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Government Enforcement Exposed - "The GEE"
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19 Feb 2014 The Position Of Assistant Attorney General For The Criminal Division May Be Filled In The Near Future

By Mark Stuaan |   Leslie Caldwell, a partner at Morgan Lewis & Bockius LLP, was nominated in September 2013 by the White House for the position of Assistant Attorney General for the Criminal Division in the Department of Justice. She was re-nominated for the position in January 2014, and her nomination took a step forward when she testified last week before the Senate Judiciary Committee. If confirmed, she would fill the position left by Lenny Breuer when he returned to private practice in 2013.   In her prepared remarks, Caldwell told the Committee: “I will do my best to ensure the vigorous enforcement of our criminal laws, and to apply them with equal force whether the wrongdoing is in a boardroom, across a computer…

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13 Feb 2014 The CFTC: Armed and Dangerous

By Trace Schmeltz |   Matt Taibbi, a well-respected journalist who covers the commodities world, recently remarked about the commodities market that, “Certain people always win and certain people always lose.”  “How Markets Are Rigged Against You,” CBC Business News, Dec. 9, 2013.   Matt was referring to a variety of phenomena, including several recent high profile cases involving allegations that large banks have rigged the LIBOR market, the currency market, and even the metals market.  See, e.g., “Goldman Sachs Creating Artificial Shortages of Metals Rigging.”  Real or perceived market manipulation threatens the commodities markets—threatening the very fabric of an American capitalism that is largely based on our access to grains, oil, metals, and other valuable commodities.   Recently, Congress has provided the Commodity Futures…

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08 Feb 2014 DOJ Wins Big Insider Trading Case: Martoma Conviction; Bad News for Cohen and SAC

By Patrick J. Cotter |   On February 6, 2014, a federal jury in New York handed the Department of Justice and U.S. Attorney Preet Bharara another victory in their ongoing campaign against perceived insider trading on Wall Street.  Martoma, once a top lieutenant to Steve Cohen, the owner of large hedge fund SAC, was convicted of acquiring and using inside information about drug tests being conducted by drug manufacturer’s Wyeth and Elan to inform SAC stock sales and purchases which netted over $275 million in profit.   The Martoma conviction, while closely watched by Wall Street insiders, the media, and, no doubt, Mr. Cohen, was not altogether unexpected. The “timeline” that the prosecution put before the jury, showing Mr. Martoma visiting with one of the…

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07 Feb 2014 SEC Continues to Struggle in Insider Trading Jury Trials

By Brian E. Casey |   The SEC’s difficulties trying insider trading cases continued to mount this past week.  Two different juries, in Texas and Illinois, concluded that the SEC failed to prove its allegations of insider trading in separate cases brought by the agency.  These results form part of what seem to be a growing trend of losses in insider trading jury trials which perhaps may cause Chair Mary Jo White to temper the agency’s enthusiasm for pushing the envelope in deciding what cases to try.  They may also encourage defendants to press on to trial, knowing that the SEC’s recent track record includes an increasing number of defeats.   For the second time in a month, juries in the Northern District of Illinois…

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31 Jan 2014 Securities Regulators’ Increasing Use of Real-Time Monitoring Systems – Is Skynet Next?

By Anne DePrez |   While the Department of Health and Human Services may have become jaded in the past few months about computer programs, the Securities Exchange Commission (SEC) has not been scared off from computers. It is instead dramatically expanding its use of computer-based tools to assist in their enforcement activities.   First it was the Accounting Quality Model (“AQM”), announced at the end of 2012.  AQM (or “Robocop” to some) rummages through the SEC EDGAR XBRL filings of more than 8000 registrants to spot red flags that might indicate questionable accrual, reserving and other accounting practices.  This information will be particularly useful for the newly-formed Financial Reporting and Audit Task force which is focusing on disclosure issues.   Then, earlier this month,…

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30 Jan 2014 Going South: What U.S. Companies Need to Know About the FCPA and Doing Business in Latin America

By Pat Cotter |   Like the legendary Spanish explorers, Coronado, Pizarro and Cortes, every day more and more U.S. companies are turning their eyes south to Latin America looking for golden opportunities. With over 500 million potential consumers, rapidly expanding economies and opportunities to literally “get in on the ground floor” in hundreds of industries, the incentives to explore business opportunities to the South of the United States are many.   But leaving the United States does not mean leaving behind all U.S. law. The Foreign Corrupt Practices Act (FCPA), makes it a crime for U.S. companies, domestic concerns, or foreign nationals doing business in the United States, as well as organizations and individuals acting on their behalf (e.g. Agents, Representatives, joint ventures), to…

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27 Jan 2014 Warrant Required to Search Cell Phone?

By Mark Stuaan |   In mid-January the Supreme Court granted certiorari in two cases which reached different answers to the question of whether the police must obtain a warrant before searching a person’s cell phone incident to that person’s arrest. The cases are likely to be argued in April. With 90 percent or more of adult Americans owning cell phones, and today’s cell phones being far more than just mobile phones, the Court’s decision could have significant impact on police activity concerning the vast majority of adults in this country.   In Riley v. California (Supreme Court No. 13-132), after police stopped Riley for expired tags on his license they found firearms under the hood of the car during an impound search of the…

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18 Jan 2014 Welcome to The GEE Blog

Do you ever want to know what the government is doing and why? Interested in knowing why that manufacturing plant down the street seems to be doing the same things you are without any intervention by the Environmental Protection Agency (EPA)? Whether or not you are subject to liability for how you coded your Medicare reimbursement request—even if it was an honest human error? Why the Securities and Exchange Commission (SEC) issued a subpoena to you for your profitable trading? The Government Enforcement Exposed Blog (“The GEE Blog”) could be the forum for you!   The GEE Blog aims to give you the “who, what, when, where and why” of government (or the “G”) enforcement. Our lawyers regularly try cases against the government, both civilly…

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18 Jan 2014 Let the Light of Day Shine

By Trace Schmeltz |    As just one example of what The GEE Blog hopes to accomplish, we want to spend a moment talking about an old subject—the Securities and Exchange Commission’s insider trading case against Mark Cuban—and Cuban’s new business venture that has resulted from that case. The case, the SEC’s handling of the matter, and Cuban’s reactions (then and now) say a lot about how “the G” does business and may even be revelatory in the future.   As you recall, the SEC charged Cuban with insider trading in 2008. The case was originally dismissed by the trial court. The Fifth Circuit Court of Appeals reinstated the case, concluding that the inquiry into whether Cuban had, in fact, traded on the basis of material,…

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16 Jan 2014 Barnes & Thornburg Legal Alert – Government Regulators Continue to Make Insider Trading a Trial Priority

By Trace Schmeltz |   From a recent client Alert that we issued yesterday:   Government regulators have started 2014 as they did throughout 2013 by continuing to go after insider trading both civilly and criminally. However, the U.S. Attorney’s office has had substantially more success in trying its criminal cases than the SEC has had recently in its civil trials. Why the government’s criminal prosecutors are having greater success proving criminal fraud than the SEC is having proving civil fraud might be because the SEC is pursuing cases that push the envelope on insider trading liability, either factually or legally. Whatever the reason, a trend might be developing…   You can download a PDF of the Alert in its entirety by visiting our website…

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