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Showing posts from April, 2010

Securities Fraud / Fiduciary Obligations / Omission Liability / Materiality Expert

In U.S. v. Schiff, --- F.3d ----, 2010 WL 1338141, April 07, 2010, defendants were "high-ranking corporate executives" at a pharmaceutical company, indicted for orchestrating a securities fraud scheme in violation of 15 U.S.C. § 78j(b) and SEC Rule 10b-5. The government filed an interlocutory appeal over a district court order addressing several contested theories of liability as well as expert witness issues under Daubert.

In a lengthy opinion only briefly summarized here, the Court first addressed, and rejected, the viability of the government's legal theory that defendant had a fiduciary duty to rectify codefendant's allegedly material misstatements in subsequent SEC filings. Absent a duty to disclose, silence is not fraudulent or misleading under Rule 10b-5. Pursuant to Oran v. Stafford, a duty to disclose under Rule 10b-5 may arise only in three circumstances: when there is [1] insider trading, [2] a statute requiring disclosure, or [3] an inaccurate, incomplete …

Court Finds Inadvertent Out-of-jurisdiction Arrest Reasonable; Declines to Address Sentencing Entrapment and Manipulation Doctrines

In U.S. v. Sed, --- F.3d ----, 2010 WL 1292152 (Apr. 6, 2010), defendant, convicted of conspiracy to distribute and PWID, challenged (1) the validity of his arrest in Ohio by Pennsylvania state police and (2) the denial of a sentencing reduction based on sentencing entrapment and/or manipulation.

First addressing Sed’s arrest, the Circuit held it reasonable under Fourth Amendment despite the fact that Pennsylvania state police violated Ohio law by seizing him outside of their jurisdiction. The Court first rejected the notion that any violation of state law constituted an ipso facto violation of the Fourth Amendment, citing Virginia v. Moore, 553 U.S. 164 (2008). Next, the Court found the arrest reasonable under the totality analysis, based on the fact that defendant had committed a serious drug crime in Pennsylvania, was acting in furtherance of conspiracy to distribute drugs in Pennsylvania at time he was seized, was responsible for a last-minute change of plans such that the secon…