No Constructive Amendment From Alternative MNPI Inferences; SDNY Venue Firmly Grounded for Nasdaq Trades: Commentary on United States v. Dagar (2d Cir. 2025)

Note on precedential status: The decision under review is a Second Circuit Summary Order. Under Federal Rule of Appellate Procedure 32.1 and Second Circuit Local Rule 32.1.1, such orders are citable but do not have precedential effect. Even so, they offer persuasive guidance and synthesize binding precedent that lower courts and practitioners will likely follow.

Introduction

United States v. Dagar is a Second Circuit appeal arising from a jury conviction of a former Pfizer programmer for insider trading tied to the clinical trial results of Paxlovid, Pfizer’s COVID-19 antiviral. The panel (Judges Sullivan, Bianco, and Menashi) affirmed the district court’s judgment, resolving two principal issues:

Constructive Amendment: Whether the government’s trial proof and summation introduced a new theory of material nonpublic information (MNPI) that altered the indictment’s “core of criminality,” thereby violating the Fifth Amendment.
Venue: Whether the Southern District of New York (SDNY) was a proper venue for the securities fraud and conspiracy counts, given the electronic nature of Nasdaq options trading and the mechanics of clearing and settlement.

The court rejected both challenges, holding that the government’s theory and proof remained within the indictment’s core and that SDNY was a proper venue under the Securities Exchange Act and existing Second Circuit venue jurisprudence.

Summary of the Judgment

The Second Circuit affirmed Amit Dagar’s convictions for securities fraud (15 U.S.C. §§ 78j(b), 78ff; 17 C.F.R. § 240.10b-5; 18 U.S.C. § 2) and conspiracy to commit securities fraud (18 U.S.C. § 371). The court held:

No constructive amendment: The indictment alleged an insider trading scheme based on MNPI about Paxlovid clinical trials culminating in November 4 messages. The government’s trial evidence—emphasizing those messages and Dagar’s background knowledge of trial protocols and milestones—did not expand the charges; it simply explained multiple ways an experienced employee could interpret the MNPI. This remained within the charged “core of criminality.”
Venue proper in SDNY: Trading occurred on Nasdaq options markets headquartered in Manhattan; Dagar used a broker with a Manhattan registered address; and clearing and settlement services were provided by Manhattan-based entities (with operations on a mainframe in Poughkeepsie, within SDNY). These facts, coupled with Dagar’s sophistication as an options trader, satisfied statutory venue and the foreseeability standard.

Analysis

Precedents Cited and Their Influence

The panel’s reasoning is anchored in a familiar constellation of Second Circuit and Supreme Court decisions:

Constructive Amendment Framework
- Stirone v. United States, 361 U.S. 212 (1960): A conviction cannot stand if the trial proof permits conviction for a charge not returned by the grand jury. This is the high-water mark for constructive amendment challenges.
- United States v. Frank, 156 F.3d 332 (2d Cir.): A constructive amendment occurs when trial proof or instructions alter an essential element such that it is uncertain if the defendant was convicted of conduct charged by the grand jury.
- United States v. Salmonese, 352 F.3d 608 (2d Cir. 2003): Even when not “specifically pleaded,” proof may be “plainly within the charged core of criminality,” granting the government “significant flexibility” in how it proves the case.
- United States v. Rigas, 490 F.3d 208 (2d Cir. 2007): The indictment must apprise the defendant of the “core of criminality” to be proven. This case often supplies the standard for what the indictment must fairly encompass.
- United States v. Zingaro, 858 F.2d 94 (2d Cir. 1988): A constructive amendment was found where proof concerned a loan not tied to the specific Yonkers social-club conspiracy charged; relied on by Dagar but distinguished by the panel because all alleged MNPI here was part of the charged scheme.
Venue in Securities and Conspiracy Cases
- Statutes: 15 U.S.C. § 78aa (Exchange Act venue); 18 U.S.C. § 3237(a) (continuing offenses: venue where begun, continued, or completed).
- United States v. Chow, 993 F.3d 125 (2d Cir. 2021): For trades on exchanges headquartered in SDNY (e.g., Nasdaq), venue in SDNY is proper even if servers are elsewhere. Clearing and settlement in Manhattan are “absolutely necessary” to the trade and support venue.
- United States v. Geibel, 369 F.3d 682 (2d Cir. 2004): Utilizing facilities of a New York-based brokerage can suffice for SDNY venue.
- United States v. Lange, 834 F.3d 58 (2d Cir. 2016): Venue may be established by circumstantial evidence.
- United States v. Svoboda, 347 F.3d 471 (2d Cir. 2003): Venue is proper if the defendant knowingly causes, or it is foreseeable that, an act in furtherance of the crime will occur in the district.
- United States v. Khalupsky, 5 F.4th 279 (2d Cir. 2021): A trader’s sophistication informs foreseeability for venue.
- United States v. Riley, 638 F. App’x 56 (2d Cir. 2016): Foreseeability that trades would occur on Nasdaq in Manhattan supports SDNY venue.
- United States v. Buyer, No. 23-7202, 2025 WL 855773 (2d Cir. Mar. 19, 2025): Recent reinforcement that trading on exchanges headquartered in SDNY supports venue.

