Rule 10b-5

News & Analysis as of

The Boundaries for Insider Trading Prosecutions See a Resurgence: The 1980s Are Back!

In a closely followed appeal, the United States Court of Appeals for the Second Circuit on December 10, 2014, delivered an important decision in United States v. Newman by vacating the insider trading convictions of two...more

Ninth Circuit Requires Particularity In All Elements Of Securities Fraud Pleading

Sometimes, I find it useful to take a step back and review the legal standard applicable to securities fraud claims under Section 10(b) and Rule 10b-5. To stay in court, and securities litigation all about surviving motions...more

Second Circuit Clarifies a Heightened Standard for Insider Trading Convictions

The US Court of Appeals for the Second Circuit recently held that, in order to convict a tippee for insider trading under Section 10(b) of the Securities Act of 1934 and Rule 10b-5, the government must prove beyond a...more

SEC Distances Itself From Janus and Adopts Expansive View of Rule 10b-5(a) and (c)

The SEC recently rendered an opinion in an enforcement action against two persons, John P. Flannery and James D. Hopkins, associated with an investment adviser. In so doing, it sought to limit the Supreme Court’s holding in...more

Second Circuit Overturns Two Insider Trading Convictions

On December 10, the U.S. Court of Appeals for the Second Circuit overturned, and further, dismissed two of the DOJ’s insider trading convictions. United States of America v. Newman and Chiasson, Nos. 13-1837-cr(L),...more

Searching for Greener Pastures: SEC Insider Trading Enforcement in a Post-Newman Era

In United States v. Newman, the U.S. Court of Appeals for the Second Circuit dealt a substantial blow to federal prosecutors’ epic crackdown on insider trading by raising the bar for the government’s burden of proof in...more

Court Of Appeals Reins in Prosecutors in Insider Trading Cases

In a landmark insider trading decision issued on December 10, 2014, the U.S. Court of Appeals for the 2nd Circuit made important pronouncements favorable to the defense on two recurring and important legal issues: (1) what is...more

Hello Newman! (and Chiasson): Second Circuit Decision Raises the Bar for Government to Prove Liability of “Remote Tippees” in...

In a groundbreaking decision, the United States Court of Appeals for the Second Circuit has reversed the 2013 insider trading convictions of Todd Newman and Anthony Chiasson. The decision in United States v. Newman, No....more

Second Circuit Raises the Bar for Government Insider Trading Prosecutions – Practical Implications for the Business Community

On December 10, 2014, the U.S. Court of Appeals for the Second Circuit issued a much publicized decision, reversing two high-profile insider trading convictions in the Southern District of New York. The Court limits the scope...more

Securities Litigation Alert: In Major Ruling, Appeals Court Sharply Narrows Reach of Insider Trading Law

On December 10, 2014, the U.S. Court of Appeals for the Second Circuit reversed insider trading convictions against two former hedge fund managers, and in the process sharply limited two key doctrines underpinning many recent...more

Knowledge of Benefit Required to Convict Insider Trading Tippees

In its important ruling on what the government must prove in a criminal insider trading prosecution, the Second Circuit reversed the convictions of two portfolio managers — throwing out their cases completely, with no new...more

Second Circuit Redefines “Personal Benefit” in Insider Trading Case

Breaking from precedent, the Second Circuit sets a new standard for the personal benefit element of insider trader liability. On December 10, 2014, the United States Court of Appeals for the Second Circuit reversed...more

Second Circuit Raises the Bar for Proving Tippee Liability

Wednesday, the U.S. Court of Appeals for the Second Circuit vacated the criminal insider trading convictions of two former hedge fund managers, and in doing so, clarified the elements required to prove an insider trading...more

Second Circuit clarifies law of insider trading in reversing convictions of remote tippees

In a significant decision, the Second Circuit has reversed criminal convictions for insider trading and conspiracy to commit insider trading in an appeal following a six-week jury trial in a closely-watched prosecution...more

When California Copied Rule 10b-5 Did It Shut The State Courthouse Door To Securities Fraud Suits?

Section 27 of the Securities Exchange Act of 1934 provides: “The district courts of the United States . . . shall have exclusive jurisdiction of violations of [the Exchange Act] or the rules and regulations thereunder,...more

SEC Announces First-Ever Market Manipulation Case Against High-Frequency Trading Firm

On October 16, 2014, the US Securities and Exchange Commission (SEC) announced a settlement in the amount of US$1 million with Athena Capital Research LLC to resolve claims of market manipulation involving Athena’s use of...more

Loss Causation In A Securities Fraud Case From a Stream of Small Disclosures

A critical element in a Section 10(b) and Rule 10b-5 securities fraud claim for damages is loss causation. Mandated as a key component of such a claim by the PSLRA, the element provides the essential link between the alleged...more

MD&A Rules Do Not Create Rule 10b-5 Disclosure Obligation

The Ninth Circuit recently examined whether Item 303 of Regulation of S-K, which sets forth the MD&A rules, creates an affirmative duty of disclosure on which to pin a Rule 10b-5 case. The case centered around a significant...more

Really? Requiring Someone To Use Information “Fairly And Lawfully” Can Be Illegal?

Companies have lots of very good reasons for adopting codes of conduct. These reasons include: - Ensuring compliance with applicable exchange listing rules (e.g., NYSE Rule 303A.10 and NASDAQ Rule 5610); -...more

District Court Reaffirms Rule 10b5-1 Standard and Denies Motion to Dismiss Insider Trading Charges

The US District Court for the Northern District of Illinois denied a motion to dismiss a 16-count indictment for insider trading, finding the government adequately alleged each element of the offense....more

Corporate and Financial Weekly Digest - Volume IX, Issue 29

In this issue: - SEC Approves FINRA Rule Limiting Expungement - CFTC Issues No-Action Relief from Certain Ownership and Control Reporting Requirements - CFTC Releases Rule Enforcement Review of ICE...more

D&O Claims – Overview of US Securities Law

The Securities Act of 1933 (“the 1933 Act”) regulates the process by which securities are first offered and sold to the public, and has two primary objectives: (1) to ensure that investors receive full and accurate...more

It Matters Who’s the Plaintiff: Janus and Stoneridge May Not Help Against The SEC, but Monterosso Shouldn’t Apply as...

The SEC recently made the unusual move of asking the Eleventh Circuit to publish its previously-unpublished per curiam decision in SEC v. Monterosso, 2014 WL 2922670 (11th Cir. June 30, 2014). The decision was not merely a...more

A Quick Glance: The Two Central Holdings from the U.S. Supreme Court’s Decision in Halliburton

In what amounted to a 6-3 decision, the Supreme Court held in Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. ___ (2014) that the presumption of reliance based on the fraud-on-the-market theory, first articulated in...more

Investment Adviser Accused of $8.8 Million Fraud by SEC

On June 3, the Securities and Exchange Commission filed an emergency enforcement action in the US District Court for the Southern District of New York against Scott Valente, an investment adviser, alleging that he used his...more

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