Tag Archives: SEC

SEC Claims Cooperator Lied At Trial; Seeks To Up Penalty from $2,500 to $3 Million

The SEC claims that insider trading defendant Thomas Condradt committed perjury at the trial of his co-defendant Daryl Payton in breach of his cooperation agreement and, instead of the agreed-upon penalty of $2,533, the SEC is now seeking a penalty of almost $3 million.  The jury ultimately convicted Payton, even though the SEC was clearly … Continue Reading

Judge Rakoff Reluctantly Declines to Refer Defendant in SEC Civil Case for Criminal Perjury Prosecution

In an opinion today, Judge Rakoff explained why he would decline to refer Darlyl Payton, a defendant who was recently found liable an SEC insider trading case, to the U.S. Attorney’s Office for a perjury prosecution related to Mr. Payton’s testimony in the SEC case.  Mr. Payton had pleaded guilty to criminal insider trading charges but … Continue Reading

Judge Rakoff : “Conscious Avoidance” of Source of Stock Tip Can Result in Liability, Even After Newman Decision

In an opinion yesterday, Judge Rakoff denied a summary judgment motion brought by two SEC defendants who traded on a tip that IBM was about to acquire a company called SPSS.  The tip passed from a lawyer working on the deal (Dallas) to his friend (Martin), then to Martin’s roommate (Conradt) and, ultimately, to the two … Continue Reading

Judge Gardephe Certifies for Appeal Issue of Whether SEC Can Subpoena Congressional Committee

Judge Gardephe yesterday certified for interlocutory appeal his earlier ruling (covered here) allowing the SEC to obtain some (but not all) categories of information sought by a subpoena to a congressional committee in connection with an investigation of the STOCK Act, which essentially extends the insider trading laws to Congress.   He found that an immediate appeal … Continue Reading

Judge Gardephe Rules that Congressional Committee Must Respond to SEC Subpoena, But May Withhold Internal Legislative Deliberations

In an opinion dated Friday but released this morning, Judge Gardephe largely upheld subpoenas to a congressional committee and a staffer concerning allegedly unlawful stock trading under the STOCK Act, which essentially extended insider trading laws to Congress.  (See our previous coverage of the case here.) Judge Gardephe found that the subpoenas were not barred … Continue Reading

SDNY Blog Returns as Steptoe Blog

The SDNY Blog is relaunching as a publication of Steptoe & Johnson LLP.  We expect to post several times a week on decisions and other developments in the Southern District of New York.  You can find us right here at www.sdnyblog.com, or follow us on Twitter or Facebook. Here’s a quick summary of what’s been happening in the Southern … Continue Reading

Judge Berman Refuses to Block SEC ALJ Proceeding; Finds ALJ Tenure Protections Likely Constitutional

In an opinion today, Judge Berman denied a motion to enjoin an SEC administrative enforcement proceeding.  The proceeding was challenged on the ground that SEC administrative law judges are too insulated from executive oversight for purposes Article II of the Constitution, as interpreted by the Supreme Court in Free Enterprise Fund v. Pub. Co. Accounting … Continue Reading

Judge Rakoff, Acknowledging “Difficulties” In Defining Insider Trading, Upholds SEC Complaint Notwithstanding Newman Decision

In an opinion yesterday, Judge Rakoff denied a motion to dismiss an SEC complaint against two individuals who traded stocks after learning about an impending acquisition from a co-worker, Thomas Conradt, who, in turn, learned the information from his roommate Trent Martin.  The opinion begins by acknowledging the “difficulties” with having insider trading defined by … Continue Reading

Judge Kaplan Denies Motion Challenging SEC Administrative Proceedings As Unfair

In an opinion today, Judge Kaplan denied the motion of CDO manager Harding Advisory and its principal Wing Chau to preliminarily enjoin SEC administrative proceedings against them.  The hearing has already been completed, but they await a decision that is expected next month.  As we reported in March, the plaintiffs initially moved to stay the … Continue Reading

Herbalife Case Raises Second Challenge to Constitutionality of SEC ALJs

A complaint filed yesterday is the second SDNY suit (see our post on the first one, here) to argue that SEC ALJ’s are too insulated from accountability to the executive branch, in violation of Article II of the Constitution. The underlying case involves administrative charges against Jordan Peixoto, who allegedly shorted Herbalife stock in advance … Continue Reading

