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Last month, Deputy Attorney General Sally Q. Yates issued a memorandum entitled “Individual Accountability for Corporate Wrongdoing” (Yates Memo). The Yates Memo directs federal prosecutors across the nation to “hold to account the individuals responsible for illegal corporate conduct.” The memo details six steps that the DOJ will undertake in this renewed mission to prosecute individual corporate executives. The guidance includes the mandate that corporations must give the government “all relevant facts” pertaining to the individuals that were involved in the alleged corporate misconduct in order for the corporation to be eligible for “any cooperation credit.”
On December 10, the Second Circuit Court of Appeals issued its widely-anticipated decision in the appeal of the insider trading convictions of Todd Newman and Anthony Chiasson. The convictions were among dozens obtained in recent years by Preet Bharara, the United States Attorney for the Southern District of New York, who has made cracking down on insider trading one of his highest priorities. In a decision that sharply rebuked the prosecutorial strategies employed in cracking down on insider trading, the Second Circuit concluded that a higher standard was required to hold individuals liable for insider trading – particularly those individuals removed by several degrees from the original “tipper.” Ruling that the jury instructions given in the Chiasson and Newman cases was flawed, the Second Circuit not only unanimously reversed the convictions, but also dismissed each case with prejudice.