As discussed in our prior blog post, earlier this year the Supreme Court vacated and remanded the Second Circuit’s decision in a high-profile insider trading case, United States v. Blaszczak,[1] for reconsideration in light of the Supreme Court’s “Bridgegate” decision in Kelly v. United States.[2] In Blaszczak, the Second Circuit had previously found that a government agency’s confidential pre-decisional information constituted “property” under Title 18, and that therefore the Blaszczak defendants had committed fraud under the applicable statutes when they obtained the information and traded on it.[3] However, following that decision, the Supreme Court held in Kelly that a government regulatory interest did not constitute “property” for the purpose of Title 18 fraud statutes.[4] The Blaszczak defendants filed a petition for certiorari, contending that the Second Circuit’s reading of Title 18 could not be reconciled with the Supreme Court’s holding.[5] After the Blaszczak defendants filed their petition, the government consented to a remand to the Second Circuit.
Continue Reading DOJ Concedes Error In Title 18 Insider Trading Convictions After Supreme Court’s “Bridgegate” Decision
First Circuit Upholds Border Searches of Electronic Devices Without Probable Cause
In a decision with potentially far-reaching implications, Alasaad v. Mayorkas, Nos. 20-1077, 20-1081, 2021 WL 521570 (1st Cir. Feb. 9, 2021), the First Circuit recently rejected First and Fourth Amendment challenges to the U.S. government agency policies governing border searches of electronic devices. These policies permit so-called “basic” manual searches of electronic devices without any articulable suspicion, requiring reasonable suspicion only when officers perform “advanced” searches that use external equipment to review, copy, or analyze a device. The First Circuit held that even these “advanced” searches require neither probable cause nor a warrant, and it split with the Ninth Circuit in holding that searches need not be limited to searches for contraband, but may also be used to search for evidence of contraband or evidence of other illegal activity. This decision implicates several takeaways for company executives entering and leaving the United States, particularly if they or their employers are under active investigation. In-house counsel in particular should consider the implications of the decision given obligations of lawyers to protect the confidentiality of attorney-client privileged information.
Continue Reading First Circuit Upholds Border Searches of Electronic Devices Without Probable Cause
Second Circuit to Reconsider the Scope of Insider Trading Prosecutions Under Federal Fraud Statutes After Supreme Court’s Bridgegate Decision
Earlier this month, the Supreme Court vacated and remanded a high-profile insider trading case, United States v. Blaszczak, to the Second Circuit “for further consideration in light of Kelly v. United States.”[1] Kelly is more commonly known as the “Bridgegate” decision, in which the Supreme Court restricted the application of federal fraud statutes to schemes seeking to obtain property, to the exclusion of schemes primarily targeting regulatory actions by government officials. In light of the remand, the Second Circuit will now reconsider its endorsement in Blaszczak of liability under Title 18 for a scheme targeting “political intelligence.”
Continue Reading Second Circuit to Reconsider the Scope of Insider Trading Prosecutions Under Federal Fraud Statutes After Supreme Court’s Bridgegate Decision
Congress Overhauls AML Framework, Mandating Disclosure of Beneficial Ownership Information
As part of the National Defense Authorization Act for 2021 (the “NDAA”), Congress has passed the most significant U.S. anti-money laundering (“AML”) legislation since the USA PATRIOT Act of 2001, the “Anti-Money Laundering Act of 2020” (“AMLA 2020”).
Although President Trump has threatened to veto the NDAA, the majorities supporting the legislation would be sufficient
Supreme Court Puts the Brakes on the “Bridgegate” Scandal and Affirms That Property Must Be the Object of Federal Fraud Schemes
On May 7, 2020, the Supreme Court unanimously held in Kelly v. United States that the “Bridgegate” political retribution scheme did not violate the wire fraud or federal-program fraud statutes. Although the government proved that the defendants devised and facilitated the closing of multiple lanes of the George Washington Bridge in September 2013, resulting in
Second Circuit: Criminal Fraud Statutes Do Not Require Prosecutors to Show that Tippers in Insider-Trading Cases Received a “Personal Benefit”
The Second Circuit has made it easier for federal prosecutors to bring insider-trading cases. In United States v. Blaszczak, decided on December 30, 2019, the Court held that the personal-benefit test—a judge-made rule that the government must prove a tipper expected to receive some benefit in exchange for disclosing confidential information—does not apply to