Collectively, these authorities shape two key holdings: (i) prosecutors may present different inferential paths to the same MNPI-based criminality without amending the indictment, and (ii) SDNY venue is robustly supported by exchange headquarters, clearing and settlement infrastructure, use of Manhattan-based brokerage facilities, and foreseeability.

Legal Reasoning

1) Constructive Amendment

The indictment’s core: The superseding indictment alleged an insider trading scheme “based on MNPI about clinical trials of Paxlovid,” focusing on November 4 messages from Dagar’s supervisor stating “we got the outcome,” “lot of work lined up,” and “press release tomorrow.” The government consistently tied its theory to those messages as the culminating MNPI event.

Trial proof: In addition to the messages, the government introduced evidence that Dagar, by virtue of his role at Pfizer, knew the trial’s structure (four potential outcomes, including “overwhelming efficacy” leading to a stop/press release), that a safety milestone and proof-of-concept were cleared, and that the Data Monitoring Committee had met the night before. Taken together, that context made the messages highly probative MNPI that a significant stock move was imminent.

Summation and theory: The government argued that even if Dagar did not know “for certain” that the specific outcome was “overwhelming efficacy,” the messages plus his background knowledge made it clear a highly positive result—one of only four structured possibilities—was about to be announced. The court characterized this as elaborating how Dagar could interpret the same MNPI, not as introducing a different MNPI or a different scheme.

Holding: Because the proof and argument remained within the “charged core of criminality” (trading on positive Paxlovid trial MNPI culminating in the November 4 messages), there was no constructive amendment. The government’s flexibility extends to showing “different ways” a defendant may have understood or acted on the MNPI—so long as the underlying MNPI and scheme align with the indictment.

Distinction from Zingaro: In Zingaro, the government introduced an uncharged loan unrelated to the clubs identified in the indictment. Here, all MNPI and acts were inseparable from the charged Paxlovid trial scheme centered on November 4.

2) Venue

Statutory framework: The Exchange Act allows venue “in the district wherein any act or transaction constituting the violation occurred” (15 U.S.C. § 78aa). Under 18 U.S.C. § 3237(a), continuing offenses may be tried where they are begun, continued, or completed.

Chow controls: The panel reiterated that for trades executed on Nasdaq—headquartered in Manhattan—SDNY venue is proper notwithstanding the electronic nature of trading or uncertainty about server locations. Trade execution, clearing, and recording activities tied to New York infrastructure matter.

Evidence establishing SDNY venue:

Dagar and his co-conspirator traded options on Nasdaq-operated markets (headquartered in Manhattan).
Dagar used a broker with a registered address in Manhattan.
Trades were cleared and settled in part by a Manhattan-based firm using a mainframe located in Poughkeepsie—also within SDNY.

Circumstantial proof is enough: Relying on Lange, the court confirmed that venue may be proven circumstantially, including via broker registration and industry practice concerning clearing/settlement as “absolutely necessary” parts of options trades.

Foreseeability and sophistication: Echoing Svoboda, Khalupsky, and Riley, the panel held that a sophisticated trader like Dagar (12 years’ options experience; 7,000 trades in six years; knowledge his brokerage was an NYSE member) could reasonably foresee that critical acts in furtherance of his trades would occur in SDNY.

