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It has been nearly 60 years since the SEC first clearly prohibited insider trading in its 1961 decision in In re Cady, Roberts & Co. You would think that would be long enough for the doctrinal rules to have become reasonably clear. Think again! The recent evidence shows otherwise: A month ago, U.S. District Judge Paul Gardephe for the Southern District of New York permitted a defendant who had plead guilty to insider trading charges in 2013 to withdraw his guilty plea because there had been “insufficient” evidence that a personal benefit had been paid by the tippee to the tipper. See, United States v. Lee, 13-Cr.-00539 (PGG). Lee shows the continuing impact of United States v. Newman, 773 F.3d 438 (2d Cir. 2014). Newman had been limited by the Supreme Court in Salman v. United States, 137 S. Ct. 420 (2016) and seemingly laid to rest earlier this year by the Second Circuit’s decision in Gupta v. United States, 913 F.3d 81 (2d Cir. 2019). Nonetheless, Newman retains enough residual vitality to necessitate a new trial for Richard Lee, a former trader at now defunct SAC Capital. Pundits are predicting that the case will discourage the government from bringing cases involving remote tippees.
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DOJ’s Cyber Fraud Initiative: A Wake-up Call That Keeps Ringing
By Randy S. Grossman, Kareem A. Salem and Kayla LaRosa
DOJ’s Cyber Fraud Initiative has been a wake-up call for companies to prioritize cybersecurity and adhere to stringent standards. By leveraging the FCA, DOJ has used a powerful enforcement tool to target a wide range of cybersecurity failures and misrepresentations. The increasing focus on cybersecurity by enforcement agencies means that robust cybersecurity practices are becoming a standard expectation, not just a best practice.
The State of Supreme Court Jurisprudence On Public Corruption
By Carrie H. Cohen and Allison M. Magnarelli
In the past decade, each time the Supreme Court has taken certiorari in a public corruption case, the court has reversed trial convictions and limited the types of conduct that constitute a federal bribery offense.
Defending Against Extradition to the United States
By Robert J. Anello and Richard F. Albert
The arm of U.S. extradition law is long. Fortunately, practitioners have defenses at their disposal that they may raise in the requested country’s courts to help either limit the scope of prosecution once extradition occurs, or to prevent it altogether.
New DOJ Self-Disclosure Pilot Program Increases Risk for Startups
By Jonathan Fahey, Jonathan P. Lienhard and Oliver Roberts
The DOJ has created new incentives for employee, or anyone, to report criminal misconduct allegedly committed by companies and their agents. Given their often laxer internal reporting structures and higher employee turnover rates, startup companies should pay particularly close attention to this new development to best mitigate legal risks.