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September 23, 2024, Principal Deputy Assistant Attorney General Nicole M. Argentieri announced revisions to the Department of Justice (“DOJ”), Criminal Division’s compliance guidance, known as the Evaluation of Corporate Compliance Programs (“ECCP”), which is used by DOJ prosecutors to assess the effectiveness of a company’s compliance program in the context of a corporate investigation.[1]  The updated compliance guidance incorporates changes that will focus on a company’s use of Artificial Intelligence (“AI”)[2] and other technologies, its use of data analytics as part of the compliance function, the incorporation of “lessons learned” to continuously enhance corporate compliance programs, and whistleblower reporting.[3] Continue Reading DOJ Announces Revisions to Compliance Guidance Focused on AI, Whistleblower Reporting, and Other Areas

There were significant developments last week in two recent criminal enforcement initiatives that were first announced earlier this year.  First, the Department of Justice (“DOJ”) outlined the details of its long-anticipated whistleblower bounty program.[1]  Second, on July 30, 2024, President Biden signed into law a number of amendments to the Foreign Extortion Prevention Act (“FEPA”).[2]  Both of these developments underscore the importance of investing in robust compliance programs and conducting timely investigations of potential misconduct.Continue Reading Two Enforcement Developments: DOJ Launches Whistleblower Awards Pilot Program and Amendments to the Foreign Extortion Prevention Act Are Passed into Law

On April 15, 2024, the Criminal Division of the Department of Justice (“DOJ”) launched the Pilot Program on Voluntary Self-Disclosure for Individuals (“the Individual VSD Pilot Program”), which represents the latest in a string of announcements by DOJ focused on catching companies and individuals that engage in corporate crime.Continue Reading DOJ Announces New Pilot Program Seeking Voluntary Self-Disclosures from Culpable Individuals Aimed At Uncovering Corporate Misconduct 

On February 22, 2023, the Department of Justice announced a new corporate Voluntary Self-Disclosure Policy for U.S. Attorney’s Offices nationwide (the “USAO Policy”).Continue Reading U.S. Attorney’s Offices Issue Nationwide Corporate Voluntary Self-Disclosure Policy

On December 29, 2022, in a closely-watched insider trading case, the Second Circuit decided United States v. Blaszczak (“Blaszczak II”).[1]  The Supreme Court in January 2021 had vacated and remanded the Second Circuit’s prior decision in light of Kelly v. United States (also known as the “Bridgegate” decision).  On remand, a divided panel of the Second Circuit found that trading on the basis of certain confidential government information related to pending regulation does not give rise to violations of the criminal wire fraud and securities fraud statutes.Continue Reading Second Circuit Decision Limits the Ability to Prosecute Instances of Trading on Confidential Government Information

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

Corporate investigations under the Biden Administration’s Department of Justice (“DOJ”) are expected to increase in the coming months.  Navigating such investigations can be complex, distracting, and costly, and comes with the risk of prosecution and significant collateral consequences for the company.  Recently, Cleary Gottlieb partners and former DOJ prosecutors, Lev Dassin, Jonathan Kolodner, and Rahul…

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

Insider trading law has remained a subject of significant debate and attention, including with a recent Second Circuit decision addressing the use of 18 U.S.C. §§ 1343 (wire fraud) and 1348 (securities fraud) in insider trading cases[1] and a new insider trading bill that passed the U.S. House of Representatives in December by an overwhelming majority.  Yesterday, a blue ribbon task force headed by Preet Bharara, the former U.S. Attorney for the Southern District of New York, published a report studying the history and current state of insider trading law and proposing reforms that would bring greater clarity and certainty to the law.
Continue Reading Task Force Led By Preet Bharara and Cleary Gottlieb’s Joon H. Kim Issues Report Recommending Reforms to Insider Trading Law

Last month, Representative Jim Himes (D-Conn) and his co-sponsors, Representatives Carolyn B. Maloney (D-NY) and Denny Heck (D-WA), introduced H.R. 2534:  The Insider Trading Prohibition Act.  Unlike its substantially similar predecessor, H.R. 1625, which was introduced by Representative Himes on March 25, 2015, H.R. 2534 has gained some momentum in the U.S. House of Representatives, having been unanimously approved by the Financial Services Committee in May 2019.  Although the bill is only at the preliminary stage, if the proposal eventually proceeds further in the process of becoming law, it will represent a potentially significant shift in and clarification of U.S. insider trading laws.
Continue Reading H.R. 2534: Insider Trading Prohibition Act – Congress Considers Enacting Changes to Insider Trading Law Under Section 10(b)