A former Hunton Andrews Kurth partner is stuck with securities fraud and conspiracy convictions after his drunken brag led to insider trading before a Pfizer merger, the Second Circuit said Jan. 10.

Robert Schulman’s contention that his tip on King Pharmaceuticals’s 2010 merger with Pfizer Inc. was merely a joking boast didn’t make it unreasonable for a jury to convict him, the U.S. Court of Appeals for the Second Circuit said.

Schulman was a Washington-based partner with Hunton & Williams, now Hunton Andrews Kurth, working on a patent dispute involving King when he learned of the potential merger in August 2010, according to the opinion. He told his investment adviser, Tibor Klein, that it would “be nice to be king for a day” at a dinner less than two weeks later.

Klein in September 2010 “purchased 65,150 King shares for $585,217 in various accounts,” including accounts belonging to Schulman and his friends, the opinion said. Pfizer and King publicly announced the merger in October. Schulman made “around $15,500, an over 50 percent return in less than two months,” according to the opinion.

Schulman argued that “no reasonable jury” could find that he’d given Klein more information or that he meant for Klein to trade based solely on his brag, he said.

But "[e]xtensive circumstantial evidence supports an inference that Schulman communicated more to Klein,” supporting the jury’s verdict, the Second Circuit said.

Even though the joke was “innocuous” on its own, Schulman conceded to Securities and Exchange Commission investigators that “king” was a reference to King Pharmaceuticals, the opinion said. There’s “ample evidence in the record that Klein behaved in a calculated manner in trading on the information about King,” so inferring some additional communication between the two was reasonable, according to the Second Circuit.

Chief Judge Robert A. Katzmann wrote the opinion, which judges Amalya L. Kearse and Denny Chin joined.

Proskauer Rose LLP represented Schulman.

The case is United States v. Klein, 2d Cir., No. 17‐3355, 1/10/19.