Bottom line: Under Chow and related cases, the combination of Nasdaq headquarters in Manhattan, use of Manhattan-based brokers and clearing entities, and the foreseeability flowing from trader sophistication plainly satisfied SDNY venue by a preponderance of the evidence.

Impact and Practical Implications

A. Constructive Amendment in Insider Trading Prosecutions

Government latitude on proof of MNPI: Prosecutors may contextualize how a defendant understood and acted on MNPI without fear of constructive amendment, provided the trial proof and argument remain anchored to the MNPI and scheme alleged in the indictment.
Indictment drafting: Charging documents that define the scheme’s “core of criminality” (e.g., trading on clinical-trial MNPI culminating in specific communications) give room at trial to present background knowledge and industry protocols as interpretive context.
Defense strategy: Constructive amendment arguments will struggle where the government’s theory does not introduce different MNPI or a distinct scheme. Defense efforts will be better directed at materiality, scienter, or challenges to whether the information was nonpublic or sufficiently specific.

B. Venue in the Era of Electronic Trading

Server location is not dispositive: Following Chow, the physical location of servers executing trades is less important than the exchange’s headquarters and the locus of clearing and settlement.
Clearing/settlement are “acts” for venue: Because clearing and settlement are essential parts of a trade, their performance in SDNY (often by Manhattan-based entities) powerfully supports venue.
Brokerage “facilities” and registration matter: Use of Manhattan-based brokerage facilities or a broker’s Manhattan registration can, with other evidence, establish venue.
Sophisticated traders are on notice: Expertise and trading volume inform foreseeability that acts in furtherance will occur in SDNY, strengthening venue arguments for the government.
Compliance takeaway: Firms and employees should assume that trading on NY-headquartered exchanges can anchor venue in SDNY, with compliance policies tailored accordingly.

Complex Concepts Simplified

Constructive Amendment vs. Variance:
- Constructive amendment occurs when the proof or instructions at trial effectively change the charge—risking conviction for an offense not returned by the grand jury. It is structural error requiring reversal.
- Variance is a divergence between indictment allegations and proof but does not alter the offense charged. It requires a showing of prejudice to warrant relief.
- In Dagar, the court found no constructive amendment because the MNPI and scheme proved were the same as those charged; the government merely offered additional context affecting how the MNPI would be interpreted.
“Core of Criminality”: The essential nature of the charged scheme that the indictment must fairly apprise the defendant of. If trial proof stays within this core, there is typically no constructive amendment.
MNPI (Material Nonpublic Information): Information that is not publicly available and that a reasonable investor would consider important in making an investment decision. Here, imminent positive Paxlovid trial results—and the tie to a next-day press release—qualify.
Data Monitoring Committee (DMC): An independent group monitoring clinical trials. Its meetings and decisions (e.g., recommending stopping a trial for overwhelming efficacy) can signal major, market-moving developments.
Clearing and Settlement: Post-trade processes by which trades are confirmed, funds and securities are exchanged, and records are finalized. Courts treat these as essential steps in a trade; if performed in SDNY, they support SDNY venue.
Foreseeability for Venue: Venue is proper if a defendant intentionally or knowingly causes, or it is reasonably foreseeable that, an act in furtherance of the offense will occur in the district (e.g., exchange-based activities, clearing, settlement in SDNY).

Conclusion

United States v. Dagar reinforces two durable propositions in Second Circuit securities jurisprudence:

No constructive amendment occurs merely because the government offers multiple inferential routes showing how a defendant understood and acted on the same MNPI alleged in the indictment, so long as the proof remains within the indictment’s “core of criminality.”
SDNY venue is robustly supported for trades on Nasdaq/NYSE where: the exchange is headquartered in Manhattan; brokers and clearing entities operate in Manhattan; clearing/settlement are essential to the trade; and a sophisticated trader can foresee SDNY-based acts in furtherance. The physical location of electronic servers is not determinative.

While the order is non-precedential, it synthesizes and applies binding Second Circuit authority—particularly Chow, Rigas, and related venue cases—in a way that will likely guide litigants and courts. For prosecutors, it affirms latitude in proving insider trading schemes through contextual MNPI inferences. For defense counsel, it signals the uphill nature of constructive amendment and venue challenges in cases anchored to New York’s exchanges and financial infrastructure.