United States v. Chestman

Ira Waldbaum, the controlling shareholder of Waldbaum, Inc., told family members in confidence that he planned to sell the company. The information passed in confidence from Ira to his sister, then to her daughter, then to the daughter's husband, Keith Loeb, each time with instructions to keep it secret. Loeb told his broker, Chestman (defendant), about the impending sale at a much higher price, and Chestman bought stock in the company for himself and for Loeb. The government (plaintiff) convicted Chestman of aiding and abetting Loeb's misappropriation of nonpublic information in breach of a fiduciary duty Loeb owed to the family, but the Second Circuit set the conviction aside and reheard the case.