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Government Enforcement Exposed - "The GEE"
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12 Jun 2017 U.S. Supreme Court Delivers Blow Limiting SEC Disgorgement Power

  In a unanimous opinion authored by Justice Sonia Sotomayor and issued on June 5, the U.S. Supreme Court reversed a decision of the U.S. Court of Appeals for the Tenth Circuit, holding that SEC disgorgement constitutes a penalty under 28 U.S.C. § 2462, thereby making such actions subject to the five-year limitations period for “an action, suit or proceeding for the enforcement of any civil fine, penalty or forfeiture.” In the case, Kokesh v. Securities and Exchange Commission , the court found the “SEC disgorgement… bears all the hallmarks of a penalty: It is imposed as a consequence of violating a public law and it is intended to deter, not compensate.”   The ruling resolves a circuit split and will have a far-reaching impact…

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11 Aug 2015 WHY NEWMAN MIGHT NOT BE HEADED TO THE SUPREME COURT

In the latest chapter of the United States v. Newman insider trading case, the Solicitor General recently filed its petition for writ of certiorari, asking the United States Supreme Court to hear the case. While the court is unlikely to decide on the government’s petition until the end of the year, the government’s petition may have actually diminished the chances that the Supreme Court will take the case.   As we have discussed previously, April 29, 2014; Dec. 23, 2014; and March 9, 2015, the Second Circuit held last year that an insider trading conviction requires that: (1) an insider tipper act for a “personal benefit” of financial consideration, or something at least akin to monetary gain; and (2) the remote tippee know that the…

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03 Mar 2015 SCOTUS Limits Definition of “Tangible Object” under Sarbanes-Oxley Act

The Supreme Court recently issued a decision in the case discussed in the December 2014 post “Prosecutorial Over-criminalization: Fishing for Guilty Pleas.” This case involved the conviction of Mr. Yates, a fisherman, who was found guilty of violating 18 U.S.C. §1519, the so-called “anti-shredding” provision of the Sarbanes-Oxley Act. A federal jury convicted Yates of destroying a tangible object with the intent to obstruct an investigation after he ordered his crew to discard some fish which fell short of the minimum legal size. The Eleventh Circuit upheld the ruling, finding that the phrase “tangible object” applied to fish.   The Supreme Court, in a 5-4 decision issued last week, overturned the Eleventh Circuit and ruled in favor of Mr. Yates. In its brief, the Government argued…

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06 Oct 2014 Supreme Court Passes on Esquenazi, Makes Instrumentality Test Settled Law

  The Supreme Court today declined to issue a writ of certiorari for the appellants in the case of United States v. Esquenazi.  As readers will recall from our previous post, the Esquenazi decision was noteworthy for adopting the Department of Justice’s relatively expansive definition of who qualifies as a “foreign official” under Foreign Corrupt Practices Act.  Now it appears that this definition is settled law.   While FCPA practitioners had hoped that the Supreme Court might step in to decide this issue, it appears that there was no room on the docket under the circumstances. The decision not to grant review of the Esquenazi decision is likely the result of a lack of any disagreement among the circuit courts on the issue. This is,…

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18 Jul 2014 Corporations and Unreasonable Searches and Seizures: Does the Supreme Court’s Decision in Riley v. California Signal the Rebirth of the 4th Amendment in White Collar Cases?

There has been much attention paid to the Supreme Court’s recent decision in Riley v. California, Nos. 13-132 and 13-212 (June 25, 2014), and justifiably so. It was notable because it was a 9-0 decision in a criminal case – a rare occurrence in the Supreme Court’s history, especially for this deeply-divided Court. But it was also an important, landmark ruling for the Fourth Amendment and its protections against unreasonable searches and seizures.   In its narrowest interpretation, the Supreme Court’s decision in Riley rejected the argument made by law enforcement that cell phones could be searched without a valid warrant if they were seized at the time of arrest. The Supreme Court has repeatedly recognized that there are appropriate exceptions to the Fourth Amendment’s…

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29 Mar 2014 Case to Watch – Chadbourne & Parke LLP v. Troice – Has the Supreme Court undermined the misappropriation theory of insider trading?

