Category Archives: Supreme Court

New Limits on Insider Trading?

A Wall Street Journal article reports that the U.S. Supreme Court has granted a writ of certiorari to review the ruling by Judge Jed Rakoff in the case of Salman v. US, 792 F.3d 1087 (9th Cir. 2015). Judge Rakoff, who usually sits on bench of the Southern District of New York, served as a visiting judge temporarily assigned to the Ninth Circuit and wrote the opinion in Salman, which disagreed with last year’s Second Circuit ruling in US v. Newman, 773 F. 3d 438 (2d Cir. 2014). The Newman decision overturned the insider trading convictions of former hedge-fund traders articulating a narrower definition of the crime. The issue in Salman is what constitutes insider trading in a case involving an Illinois businessman’s appeal of his conviction for making $1.2 million trading on tips about mergers from his brother-in-law, a Citigroup banker. With the grant of certiorari, the Supreme Court may now decide a key question in insider trading cases, namely what benefits corporate insiders need to receive for any information they disclose to traders to be illegal. The Justice Department warned that overturning the convictions in Newman prosecution could hinder the government’s campaign to curb insider trading on Wall Street. The Supreme Court denied certiorari in Newman.

Salman was convicted of 2013 of making investments based on confidential information he received from a family member who worked in the health care investment banking group at Citigroup Global Markets in NY. Co-defendants pleaded guilty in 2011 and were sentenced to probation. Salman was sentenced to 36 months in federal prison and ordered to pay more than $738,000 in restitution. His appeal cites the Second Circuit decision in Newman where the court ruled that prosecutors must prove that a defendant had direct knowledge of the leaker, realize that a breach of fiduciary duty occurred and know that the leaker received a personal benefit in exchange for the information. In Newman, the Second Circuit held that the evidence was insufficient to establish that the tippers received a personal benefit in exchange for the tip. The court also explained that there needed to be “proof of a meaningfully close personal relationship that generates an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature.” In other words,  the relationship should suggest a quid pro quo from the recipient.

InsiderBrooklyn Law School Library has an extensive collection of material on  insider trading, the latest of which is Insider Trading Law and Policy by Stephen Bainbridge (Call # KF1073.I5 B35 2014). The textbook is for use in law school classes on insider trading, securities regulation, or business associations. It offers a clear and direct exposition of the law and policy concerns raised by this important and hcircleigh-profile area of the law. The author provides sufficient detail for a complete understanding of the subject without getting bogged down in minutiae. A second item in the BLS Library collection is  worth reading: Circle of Friends: The Massive Federal Crackdown on Insider Trading—and Why the Markets Always Work Against the Little Guy by Charles Gasparino (Call # HG4928.5 .G38 2013). It is a riveting work of narrative nonfiction, as engrossing and explosive as fictional thrillers of the finest magnitude and should serve as a wake-up call to the investing public.

Supreme Court To Decide If and When RICO Reaches Extraterritorially

On October 1, 2015, the United States Supreme Court granted certiorari to the Second Circuit decision in European Community v. RJR Nabisco, 764 F.3d 129 (2d Cir. 2014). In granting review, the Court will determine whether or not RICO has extraterritorial reach. In examining this issue, the Court may also rule on how to decide whether RICO claims involving multinational parties are domestic ones, and how to determine whether it is an improper or proper extraterritorial claim.

If you would like to learn more about the Racketeer Influenced and Corrupt Organization Act (RICO), check out the library resources below.

Ending the Death Penalty

On June 29, 2015, the final day of its 2014 term, the US Supreme Court ruled in Glossip v. Gross. The Court, in a 5-4 opinion by Justice Alito, ruled that death-row inmates had failed to establish a likelihood of success on the merits of their claim that the use of midazolam, a sedative in Oklahoma’s lethal injection protocol, violates the Eighth Amendment because it fails to render a person insensate to pain. Today, Glossip is scheduled to die by the controversial method that the Court greenlighted this summer unless there is a stay of execution. The case is likely not the final word on the death penalty. Justice Scalia this week Scalia told students at a Memphis college that he “wouldn’t be surprised” if the Supreme Court ruled the death penalty unconstitutional citing Justice Breyer’s dissent that it is time to consider whether the Eighth Amendment bars capital punishment in all cases.

Breyer is not the first Supreme Court justice to invite constitutional debate about the death penalty. Several justices in Gregg v. Georgia, 428 US 153 (1976) bringing back the death penalty later came to reject it. Justice Powell told his biographer that the death penalty should be abolished. Justice Blackmun, wrote in 1994 that he would no longer “tinker with the machinery of death.” In 2008, Justice Stevens wrote that his review of hundreds of cases had persuaded him that the penalty is both profoundly unworkable and unconstitutional. Justice Breyer in his dissent in Glossip argued that the death penalty is unreliable and arbitrary in application citing the long delays that undermine its purpose, convinced that we have executed the innocent. In Rudolph v. Alabama, 375 U.S. 889, (1963), Justice Goldberg’s dissent also suggested that capital punishment might violate the Eighth Amendment. That dissent prompted statewide moratoriums and encouraged cases to be brought to the Court challenging the constitutionality of capital statutes. A decade later, the Court struck them all down in Furman v. Georgia, 408 U.S. 238 (1972). Perhaps, in the wake of Glossip, we are about to travel down that path once again.