New Suit Challenges Constitutionality of SEC Administrative Proceedings Based on ALJs’ Insulation From Executive Oversight

Attorneys at Skadden Arps and Post & Schell, on behalf of a client named Joseph Stilwell and his firm, today filed a complaint arguing that SEC administrative proceedings are unconstitutional: SEC administrative proceedings violate Article II of the U.S. Constitution, which states that the “executive Power shall be vested in a President of the United States of … Continue Reading

Judge Rakoff Questions Second Circuit While Reluctantly Approving SEC-Citi Settlement

In an opinion today, Judge Rakoff, following a remand from the Second Circuit (see our post here), relucutantly approved the $285 million SEC-Citibank settlement that he had previously rejected and that involved no admission of wrongdoing. Judge Rakoff offered a few criticisms of the Second Circuit’s decision, even as he concluded that it compelled the … Continue Reading

SEC Sues to Force Congressional Committee and Staffer to Comply With Insider Trading Subpoenas

In papers filed Friday, the SEC moved, by Order to Show Cause, to force the House Ways and Means Committee and a staffer, Brian Sutter, to comply with subpoenas issued as part of the SEC’s investigation into potential violations of the STOCK Act, which essentially extends the insider trading laws to Congress. By an agreed-upon … Continue Reading

Judge Marrero Approves $614 Million SAC Capital Settlement With SEC in Light of Second Circuit Ruling in Citi Case

As expected, the Second Circuit’s decision in a pending appeal involving Citibank paved the way for Judge Marrero to approve, in an opinion today, the SEC’s proposed $614 million settlement with SAC Capital. Judge Marrero initially expressed concern about the settlement being on a “neither-admit-nor-deny” basis, but, since then, a jury found former SAC Capital … Continue Reading

Second Circuit Reverses Judge Rakoff’s Rejection of “No Admission” SEC Settlement With Citi

In an opinion today reversing Judge Rakoff’s highly publicized decision to reject Citi’s $285 million settlement between the SEC and Citi that involved no admission of wrongdoing, the Second Circuit held that, in reviewing consent decrees with the SEC, district courts should not address the “adequacy” of settlements: It is an abuse of discretion to … Continue Reading

CDO Manager Sues to Enjoin SEC Administrative Case Based on Inadequate Procedural Protections

In a complaint filed Tuesday, CDO manager Harding Advisory and its principal Wing Chau allege that the SEC violated their due process and equal protection rights by “shoehorning” a case against them into an administrative proceeding instead of suing in federal court.  The plaintiffs allege that an administrative hearing is wholly unsuitable for a complex case … Continue Reading

Judge Maas Rejects Request to Depose SEC Officials to Prove Madoff’s Elusiveness

In the civil litigation against the Madoff feeder fund Fairfield Greenwich, its auditors and others, Judge Maas on Thursday (Thanksgiving Day), denied the defendants’ letter motion to compel depositions of two SEC employees for the purpose of showing that, since Madoff successfully deceived the SEC, he could have also deceived the defendants.  Judge Maas found … Continue Reading

Judge Oetken Dismisses SEC Insider Trading Complaint Containing “All Belief and No Information”

In an opinion dated yesterday, Judge Oetken dismissed an SEC complaint against two individuals who made what it contended were highly suspicious trades in the stock of Onyx Pharmaceuticals, Inc. shortly before Amgen, Inc. made an unsolicited bid for Onyx that made Onyx’s stock price rise. Judge Oetken ruled that the complaint did not have enough … Continue Reading

Judge Gardephe Orders Gibson Dunn to Produce Notes of Interviews of Witnesses Whose Statements It Revealed to SEC

In an opinion today, Judge Gardephe rejected Gibson Dunn’s attempt, in a civil defamation suit, to prevent disclosure of interview notes from witnesses whose statements were shared with the SEC. Judge Gardephe had earlier ruled that any privilege was waived, but Gibson Dunn argued that, apart from any waiver, the firm had its own internal … Continue Reading
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