A defendant in an insider trading case who allegedly profited from his inside knowledge recently filed a motion to dismiss in the US District Court for the District of Rhode Island to drop him from a Securities and Exchange Commission suit. The defendant tippee, Kenneth Rampino, claimed that following the recent holding in U.S. v. Newman, 773 F.3d 438 (2d Cir. 2014), the SEC unsuccessfully satisfied the requirement that it show the alleged tipper benefited in exchange for his alleged tip to Mr. Rampino, or that Mr. Rampino knew of any such benefit.
Continue Reading Claiming Tipper Received No Benefit, Defendant Invokes Newman in Seeking to Dismiss Insider Trading Allegations

Demonstrating the effect recent enforcement efforts have had on the industry, in remarks given in Washington, DC at a Compliance Outreach Program for broker-dealers, Securities and Exchange Commission Chairman Mary Jo White tried to assure compliance officers that the SEC does not intend to use its enforcement program to target compliance professionals.
Continue Reading SEC Chair Attempts to Reassure Compliance Officers That They Will Not Be Targeted

On June 9, the US Court of Appeals for the Eleventh Circuit affirmed a Florida district court’s refusal to acquit Linda Deavers, an Indianapolis real estate broker, of four counts of wire fraud. In doing so, the Eleventh Circuit found that Ms. Deavers need not have sent fraudulent statements via email nor even know about the specific wording of the fraudulent statements as long as she supplied the misrepresentations, and it was reasonably foreseeable the substance of them would be transmitted by another person.
Continue Reading Eleventh Circuit Upholds Wire Fraud Conviction of Defendant Who Did Not Participate in Sending the Fraudulent Representations

On June 9, Chad Wiegand and Akis Eracleous, two San-Diego based brokers, pled guilty in California district court to trading in Ardea Biosciences, Inc. stock with inside information.

Mr. Wiegand and Mr. Eracleous, brokers for National Planning Corporation, admitted to trading on inside information in advance of four separate announcements between April 2009 and April 2012. Mr. Wiegand received inside information from his brother-in-law and former Ardea Biosciences employee, Michael Fefferman. Mr. Fefferman tipped Mr. Wiegand material, non-public information, related to pharmaceutical trials of RDEA594, a drug for the treatment of gout; a global agreement with Bayer HealthCare, LLC to license a developmental cancer treatment; and the acquisition of Ardea by AstraZenca PLC. Mr. Wiegand passed along the non-public information to Mr. Eracleous, a friend and business associate.
Continue Reading California Brokers Plead Guilty to Insider Trading of Ardea Biosciences, Inc. Stock

The US Attorney’s Office in the Northern District of California recently settled an enforcement action against Ripple Labs Inc., a Delaware corporation providing virtual currency exchange services. According to the settlement agreement, Ripple Labs was not registered with the Financial Crimes Enforcement Network (FinCEN) as a money services business (MSB) pursuant to the Bank Secrecy Act of 1970 while engaged in currency trading, and lacked required anti-money laundering controls.
Continue Reading Department of Justice Settles Virtual Currency Enforcement Action

On April 3, the US Court of Appeals for the Second Circuit denied the request of Preet Bharara, US Attorney for the Southern District of New York, for an en banc hearing after the court issued a ruling in December that drastically limited the scope of insider trading prosecutions. With the original ruling in United States v. Newman left in place, prosecutors will be required to prove beyond a reasonable doubt that the tippee had knowledge of the personal benefit received by the tipper who initially conveyed the insider information.
Continue Reading Second Circuit Refuses to Rehear Groundbreaking Insider Trading Case

The US District Court for the District of Columbia took the unusual step of granting summary judgment against a technology company executive who the Securities and Exchange Commission accused of various violations of the Securities Exchange Act of 1934. The court found the executive, Tamio Saito, the chief technology officer of e-Smart Technologies, made material misrepresentations in connection with the sale of securities under Section 10(b) and failed to file required ownership documents under Section 16(a).
Continue Reading SEC Secures Victory on Fraud Allegations Against Technology Executive

The US Supreme Court recently reversed the conviction of a commercial fisherman, John L. Yates, accused of violating 18 U.S.C. § 1519, also known as the anti-shredding provision of the Sarbanes-Oxley Act (SOX), holding that the term “tangible object” was limited to objects used to store information.
Continue Reading Supreme Court Limits Scope of SOX Anti-Shredding Provision