BarbellaOn the subject of capital punishment, Brooklyn Law School Library has The Trials of Maria Barbella: The True Story of a 19th Century Crime of Passion by Idanna Pucci (Call #HV6053 .P83 1996). This book illustrates the debate over the death penalty in the late 19th Century in the story of the trial of Maria Barbella for the murder of Domenico Cataldo in New York City on April 26, 1895. Maria and her family immigrated to New York in 1892. She met and became friendly with Cataldo, also from the same region of Italy. One day Cataldo took her to a boarding house, drugged her with the drink he bought her, and took advantage of her. With strong morals about intimacy and marriage, Maria said that they would have to get married. He promised they would marry in several months, even though he was already married to a woman in Italy, with whom he had children. Later Cataldo told Maria that he was going back to Italy and would not marry her. When Maria and her mother confronted him and insisted he marry Maria he said the only way he would do that was if they paid him $200. As the mother stormed away, Maria asked, one last time, whether she would be his wife. When he replied that “Only a pig would marry you“, she drew out her razor and killed him by cutting his throat.

Thus began the saga of Maria Barbella, who shortly became the first woman sentenced to die in the electric chair. She was arrested and put in the New York Halls of Justice and House of Detention (otherwise known as “The Tombs”) for more than two months. Her trial began on July 11. Maria was unable to speak or understand English. She admitted everything: how she slit his throat and how he ran after her, unable to reach her and dropped dead. The jury showed sympathy for her case; but trial Judge John W. Goff asked the jury not to have mercy on Maria. He said, “Your verdict must be an example of justice. A jury must not concern itself with mercy. The law does not distinguish between the sexes. The fragility of the female sex is sometimes involved to excuse savage crimes. We cannot publicly proclaim a woman not guilty of killing a man solely because this man has proposed marriage and then changed his mind!” The jury declared her guilty. On July 18, 1895, Judge Goff sentenced her to “execution by electricity” and sent her to Sing Sing Prison, the first female convict held there in 18 years and the first one on death row.

The case stirred up controversy in the Italian community which felt that the verdict was unjust with no Italians on the jury. Many complained to the Governor about how the trial was handled. On April 21, 1896, the Court of Appeals of New York in People v Barberi, 149 N.Y. 256 (also available on Westlaw Next at this link) ruled that the judgment of conviction should be reversed and a new trial granted. In the second trial at the criminal branch of the New York Supreme Court, she was said to be epileptic and mentally ill because of everything that had happened. She was found not guilty.

Two Landmark Supreme Court Decisions in Two Days

The United States Supreme Court on Thursday, June 25, 2015 upheld federal health insurance subsidies for moderate and low income Americans as part of the Patient Protection and Affordable Care Act of 2010.

The vote was 6-3, with the majority opinion written by Chief Justice John Roberts, Jr. The Court ruled that subsidies are valid even in those states that did not set up their own exchanges. This decision, in King v. Burwell, was the second time in three years that the Supreme Court upheld provisions of “Obamacare,” that otherwise might have decimated the law.  The Court upheld the law’s individual mandate in 2012 in National Federation of Independent Business, et al. v. Sebelius.

The Court also handed down another major decision on Friday, June 26, 2015 in Obergefell v. Hodges. By a vote of 5-4, the Court ruled that states cannot ban same-sex couples from getting married.  This decision establishes a national right to same-sex marriage throughout the country and requires states to recognize same-sex marriages performed in other states. The majority opinion was written by Justice Anthony Kennedy.


First Amendment Supreme Court Decisions

Today the Supreme Court issued rulings on two cases dealing with First Amendment issues.Judges_Gavel

In Walker v. Texas the Court ruled that Texas did not violate the First Amendment when it rejected a specialty license plate featuring the Confederate battle flagJustice Clarence Thomas joined four liberal members of the court to keep the flag off Texas license plates. The court’s four other conservative members called the decision an assault on free speech rights.

In Reed v. Gilbert the Court ruled for an Arizona church’s challenge to a sign ordinance.  The justices unanimously said the town of Gilbert, Arizona, ran afoul of the First Amendment by setting tougher rules for signs placed in the right of way along public streets to direct people to Sunday church services than for signs for political candidates and real estate agents.


Will the Supreme Court Make History Next Month?

In mid January the U.S. Supreme Court agreed to hear four new cases on the issue of same-sex marriage. The focus of the Court’s review is a decision issued in early November by the U.S. Court of Appeals for the Sixth Circuit.  That decision upheld bans on marriage or marriage-recognition in Kentucky, Michigan, Ohio, and Tennessee.

The cases in question are  Bourke v. Beshear (Kentucky); DeBoer v. Snyder (Michigan);  Obergefell v. Hodges, (Ohio) and  Tanco v. Haslam, (Tennessee). These cases are linked and being argued as Obergefell v. Hodges.  Arguments began on Tuesday, April 28th.

The questions the high court is considering are

  1. Does the Fourteenth Amendment require a state to license a marriage between two people of the same sex?
  2. Does the Fourteenth Amendment require a state to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-state?

For a good analysis of the arguments before the court, check out the SCOTUSblog.

For further background information check out the book, Same-sex marriage in the United States: the Road to the Supreme Court, which tells the story of the legal and cultural shift regarding this social issue and how it has evolved over the past 15 years.

The justices will issue their decision by the end of June.  We all await this decision.