Important developments in U.S. securities law, white collar criminal defense, regulatory enforcement and other emerging issues impacting financial services institutions, publicly traded companies and private investment funds
The Second Circuit last week affirmed the conviction of a former corporate executive on charges of insider trading. The court’s unpublished decision on January 14 in United States v. Riley held that the Government had adduced sufficient evidence that the defendant had received a personal benefit – in the form of investment advice – in exchange … Continue Reading
The Second Circuit held last week that a borrower did not waive the attorney-client privilege by providing documents to a consortium of lender banks that shared a common legal interest with the borrower in the tax treatment of a refinancing and corporate restructuring resulting from an acquisition originally financed by the consortium. The November 10, 2015 … Continue Reading
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 … Continue Reading
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 … Continue Reading
The U.S. Court of Appeals for the Ninth Circuit appears to have rebuffed aspects of the Second Circuit’s recent effort to narrow liability for insider trading. The Ninth Circuit’s decision today in United States v. Salman holds that insiders can engage in insider trading if they disclose material nonpublic information with the intent to benefit … Continue Reading
The Second Circuit today denied the request by the U.S. Attorney’s office for the Southern District of New York for panel or en banc rehearing of the landmark U.S. v. Newman decision, which overturned insider-trading convictions of two remote tippees by (i) holding that a tippee must know that the insider tipper received a personal benefit … Continue Reading
The Second Circuit Court of Appeals recently deferred to the SEC’s determination that a tipster who provided information to the Commission before July 21, 2010, the effective date of the Dodd-Frank Act, is not eligible to receive a whistleblower bounty payment. Stryker v. SEC, Case No. 13-4404-ag (2d Cir. Mar. 11, 2015).… Continue Reading
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 … Continue Reading
Over the last five years, the U.S. Attorney for the Southern District of New York, Preet Bharara, has aggressively pursued insider-trading cases against a broad spectrum of defendants. As a result, insider trading remains a topic of public interest—especially in the compliance community. On December 23, 2014, Compliance Week published an article on the Second … Continue Reading
Inside Counsel interviewed Jonathan Richman, partner and co-head of our Securities Litigation Practice, regarding the high-profile Second Circuit decision last week overturning the insider-trading convictions of Todd Newman and Anthony Chiasson. The article discusses issues likely to arise in any appeal by the government to the Second Circuit Court of Appeals for en banc review, or to the … Continue Reading
With several billions of dollars ultimately at stake, the Second Circuit has affirmed that Section 546(e) of the Bankruptcy Code, a safe-harbor protecting certain securities-related payments from bankruptcy “claw backs,” barred Irving Picard, Trustee of Bernard L. Madoff Investment Securities, LLC (“BLMIS”), from asserting all but a limited category of avoidance and recovery claims. In … Continue Reading
On December 10, 2014, the Second Circuit reversed insider trading convictions of two former hedge fund managers, holding that, to sustain a conviction for insider trading, the government must prove a tippee who trades on the basis of material non-public information had knowledge that the tipper not only disclosed confidential inside information, but also that … Continue Reading
In the recent decision, Goldman Sachs & Co. v. Golden Empire Sch. Fin. Auth., 764 F.3d 210 (2d Cir. 2014), the Second Circuit held that nearly-identical forum selection clauses in broker-dealer agreements between the broker-dealers/underwriters of auction rate securities (“ARS”) and the public financing authorities who issued the ARS superseded the Financial Industry Regulatory Authority, … Continue Reading
In a recent case arising from the Facebook IPO, NASDAQ OMX Group v. UBS Securities, LLC, No. 13-Civ. 2657 (2d Cir. October 31, 2014), the Second Circuit determined that the federal courts had jurisdiction to enjoin an arbitration against NASDAQ, finding that the case implicated important federal issues regarding the regulation of an orderly securities … Continue Reading
By Harry Frischer, Jessica Fisher and Philip Arnold on Posted in Financial Services
Originally published as a Proskauer Client Alert. On October 23, 2014, the New York Court of Appeals held for the first time that, under New York law, the “separate entity” rule prevents a court from ordering a foreign bank operating branches in New York from restraining a judgment debtor’s assets held in foreign branches of the bank. Motorola … Continue Reading
By Brian Friedman, Harry Frischer and Philip Arnold on Posted in Securities Regulatory
In the recent case Citigroup Global Markets Inc. v. Ghazi Abdullah Abbar, et al., 13 Civ. 2172 (2d Cir. Aug. 1, 2014), the Second Circuit held that, under FINRA rules, an investor who purchased an over-the-counter derivative from a financial institution was not a “customer” of the financial institution’s affiliated broker-dealer, notwithstanding the broker-dealer’s involvement … Continue Reading
By Alexandra Skellet and Tanya Dmitronow on Posted in White Collar
On April 23, 2014, the U.S. Court of Appeals for the Second Circuit reinstated the action brought by the European Community and its 26 member states against RJR Nabisco and related entities (collectively, “RJR”) for allegedly laundering drug money through the exchange of discounted euros and cigarettes. In the long-running case European Community v. RJR … Continue Reading
In its landmark 2010 decision in Morrison v. National Australia Bank, the Supreme Court articulated what seemed to be a bright-line test for determining the extent to which the U.S. securities laws apply to transactions with international elements. In so doing, the Court harshly rejected the fact-intensive “conduct/effects” tests propounded several decades ago by the … Continue Reading
The Court of Appeals for the Second Circuit ruled today that the Dodd-Frank Act’s prohibition on retaliation against whistleblowers does not apply extraterritorially. In affirming the dismissal of the case on extraterritoriality grounds, the court declined in Liu v. Siemens AG to address another issue that has attracted attention: whether a person qualifies as a … Continue Reading
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