One case that has percolated for years came to several convictions in May 2018. In this case, based on available news articles, a CMS consultant (Blaszczak) obtained information on pending rules from a CMS employee (Worrall), and passed the information forward to several investors. For a mid-trial article, here. For an article after the jury convictions, here.
On July 2, 2018, New York Law Journal published an open access article on the case by Abramowitz & Sack of the Morvillo law firm. Here.
The authors make the point that prosecution made charges under two different statutes:
- 1934 SEC Act, Rule 10-b-5, civil
- 2002 Sarbanes Oxley Act (Title 18), criminal
Jury acquitted under SEC Act civil charges, which by now require 10 different points of law to be satisfied (40 pages of instructions to jurors). It was actually easier to get criminal convictions under Title 18 Sarbanes Oxley (instructions only 4 pages long).
The authoring attorneys note it is quirky to have a situation where the same actions are more easily prosecuted on criminal rather than civil grounds. They also note that many insider trading cases have been prosecuted only under SEC civil law (often with not-guilty findings) but that in the future prosecutors may go for an easier win under Title 18.
For a bundled PDF including the transcript testimony of former CMS administrator Jonathan Blum, here.