SEC Division of Enforcement Director Gurbir Grewal and several high-ranking officials from the U.S. Attorney’s Offices for the Southern and Eastern Districts of New York and the FBI spoke on November 29, 2022 at a conference sponsored by Sandpiper Partners LLC concerning hot topics in SEC and DOJ enforcement.  The panelists all made clear that the views they expressed were their own, but those views are worth hearing.

The Second Circuit has recently held that the Government must account for rental income it denied a property owner during a period of illegal seizure even though the Government was able to establish probable cause at a post-seizure hearing. The appeal stemmed from a decades-long sanctions and civil forfeiture action

On Friday, the SEC filed a complaint against James C. Cope, a former member of the Executive Committee of Pinnacle Financial Partners’ (“PFP”) board of directors, alleging that he engaged in insider trading.  The same day, Cope pleaded guilty to related insider trading charges brought by the U.S. Attorney’s office for the Middle District of Tennessee.  The government alleges that Cope personally traded on information about a pending acquisition that he learned during board meetings, in breach of his duties to the company.

On September 9, 2016, the SEC filed a complaint against RPM International Inc. (“RPM”) and the company’s General Counsel/CCO. The SEC claims the company filed false and misleading SEC filings that failed to disclose any loss contingency relating to a DOJ investigation that the company eventually settled for $60.9 million.  The complaint also charged the GC/CCO, individually, for his failure to inform RPM and its auditors about material facts relating to a DOJ investigation.  RPM and the GC/CCO are contesting the SEC’s allegations, and the company has called the case a “product of prosecutorial overreach.

This week, Deputy Attorney General Sally Q. Yates delivered remarks at the New York City Bar Association reflecting on the eight months since the release of the “Yates Memo,” or as Deputy AG Yates prefers, the “Individual Accountability Policy” (“the Policy”).  The Policy’s release in September 2015 followed prolonged criticism over a perceived lack of prosecution of individuals responsible for corporate misconduct.  Aimed at increasing prosecutions of such individuals, the Policy outlined six directives to prosecutors, which we covered in an earlier post.

Last week the Supreme Court further clarified the procedures and limits regarding the government’s ability to freeze assets in connection with criminal prosecutions. Following the 2014 decision in Kaley v. United States, where the Court ruled (in the government’s favor) that a defendant could not challenge the legality of a pre-trial asset seizure by contesting the grand jury’s determination of probable cause, last week the Court added to the body of law on asset forfeiture by siding with defendants and limiting the government’s ability to freeze “untainted” assets. The Court’s March 30, 2016 decision in Luis v. U.S. holds that the government’s pre-trial freeze of “untainted” assets (meaning money not connected to the alleged crimes) violates the Sixth Amendment right to counsel by choice.

The Supreme Court today refused to grant review of the Second Circuit’s restrictive insider-trading decision in United States v. Newman.  The Government, through the Solicitor General, had asked the Supreme Court to clarify the nature of the “personal benefit” that a tipper must receive in order to create liability for insider trading.  But the Supreme Court declined to take the case.