The Sixth Amendment guarantees that criminal defendants “have the assistance of counsel,” which entails the freedom to choose said counsel, so long as he or she is able to pay for it. However, federal forfeiture laws related to asset “freezing” have served as a clever workaround to this Constitutional right for many years. That was until this March when the Supreme Court ruled in a 5-3 decision against such laws in the case of Luis v. United States.
“Freezing” Untainted Assets Amounts to Sixth Amendment Violation in Recent SCOTUS Decision
In light of Justice Scalia’s Death, Dow Chemicals Settles Instead of Taking Its Chances in Front of the Supreme Court
In a statement released on February 26th, Dow Chemicals announced the $835 million settlement of a pending class-action lawsuit citing “growing political uncertainties due to recent events within the Supreme Court and increased likelihood for unfavorable outcomes for business involved in class action suits.” The suit in question—a class action lawsuit alleging illegal urethane price fixing—has already been decided by a lower court in favor of the plaintiff class with damages totaling $1.06 billion. Prior to settlement, Dow filed a writ of certiorari with the Supreme Court, requesting review of the lower court’s verdict for improper application of class-action lawsuit standards. However, it appears that the passing of Justice Scalia has revised Dow’s risk assessment to the tune of $835 million.
Supreme Court Presses Pause on Carbon Regulation
The Obama Administration and the Environmental Protection Agency (“EPA”) suffered a setback on February 9, 2016 when the Supreme Court put a temporary halt on enforcement of the EPA’s Clean Power Plan. The Clean Power Plan is an attempt to reduce carbon pollution from its largest source, power plants, by returning the costs of negative externalities stemming from the worst carbon-producing power plants back to them. It punishes heavy carbon-producing power sources such as coal while simultaneously rewarding investment in cleaner energy-producing alternatives such as solar, wind, and natural gas.
New York Governor Andrew Cuomo has gone on record as stating, “[the Clean Power Plan is] crucial to ensuring a cleaner, greener, and safer future for all.” U.S. Solicitor General Donald Verrilli stated in his legal filings that “[a] stay that delays all of the rule’s deadlines would postpone reductions in greenhouse gas emissions and thus contribute to the problem of global climate change even if the rule is ultimately sustained.”
In The Peak Of A Hedge Fund Asset Crisis, The Supreme Court Might Have Just “Broke The Camel’s Back” For Investor Confidence In Hedge Funds
The Supreme Court rejected the petition for certiorari in United States v. Newman last month—a case about insider trading. In so doing it reaffirmed the Second Circuit Court of Appeals’ decision, which held that liability for insider trading requires proof of (1) that the discloser received a personal benefit, and (2) that the person receiving the information (“tippee”) knew about that benefit. This position not only troubles prosecutors in current insider trading cases and investigations, but is also likely to intensify the current hedge fund asset crisis by calling the credibility of the whole system into question among investors.
In a jury trial in the Southern District of New York, federal prosecutors presented evidence that Todd Newman and Anthony Chiasson (among others) were involved in insider trading. Pursuant to the evidence, it was found that these hedge fund managers received financial information from insiders about Dell and NVIDIA before that information was made available to the public—allowing them to earn millions of dollars in trades during the 2008 fiscal year. Accordingly, they were convicted in 2013 for conspiracy to commit insider trading.
Administrative Judge Raises S.E.C’s Burden to Convict Insider Trader
In a pivotal 1983 ruling, the Supreme Court held that to find a breach of duty to stockholders resulting in “insider trading,” a party must prove that a personal gain, either material or immaterial, resulted from confidential information provided by a trading relative or “friend.” The Court, however, left ambiguous the term, “friend” for over three decades, causing much confusion. Did the Court intend to mean a close friend? A friend with whom you occasionally converse? A Facebook friend?
Recently, Judge Patil provided some context, although controversial, to this central term in a S.E.C. administrative decision, by dismissing insider trading charges against Joseph Ruggieri, a former securities trader at Wells Fargo. At issue in the case was the question of how close a non-familial relationship must be to qualify as “meaningfully close.” Ruggieri mentored Gregory Bolan, a Wells Fargo analyst, and allegedly profited approximately $117,000 from tips received from Bolan. In order to have succeeded, the Department of Justice needed to prove that benefits Bolan received from the mentorship and feedback was substantial enough to qualify their relationship as meaningfully close. The Department of Justice argued that mere friendship was enough to establish the benefit. In his decision, however, judge Patil disagreed, holding that the benefit received by the mentorship was insufficient.
SCOTUS to Decide Whether RICO Reaches Overseas
With a docket already filled with politically charged and highly contentious issues, the U.S. Supreme Court hopes to also address the reach of U.S. law overseas, specifically as it pertains to the Racketeer Influenced and Corrupt Organizations Act. Commonly referred to as RICO, the law was designed to combat organized crime by allowing for the criminal prosecution of “patterns of racketeering activity in an enterprise,” which may include money laundering, bribery, embezzlement, drug trafficking, and a number of other questionable activities.
A few days prior to the start of its new term beginning October 2015, the highest court in the land granted a writ of certiorari to hear the case RJR Nabisco, Inc., et al. v. European Community, et al, in order to resolve the question of whether RICO applies extraterritorially and if so, to what extent. The petition, filed by counsel at Jones Day representing R.J. Reynolds, questioned the reversing of the lower court’s dismissal of the case in the Eastern District of New York by the sharply divided 2nd U.S. Circuit Court of Appeals Court of Appeals, which held that because the scope of RICO encompassed activities that apply to overseas conduct, claims filed based on these activities can proceed in a U.S. federal court.
Supreme Court Clarifies Federal Bank Fraud Statute in Loughrin v. United States
On June 30, 2014, the U.S. Supreme Court issued its final opinions and concluded its 2013-2014 term. Among the Court’s recently decided cases is Loughrin v. United States, where the Court clarified that Section 1344(2) of the federal bank fraud statute does not require intent to defraud.[i] The Court’s decision impacts federal bank fraud prosecutions, but may also impact bank compliance personnel and in-house counsel.
A Look at Some of the U.S. Supreme Court’s Biggest Decisions of the Term
On June 30, 2014, the U.S. Supreme Court concluded its 2013-2014 term. The Court will reconvene for the 2014-2015 term on October 6, 2014. Here is a snapshot of some of the Court’s biggest decisions of the term.
Supreme Court Ruling in Halliburton II is a Partial Win for Defendants Facing Securities Class Actions
Yesterday, the U.S. Supreme Court issued its long-awaited decision in Halliburton Co. v. Erica P. John Fund, Inc. (“Halliburton II”), resulting in a partial win for defendants sued in putative securities fraud class actions.
USSC Decides Securities Fraud Class Action Case
In Halliburton Co. v. Erica P. John Fund, Inc., the Supreme Court decided a much-awaited case regarding the ability of investors to file a class action suit against a company for fraud. The Court held that “investors can recover damages in a private securities fraud action only if they prove that they relied on the defendant’s misrepresentation in deciding to buy or sell a company’s stock.”