This one might leave Securities and Exchange Commission Chairwoman Mary Jo White a bit red-faced.
The tough-as-nails former federal prosecutor, who has pledged to turn the regulator into a more aggressive enforcer that brings more cases to trial, suffered a loss on Friday when a jury cleared a New York hedge fund manager and two others accused of engaging in a $1.3 million insider trading scheme in 2001.
A federal jury in Manhattan found Nelson Obus, a fund manager at Wynnefield Capital, not liable on an SEC claim that he traded on inside information about a takeover of industrial products supplier SunSource.
The jury also found Peter Black, a Wynnefield analyst, and Thomas Strickland, a former GE Capital employee, who worked on the deal, not liable as well.
Obus hugged his lawyer after the verdict was read. Outside the courtroom, he criticized the SEC for engaging in a “12-year campaign of regulatory overreach.” He promised to push for changes “to ensure this doesn’t happen again.”
“There’s no better use of one’s wealth than to clear one’s name and reputation,” he said.
Mark Cohen, Black’s lawyer, said his client was “looking forward to getting on with his life.”
A spokesman for the SEC did not immediately respond to a request for comment.