Justia Securities Law Opinion Summaries

This criminal appeal arose from a "finite reinsurance" transaction between American International Group, Inc. (AIG) and General Reinsurance Corporation (Gen Re). Defendants, four executives of Gen Re and one of AIG, appealed from judgments convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. Most of the arguments were without merit, but defendants' convictions must be vacated because the district court abused its discretion by admitting the stock-price data and issued a jury instruction that directed the verdict on causation. View "United States v. Ferguson, et al." on Justia Law

Defendant pled guilty to one count of securities fraud, alleged in the indictment to be a violation of 15 U.S.C. 78j(b), 78ff, and 17 C.F.R. 240.10(b)-5. At issue was whether the district court erred in holding that defendant was not entitled to the protection of section 78ff(a) because he pled guilty to a statutory offense and the no-knowledge provision was inapplicable to people convicted of violating criminal securities law. The court, reading the plain language of the statute, held that the district court erred when it determined that defendant's guilty plea to a violation of section 78j(b) prevented him from asserting the no-knowledge defense. Thus, defendant was entitled to assert the no-knowledge defense to imprisonment at sentencing. The court held, however, that the district court did not reach the question of whether defendant had met his burden of showing no knowledge under Rule 10(b)-5 and as such, the issue was remanded to the district court for consideration. View "United States v. Behren" on Justia Law

Defendant appealed from a judgment of conviction for securities fraud and conspiracy to commit securities fraud and wire fraud. At issue, among other things, was whether venue was proper in the Eastern District of New York. The court held that venue in the Eastern District was proper for the conspiracy counts where defendant committed overt acts in furtherance of the conspiracies in the Eastern District. Accordingly, the court did not find venue for the conspiracy charges to be unfair or prejudicial. The court held, however, that venue in the Eastern District was improper for the substantive securities fraud count where no conduct that constituted the offense took place in the Eastern District. Accordingly, nothing in United States v. Svoboda called into question the principle that preparatory acts alone were insufficient to establish venue. Therefore, the court affirmed in part and reversed in part.

Defendant appealed from two judgments of conviction related to his involvement in "pump and dump" stock schemes. At issue was whether the first judgment of conviction, entered upon a jury verdict, should be overturned, either because the evidence was insufficient to permit a jury to find a fiduciary duty, or because the jury was improperly instructed about how to determine the existence of a fiduciary duty. Also at issue was whether the second judgment of conviction should be overturned because defendant's guilty plea, entered after his conviction in the first trial, was premised on the outcome of that trial. The court held that, upon reviewing the jury instructions for plain error and taking the evidence in the light most favorable to the Government, the jury was entitled to find that the brokers in this case had a duty to disclose their exorbitant commissions, just as they had a duty to refrain from making affirmative misrepresentations regarding the size of their commissions, and thus, the district court properly instructed the jury on the elements of that duty. The court also held that, because it found no principled basis on which to distinguish this case from United States v. Szur, the court concluded that there was no error in the charge, and affirmed defendant's first conviction. Therefore, the court's conclusion necessarily defeated defendant's argument challenging his subsequent guilty plea and the second judgment of conviction was also affirmed.