The federal statute criminalizing false statements, 18 U.S.C. § 1001, is one of the most widely-used tools in a federal prosecutor’s toolbox.  The statute criminalizes “knowingly and willfully” making a false statement to a federal officer, including law enforcement agents.  Recently, however, the Department of Justice has signaled that it intends to rein in some of the breadth of the statute, endorsing the interpretation that Section 1001 requires the government to meet a higher burden when demonstrating that the defendant “willfully” made a false statement.  In short, the DOJ now takes the view that to successfully convict a defendant under Section 1001, the defendant must have made the false statement knowing that the act of doing so was a violation of federal law.
Continue Reading DOJ Trims Away Some Excess of the Federal False Statement Statute

In the months following revelations about the potentially-unfair advantages created by high-speed trading, SEC Chairman Mary Jo White announced that the SEC intends to develop rules to target high-speed trading in order to quell concerns that the practice allows traders to manipulate the market by, among other things, “front running” other traders. The SEC is not the first agency to set its sights on high-speed traders.  Among those looking into the practice, New York Attorney General Eric Schneiderman and United States Attorney General Eric Holder have announced investigations.  More recently, Schneiderman brought suit against Barclay’s, alleging that it gave high-speed traders an unfair advantage in its private securities trading venue.  But while prosecutors appear to have strong medicine in mind, the SEC is aiming for a more measured approach.  
Continue Reading SEC Announces Development of Rules to Oversee High-Speed Trading

Over 90% of federal criminal cases are resolved by plea agreement, and plea agreements typically require defendants to waive their rights to appeal their sentences.  In many cases, prosecutors also require that defendants agree to pay restitution (compensation for loss) to the victims of the crime.  Practically speaking, the specific amount of restitution to be paid is rarely set forth in the plea agreement.  Rather, restitution is calculated by the court during sentencing. But what if the court errs by miscalculating the amount of restitution?  Does the plea agreement’s waiver of appeal rights apply to the calculation of restitution? According to the Sixth Circuit–it depends.
Continue Reading Sixth Circuit: When Plea Agreements Waive the Right to Appeal Restitution

In the 1987 film “Wall Street,” Gordon Gecko gives a memorable speech in which he declares “that greed, for lack of a better word, is good.  Greed is right, greed works.”  On Wall Street today, one might say that speed is good.  Milliseconds (1/1,000th of a second) and microseconds (1/1,000,000th of a second) matter.  Traders relentlessly pursue methods to access the most current information from Wall Street, employing fiber-optic cable, microwave dishes, and even laser beams.  But is acting upon this virtually-instant data, which may arrive at a high-speed trader’s computer mere milliseconds before the average trader, insider trading?  Some are claiming, “yes.”  After the publication of Michael Lewis’s book Flash Boys: A Wall Street Revolt, allegations are circulating that a speed advantage allows high-speed traders to effectively “front run” other traders.
Continue Reading Speed is Good: But Is High-Speed Trading A Crime?

Icahn Enterprises L.P. issued a press release on March 7, 2014 announcing that its Chairman—famed investor Carl Icahn—intends to use Twitter, Facebook, and the website Shareholders’ Square Table to communicate from time to time with the public about the company.  The press release was careful to note that the information Mr. Icahn may choose to share via social media could be deemed material, and therefore encouraged “investors, the media, and others interested in our company to review the information that Mr. Icahn posts,” in addition to the information the company discloses on its investor relations website. Like Icahn Enterprises, many companies and executives are using social media to not only market to the public, but to share information with investors.  The SEC’s Regulation Fair Disclosure (“Regulation FD”) requires that if material, non-public information is disclosed, the company must disclose that information in a manner reasonably designed to distribute broadly the information to the public.  This leads to an inexorable question: If a company decides to use social media to share material information with investors and the public, how can it ensure compliance with Regulation FD?
Continue Reading Fair Disclosure in 140 Characters or Less