  In the recent decision by the United States Supreme Court, Chadbourne & Parke LLP v. Troice, the dissent suggested that the Supreme Court may have unwittingly undermined the misappropriation theory of insider trading liability. In that case, the Supreme Court, analyzing the Securities Litigation Uniform Standards Act of 1998, held that “[a] fraudulent misrepresentation or omission is not made ‘in connection with’” a security “unless it is material to a decision by one or more individuals (other than the fraudster) to buy or sell” the security. Under misappropriation theory, however, the fraudster’s omission plays no role in the decision by another individual to buy or sell a security. Consequently, Troice may vitiate misappropriation theory.   The opinion is available here.   BT GEEMore Posts…

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07 Mar 2014 Barnes & Thornburg Legal Alert – Supreme Court Opens a Pandora’s Box of Whistleblower Litigation

By Brian E. Casey |   On Tuesday, the Supreme Court opened the door to a potential wave of whistleblower litigation under the Sarbanes-Oxley Act’s anti-retaliation provision, with its surprising 6-3 decision in Lawson v. FMR LLC.  The Supreme Court’s dissent predicts that even housekeepers, gardeners, and nannies might be able to assert retaliation claims under the Act.  How broadly future courts will interpret Lawson may depend on the imagination of plaintiffs’ lawyers, but one thing is certain – Lawson has created more questions, and more litigation, than it resolved.   For a more detailed analysis, please see the Client Alert published today jointly by the Firm’s Finance, Corporate Governance, and Mergers & Acquisition Litigation practice group and the Labor & Employment Department. You can…

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03 Mar 2014 The Government Has Frozen My Bank Accounts, What Do I Do Now? Analyzing Asset Forfeiture After Kaley v. U.S.

By Jason R. Barclay |   On Feb. 25, 2014, the United States Supreme Court issued an opinion in Kaley v. United States, No. 12-464, 571 U.S. ___ (2014), a case eagerly followed by many in the white collar defense bar.  Brian and Kerri Kaley, who were indicted by a grand jury for transporting stolen medical devices and laundering the proceeds from the sale of those devices, took a simple legal position.  After the United States froze their assets, including a certificate of deposit that contained the only source of funds the Kaleys had available to pay their lawyers, the Kaleys argued that the Government should have been required to establish that there was probable cause to restrain those assets in an adversarial evidentiary hearing…

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03 Mar 2014 The SEC and Its “Strange Bedfellows” Argue Against Investors Seeking Damages for Fraud – Are Rebuffed by the Supreme Court

By Brian E. Casey |   When the SEC interprets the breadth of a federal securities statute the same way as the Defense Research Institute (DRI) and the Securities Industry and Financial Markets Association (SIFMA) – two prominent associations who traditionally interpret such laws narrowly – something is up. So it was in Chadbourne & Parke LLP v. Troice, a case interpreting the preemptive scope of the Securities Litigation Uniform Standards Act (SLUSA). As one senior SEC official admitted at the recent SEC Speaks conference, this case made for some “strange bedfellows.” But in a decision last Wednesday, the Supreme Court disagreed with all of them.   Troice arises out of the massive Ponzi scheme orchestrated by Allen Stanford. Stanford induced investors to buy certificates…

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27 Feb 2014 A Little-Known Exception to the 4th Amendment: Is Your Company’s Confidential, Proprietary Data Safe from Government Inspection When Entering the U.S.?

By Brian Weir-Harden* |    You arrive home to the United States from an international business trip. Customs directs you to open your bags for an inspection. Unconcerned, you acquiesce. The Customs Agent goes through your bags and finds nothing of interest, except your work laptop. To your surprise, the Customs Agent asks you to turn it on. He randomly opens files and reviews their contents. To your further surprise, the Customs Agent informs you that he will need to temporarily confiscate your work laptop in order to conduct a forensic examination. He takes your computer and makes an image of all its contents. You think to yourself, “This must be a violation of my Fourth Amendment rights against unreasonable searches and seizure, right?”   The answer:…

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