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Can Disclosure Set You Free?
The misappropriation theory of insider trading, which was first recognized by the Supreme Court in United States v. O'Hagan, 521 U.S. 642 (1997), establishes liability for individuals who are not typical 'insiders' of companies and also appears to offer such defendants a specific defense to insider trading charges. The O'Hagan Court based the misappropriation theory on a duty owed by the defendant to the source of non-public material information, rather than to the shareholders of the company whose stock was being traded. Because a defendant prosecuted under the misappropriation theory had a duty only to his source, the Court explained that a defendant's disclosure to the source of information prior to trading or tipping could neutralize the acts of deception necessary for a securities fraud claim. O'Hagan, 521 U.S. at 655.
This 'disclosure to the source' defense remained untested until a recent SEC action against Patricia Rocklage, the wife of a pharmaceutical executive. Mrs. Rocklage defended against the SEC's allegations of insider trading by arguing, in part, that she disclosed to the source of her information ' her husband ' her intent to use the material non-public information she had obtained in confidence. SEC v. Rocklage, 470 F.3d 1 (1st Cir. 2006).
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.