to the verdict and both the jury who heard the evidence and the district court who affirmed the conviction and rule twenty nine dollars and concluded himself personally that he had no doubt that the defendant had manipulated the price of the stock and committed fraud viewed all of this as fraudulent and manipulation i would note more if you look at the stock price after the twenty days what happened is it's after the twenty days trading effectively stop mr hoskins started slowly dropping his price and selling the stock for lower and lower in the price dropped over time mr schmidt of stop buying altogether well that tends to happen particularly after an i p o bump and all of a sudden reality sets in or the st piece of bad news comes in and the start top stock reaction accordingly and so the people that were selling at the top want to keep selling is a goes down so they get out  that's your just i know there's more to the case in the evidence but the way you describe fraud is scary you don't i don't think it is i don't think if you look at what mr gilbertson did and how he did it how  you i think a public buyer an investor of any sophistication who who is aware of the bonus arrangement in the st days of trading would assume that there are insiders who would like who would like to bring the monas home so to speak shares and it's important to note that on the day that he proposed the reverse merger october rd of two thousand and eleven mr gilbert from sin proposed the reverse merger agreement and he amended the terms of the the bonus provision to apply matches t o but also to reverse merger and he proposed that to a new board of directors in their very st meeting that same day he makes and they have proved it right they did approve it did approve it that very same day this is what they didn't approve judge ben that great lengths to hide it he arranged for his friend in polo coach mr hoskins to open up an account at a brokerage in salt lake city he lied on those account opening documents he arranged he wired mr hoskins money dish to pay for the shares to hide his involvement in it he had mr hoskins lie on share purchase agreements purchase agreements at mr gilbertson himself at it just the use of a nominee that sort of said they that work and mr gilbertson was convicted on it ok i would point out your honor that those share purchase agreements mr if you look at that evidence mr gilbert said was arranging this transaction he was filling out these forms he was editing them he was making the material there the materiality is his control of it has got ownership of the shares in his control over the shares in the manipulate trading so when you say it is so they omission of his ownership we where's the where's the facts that distinguishes this from what countless investors do in the marketplace every nearly every day that countless investors in the market every day are buying stocks to profit not to defraud and that's this the government's theory is a far cry from short sellers out openly in the market trying to drive down trying to short sell stock so it drives down to profit this is totally different mr did not value the stock at twelve dollars a share that was false an error to have a lay witness talk about manipulation on the sell side the buy side that is a real term of art here it's throughout the jury instructions in terms of what the jury has to determine really went on here was the were these legitimate trades or was this manipulation how is that not air because mr mr hollis is doing nothing more than interpret a conversation to which he was a market manipulation and the defendants had done it that's not what mr house did he testified about the context message conversation and oral conversations that he had with the defendant and what he did in reaction to those conversations in the back and forth that's what he mr gilbert's instruction you have a minute left i'll talk briefly about refs we're going to go over my question and restitution please your honor why is the defendant's game the bonus the proper measure of the code of planes rest touche restitution given our cases this carefully distinguished fraud laws for sentencing purposes and restitution which has to be measured by the that but what what what was the what was the measuring value what was the value base for the for the rest to should be entire in them out of the bonus that was ultimately paid out to the defendants and it was paid out in a combination of cash and stars the where is the proof experts to go from that from point a to point b on that one the mathematical calculation of the restitution was not in dispute your honor that's the amount that was paid out on the bonus it wasn't a full thirty two point eight million dollars it was renegotiated and paid out through a combination of cash and stock the court where's the evidence that it was lost to dakota plane because the company paid it out that was the money that they paid out and in on the bonus a lot of was paid on stock and there was a calculation coordination on the sell side and the buy side but it page nineteen the district court rejected a match trades theory and for good reason the evidence of price movements during the relevant twenty dollars day period indicates that on the south side and on the buy side hoskins and sure met it in fact didn't even trade together on a majority of the twenty days and in fact traded in the same number of shares only on two of those twenty days and so there really isn't factual support for that at the market price not some inflated price and that's page eleven dollars or five of the transcript now nd at the government relies on this nominee theory and in fact i think that's really the core of the government's argument now and mr thompson talks a great length about the circumstances of hoskins's application to his brokerage firm to open an account and the like but the fundamental problem is that mr thompson once again concedes that it would have been perfectly ok for mr gilbert and himself to trade and he makes no argument that the counter party would somehow be privy to the identity of the party with whom it is trading and if that is true there simply cannot be market manipulation and there also cannot be materiality because can i