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After months of will-he-or-won’t-he speculation about whether the U.S. Solicitor General would ask the Supreme Court to review the Second Circuit’s restrictive insider-trading decision in United States v. Newman, the question has now been answered. The Government filed a certiorari petition on July 30, 2015 asking the Supreme Court to clarify the nature of the “personal benefit” that a tipper must receive in order to create liability for insider trading – and to resolve what the Government characterizes as a split between the Second Circuit and other appellate courts, including the Ninth Circuit in its recent decision in United States v. Salman.

US DOJ sealLast week, the DOJ announced its first corporate enforcement action under the Foreign Corrupt Practice Act (“FCPA”) for 2015. IAP World Services, Inc., a Florida-based defense and government contractor, agreed to pay $7.1 million in a non-prosecution agreement (NPA) for conspiring to bribe Kuwaiti officials in exchange for a contract to build a large-scale homeland surveillance system in Kuwait. The primary employee involved, James Rama, pleaded guilty to one count of conspiracy to violate the FCPA. (see here for criminal information and here for plea agreement). Fresh off the heels of the announcement that the DOJ has declined to prosecute Petro Tiger (only the second publicly-acknowledged declination of its kind), the IAP settlement is the first significant case from the DOJ in a year where FCPA enforcement has thus far been dominated by the SEC.

According to the NPA, Kuwait’s Ministry of the Interior started a homeland security project in 2004, which was divided into two phases. Rama and others allegedly created a shell company, Ramaco, which bid on and won the Phase I contract. Rama and IAP allegedly designated half of the approximately $4 million Ramaco received from the Phase I contract to bribe Kuwaiti officials through a consultant to assist IAP in gaining the lucrative Phase II contract.

LTexas_Flag_3ast week, the Texas Supreme Court joined the majority of jurisdictions in holding that a company enjoys an absolute privilege when providing the Department of Justice (DOJ) with an internal investigation report containing statements later alleged by an employee to be defamatory. The decision in Shell Oil Co. v. Writt, __S.W.3d__ (Tex. 2015) should provide Texas companies comfort that cooperating with regulatory and law enforcement agencies will not expose them to liability for defamation.

The Writt case arose from an FCPA investigation of Panalpina, a contractor Shell employed to provide freighting and customs-clearing services for a deep-water drilling project off the coast of Nigeria. At DOJ’s request, Shell conducted an internal investigation and provided the DOJ with its confidential findings.

Leslie Caldwell, head of the Justice Department’s Criminal Division, is, in her own words, “pounding the pavement on cooperation and transparency.”  Speaking on Tuesday at the New York City Bar’s fourth annual White Collar Crime Institute in Manhattan, Caldwell took another opportunity to discuss what the government expects of companies that seek to cooperate with criminal investigations.  She emphasized that companies choosing cooperation and expecting to get full credit must act with candor and give the Department all relevant information in a timely fashion. In particular, the Justice Department expects companies to learn and disclose all knowable, relevant facts and to share them, whether they be good or bad and no matter how high the rank of the individuals responsible for the misconduct.

The U.S. Government filed a petition seeking panel and en banc rehearing of the Second Circuit’s December 2014 decision in United States v. Newman and Chiasson, ___ F.3d ___, 2014 WL 6911278 (2d Cir. Dec. 10, 2014).  That highly publicized decision – about which we blogged here – overturned insider-trading convictions of two remote tippees by (i) holding that a tippee must know that the insider tipper received a personal benefit for providing the tip and (ii) clarifying or narrowing (depending on one’s interpretation) the definition of what constitutes an actionable personal benefit.

The Government’s rehearing petition, filed on January 23, 2015, makes a relatively surgical strike at the panel’s decision.  Although the Government disagreed at trial and on appeal with the defendants’ contention that a tippee must know that the insider tipper received a personal benefit, the Government chose not to seek rehearing of the panel’s holding that such knowledge is required and that the trial court had therefore erred in not including that element in its jury instructions.  Instead, the rehearing petition focuses primarily on what the Government contends was an erroneous restriction of the nature of that personal benefit.  The Government also argues that the panel erred by vacating the defendants’ convictions and remanding for dismissal of the indictments, instead of remanding for a new trial under different jury instructions.


Yesterday, U.S. District Judge Andrew L. Carter, Jr. rejected the argument by the U.S. Attorney’s Office for the Southern District of New York to limit the Second Circuit’s decision in United States v. Newman to classical insider-trading cases.  Judge Carter’s order, vacating four insider-trading guilty pleas in United States v. Conradt, represents another setback for U.S. Attorney Preet Bharara in the wake of the Second Circuit’s landmark decision in Newman—a case that we’ve written about here and here.

In Conradt, the government alleged that Trent Martin, a research analyst at a financial services firm, had received material, non-public information from an attorney working on a merger between two publicly traded technology companies.  According to the government, Martin then passed information about the merger to his roommate Thomas Conradt, a stock broker at a securities trading firm, who shared the information with three co-workers—Daryl Payton, David Weishaus and Benjamin Durant.

The Justice Department continues to send the strong signal that it is looking to charge senior executives of companies.  At a conference this week in London, senior Justice Department official Deputy Assistant Attorney General Sung-Hee Suh focused not only on the high priority the Department places on prosecution of corporate…