According to a Bloomberg report, Level Global Investors LP co-founder Anthony Chiasson and ex-Diamondback Capital Management LLC portfolio manager Todd Newman are to file appeals at the the US Court of Appeals in New York today to challenge the convictions they received for their purported insider trading activities. Chiasson and Newman's lawyers will be arguing with a three-judge panel that the prosecutors failed to comply with an additional requirement to prove that their clients committed insider trading.

A couple of the requirements used to find defendants guilty of insider trading charges are that the traders are aware that the information they have used were confidential in nature and have breached a fiduciary duty. The other requirement is that traders know the original source of the information they have used and benefited from the tip.

Bloomberg noted that in the case of Whitman Capital LLC hedge fund founder Doug Whitman, jurors were required to seek all three elements as ordered by US District Judge Jed Rakoff to find the defendant guilty of his crimes. In the trial of SAC Capital portfolio manager Mathew Martoma and Galleon Group LLC co-founder Raj Rajaratnam, the same three elements were also used by US District Judge Paul Gardephe and former US District Judge Richard Holwell respectively.

Chiasson and Newman's legal camp are claiming that the prosecutors have only complied with two of the three requirements. The US government also secured victory when US District Judge Richard Sullivan convicted SAC Capital Advisors LP fund manager Michael Steinberg on the basis of the two earlier requirements.

In a memo to court, Chiasson's lawyers Marc Pomerantz and Greg Morvillo wrote, "The government's zeal to combat insider trading went too far in this case. He was a remote tippee, removed from the insiders by four degrees of separation."

Bloomberg said that should the federal appeals court rule in favor of Chiasson, the Steinberg conviction might be in peril of getting overturned for the same reasons. The conviction of Steinberg along with Martoma's were touted to be among the biggest victories for the office of Manhattan US Attorney Preet Bharara in prosecuting wrongdoing at Wall Street.