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Government Enforcement Exposed - "The GEE"
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20 Jan 2016 THE SUPREME COURT GRANTS CERTIORARI IN SALMAN

  Score one for the tea leaf readers. For the last past year, since the Second Circuit issued its watershed insider trading opinion in United States v. Newman, we have followed the fall-out from that decision and speculated whether the time was ripe for the Supreme Court to address this issue again. (See previous posts here.)  In the government’s petition for Supreme Court review, it argued that Newman gutted Dirks and created numerous negative consequences for the country’s financial markets.   Back in August, we suggested that the Court might choose not to grant certiorari in Newman because it appeared not to be an optimal vehicle for addressing whether insider trading can arise simply from a close family relationship between the insider and tippee.  We…

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05 Oct 2015 REST IN PEACE, NEWMAN – SO WILL THE GOVERNMENT LAY DOWN IN SALMAN?

This morning, the U.S. Supreme Court finally put to an end to the government’s efforts to reverse the Second Circuit’s decision in United States v. Newman. As this blog predicted it might (August 11, 2015), the Supreme Court denied the government’s petition for writ of certiorari. As a result, the Second Circuit’s decision vacating the convictions of Newman and Chiasson stands. As is the court’s custom, it did not explain its decision.   As a result, if the government was not being hyperbolic in its petition for certiorari, the Second Circuit – home to most of the insider trading prosecutions in the country – has raised the bar for insider trading prosecutions higher than any other circuit in the country, created a standard that conflicts…

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28 Sep 2015 INSIDER TRADING AND ADMINISTRATIVE COURTS – MORE ON TWO HOT TOPICS THAT HAVE NOW CONVERGED

Since this blog began in January 2014, several topics have garnered substantial ink. These include: (1) the SEC’s apparent growing preference for litigating contested cases on their home turf, administratively, rather than in federal court. (June 19, 2014, July 10, 2014, May 26, 2015, May 22, 2015); and (2) the difficulties the government (both the SEC and DOJ) have encountered bringing insider trading cases and, in particular, the continuing saga of United States v. Newman, in which the DOJ’s petition for writ of certiorari is now pending before the United States Supreme Court. Both these issues continue to generate news, and they even converged recently.   SEC’s Administrative Law Courts   On the administrative court front, the SEC has been criticized repeatedly about the potential…

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15 Jul 2015 NINTH CIRCUIT SLAPS BACK REMOTE TIPPEE’S NEWMAN DEFENSE

Last week, the Ninth Circuit, with opinion by Southern District of New York Judge Jed S. Rakoff, questioned how far remote tippee insider-trading defendants can stretch the Second Circuit’s Newman decision.   In United States v. Salman, the defendant appealed his conviction for conspiracy and insider trading, urging the court to find the evidence against him was insufficient under the Newman standard. The conviction arose from Salman’s trading on insider information through family connections. Salman’s future brother-in-law, Maher Kara, worked in a leading global bank’s healthcare investment banking group and shared insider information with his brother, Michael, who became Salman’s close friend and in turn shared that insider information with Salman. Michael urged Salman to “mirror-image” his trading, and Salman traded through a brokerage account…

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31 Mar 2015 THE FALLOUT FROM NEWMAN CONTINUES AS CONGRESS WEIGHS IN

As previously reported, the Newman decision caused turmoil in the world of insider trading and the fallout continues.   Earlier this month, prosecutors told a federal judge in Manhattan that Newman had invalidated the guilty plea for insider trading of John Johnson, former Wyoming Retirement System CIO, because the admissions he had made in 2013 were now insufficient to support the plea. Prosecutors were planning to prosecute if Johnson did not enter a new plea that would suffice under Newman.   Meanwhile, Congress has weighed in with three proposed bills that would statutorily define insider trading and eliminate the requirement under Newman that: the tippee know both that the tipper breached a duty of confidentiality and the tipper received a personal benefit of “some consequence.”…

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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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