Opinion ID: 613369
Heading Depth: 2
Heading Rank: 1

Heading: Gansman's Defense Theory.(i)

Text: A person commits securities fraud for purposes of both civil and criminal enforcement actions under § 10(b) of the 1934 Act and Rule 10b-5 when he misappropriates confidetial information for securities trading purposes, in breach of a duty owed to the source of the information. [7] O'Hagan, 521 U.S. at 652, 117 S.Ct. 2199. Rule 10b5-2, in turn, lists a non-exclusive set of examples in which a duty arises for purposes of § 10(b) and Rule 10b-5. See 17 C.F.R. § 240.10b5-2 Preliminary Note; Insider Trading, U.S. Securities and Exchange Commission, http://www.sec.gov/answers/insider.htm ([Rule10b5-2] provides that a person receiving confidential information under circumstances specified in the rule would owe a duty of trust or confidence and thus could be liable under the misappropriation theory.). On appeal, Gansman contends that the District Court erred in declining to instruct the jury pursuant to a theory of the defense based in part on Rule 10b5-2. The proposed charge, set forth above, reflected a defense theory that Gansman lacked the requisite intent to commit securities fraud because he had shared material non-public information with Murdoch only as part of a relationship of trust and confidence, in which they had a history and practice of sharing work and personal confidences. Joint App'x at 767. According to Gansman, he therefore reasonably expected that Murdoch would keep any confidences he shared with her confidential[] and . . . would not use those confidences to buy or sell securities. [8] Id. The District Court declined to give Gansman's proposed instruction. Instead, it gave a slightly modified version of the charge, as follows: In this case, Gansman contends that he did not [provide Murdoch with insider information] with the understanding that she would use [it] to buy and sell securities. According to [Gansman], any material nonpublic information that Murdoch may have received from him was shared with her as part of a relationship in which they shared work and personal confidences. Joint App'x at 1093-94. To secure a reversal on a flawed jury charge, a defendant must demonstrate both error and ensuing prejudice. United States v. White, 552 F.3d 240, 246 (2d Cir.2009) (quotation marks omitted). No particular wording or phrasing is required for an instruction to be legally sufficient, so long as, taken as a whole, the instruction correctly conveys the applicable law. Victor v. Nebraska, 511 U.S. 1, 5, 114 S.Ct. 1239, 127 L.Ed.2d 583 (1994) (quotation marks omitted). At trial, the District Court gave an instruction that was substantially similar to the one Gansman requested and that clearly informed the jury of Gansman's theory that he lacked the requisite intent to commit the crime with which he was charged. Accordingly, in the circumstances presented here, we hold that the theory of the defense was adequately conveyed to the jury and the defendant suffered no prejudice as a result of the District Court's instruction, even though the instruction did not use the exact words Gansman preferred. Moreover, the government presented ample evidence that Gansman knew or had reason to know that Murdoch was trading on the information he gave her. The jury could have reasonably accepted this evidence. For example, the government presented evidence that:  In late September 2006, following a profitable trade, Murdoch gave Gansman an Apple computer as a thank you present. Gansman said to her, I don't even want to know how much you made with that trade.  Gansman told Murdoch he kept expecting to see her name on an Ernst & Young list that Gansman got whenever there was suspicious activity in a stock. The government proved that such a document existed; an Ernst & Young employee testified that the firm periodically circulated lists with respect to trading on transactions where Ernst & Young has played a part in the transaction.  After Gansman's last tip to Murdoch, relating to a 2007 corporate acquisition, Murdoch said she did not speak to Gansman immediately afterwards because she was freaked . . . out and she knew Gansman was freaked out as well. Murdoch had made approximately $138,000 on this deal, and, as she put it, [i]t was a lot of money and it was very fast and it was too much. When Murdoch and Gansman finally spoke, they decided to put an end to their scheme: No more. Can't do it. . . . I don't remember who said it first but it was sort of like blurted out of both of our mouths at the same time when it came out, no more, I agree we can't talk about this any more. According to Murdoch, Gansman said to her, I love you but I don't want to go to jail. Sorry.