- Alex J. Brackett, McGuireWoods LLP
- James F. Neale, McGuireWoods LLP
- David Debold, Gibson, Dunn & Crutcher LLP
Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law
Over a three-year period from 2004 to 2007, Citigroup investment banker Maher Kara disclosed confidential nonpublic information about upcoming mergers and acquisitions to his brother Michael Kara. In turn, Michael disclosed the information to his close friend Bassam Salman, who then indirectly traded in the affected stocks. When Salman was tried on charges of illegal insider trading, the government offered evidence that he knew the information originated with Maher.
The case presented two issues: First, what is the basis of liability when an insider tips information to an outsider? Second, what must the government prove in order to hold a remote tippee liable when the information is passed down a chain from tipper to tippee to a tippee of that tippee and so on? Continue reading
Anthony W. Swisher, a Partner in the Washington, DC office of Squire Patton Boggs (US) LLP.
*Ed. Note: With this post, Mr. Swisher is assuming the role of Featured Expert Contributor on Antitrust & Competition—DOJ. The WLF Legal Pulse welcomes him on board, and we thank his predecessor, Mark J. Botti, for his contributions on DOJ-Antitrust matters during the past two years.
Observers looking for clues as to how federal antitrust enforcement could develop in the next administration took note of a June speech by Senator Elizabeth Warren. Senator Warren laid out some aggressive policy views that would result in a marked shift in antitrust enforcement doctrine if put into place. She decried a so-called “concentration problem” and lamented that “competition is dying.” Senator Warren called for the antitrust enforcement agencies to “hold the line” on horizontal mergers, and was sharply critical of the established agency practice of obtaining divestiture relief, claiming that “too often, [divestitures] don’t work.” Continue reading
Andrea Agathoklis Murino, Goodwin Procter LLP
Staples, Inc. (SPLS) and Office Depot, Inc. (ODP) would be forgiven for thinking of the late Yogi Berra and wondering if this was what he meant by déjà vu all over again. In 1997, following an investigation by the Federal Trade Commission (FTC), the US District Court for the District of Columbia blocked their proposed tie-up. And now, in 2016, after more than a year-long battle with the FTC, the same court’s Judge Emmet G. Sullivan blocked SPLS’s proposed acquisition of ODP. Judge Sullivan announced the outcome on May 10, but issued his opinion only to the parties; the public needed to wait until May 17 to see his quite detailed 75-page explanation. In sum, Judge Sullivan found that the FTC had met its burden under § 7 of the Clayton Act and showed a reasonable probability that the proposed merger would substantially lessen competition in the sale and distribution of consumable office supplies to large Business-to-Business customers. With that finding in hand, the court concluded that the FTC had carried its burden of showing that a preliminary injunction preventing the proposed merger was in the public interest and that the equities weighed in favor of injunctive relief. Shortly after Judge Sullivan announced his decision, SPLS and ODP abandoned the transaction. Continue reading
On Monday, May 2, 2016, Washington Legal Foundation hosted a program in its Media Briefing series entitled Freeing Off-Label Use Information: Three Lingering Questions for Medical-Product Innovators and Regulators. The recording of that program is available below. Also below are links to related materials, including an April 29, 2016 WLF Legal Backgrounder that draws lessons from a medical-device company’s successful defense of a criminal prosecution for alleged off-label promotion.
The program can also be viewed through WLF’s website—with a higher-quality video and integrated slides—by clicking here.
John Osborn’s Yale Journal article, “Can I Tell You the Truth?”, cited by the U.S. Court of Appeals for the Second Circuit in U.S. v. Caronia, is available here.
WLF’s Legal Backgrounder, “The US v. Vascular Solutions Acquittal: Three Lessons for Targets of ‘Off-Label Promotion’ Enforcement,” is available here.
Deferred-prosecution agreements (DPAs) pose thorny questions from an overcriminalization perspective. But DPA skeptics should welcome—at least for now—a decision issued last Tuesday by the U.S. Court of Appeals for the DC Circuit. In a case entitled United States v. Fokker Services B.V., the DC Circuit held that federal district courts may not second-guess the charging decisions of prosecutors under the guise of performing their Speedy Trial Act (STA) duties.
After investigating the defendant company’s self-reporting of potential export control law and federal sanction violations with respect to Iran, Sudan, and Burma, the Department of Justice negotiated an 18-month deferred-prosecution agreement with Fokker. To implement such a DPA the prosecutor formally initiates criminal charges against the defendant based on facts conceded in the agreement. If the defendant meets the preconditions mapped out in the DPA (which generally involve complying with the law and keeping its nose clean), the prosecutor will then dismiss those charges at the conclusion of the deferral period. If, on the other hand, the defendant fails to meet the preconditions at some point along the way, the prosecutor will proceed with its criminal case. Continue reading
America’s highest ranking law-enforcement officer, Attorney General of the United States Loretta Lynch, has gotten directly involved in the debate over the proper standard of criminal intent (known in legalese as mens rea) in federal laws. At a March 9 Senate Judiciary Committee oversight hearing, Attorney General Lynch, while generally cautious in her response to Senators’ questions, endorsed the Department of Justice’s use of strict-liability laws to, among other things, “ensure the safety of our food and drugs.” Attorney General Lynch’s statement reflects the federal government’s long-standing belief that criminal prosecution is an appropriate and effective business regulatory tool. The government’s heavy reliance on regulatory crimes is why the Justice Department and other federal agencies oppose such common-sense reforms as a default culpability standard of “willful” or “reckless” for federal laws that lack an intent requirement. Heightened intent standards would complicate regulation-by-prosecution, an outcome the Obama Administration and some elected officials are desperate to prevent. Continue reading