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SCOTUS Gives Insider Trading a Pass

In a move that is sure to inflame the passions of Occupiers (a la, the 99 percent), SCOTUS refused, on Wednesday, to review a decision by the Second Circuit which threw out the convictions of hedge fund managers Anthony Chiasson and Todd Newman. The decision came as a major blow to both US Attorney Preet Bharara and the US Justice Department's attempt to crackdown on insider trading in the midst of increasing disapproval from the public.

SCOTUS' refusal all but affirms the Second Circuit's narrow definition of insider trading.

Companies are much more willing to part with millions of dollars than to admit that they have done wrong and violated the law. Settlements with enforcement agencies, the Securities and Exchange Commission chief among them, almost never require companies to admit wrongdoing -- almost.

For the past two years, the SEC has been pursuing such admissions more fervently. Under a new-ish policy, the Commission requires admissions of wrongdoing in "egregious" cases.

The Securities and Exchange Commission has charged 36 firms with securities violations connected to the issuance of municipal bonds. Those banks, underwriters of the bonds, will pay between $40,000 to $500,000 for making materially false statements or omissions about the issuer's compliance with disclosure rules.

The enforcement action is the first the SEC has taken under its Municipalities Continuing Disclosure Cooperation Initiative. The MCDC is a voluntary program that allows participating banks to self-report violations in exchange for standardized settlement terms.

Your company may not be paying its legal department in bitcoin yet -- and it may never -- but bitcoin technology could soon change the way financial operations work. Nasdaq is currently experimenting with bitcoin's blockchain technology to see if it can speed up trades on its stock market.

Right now, the experiment is limited to a small market for securities in privately held companies. If the project is successful, it could ramp up the speed of securities trades -- potentially transforming the industry. For in house counsel, now's a good time to start taking note of bitcoin.

When the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010, it included an expanded whistleblower bounty program. As an incentive to report violations of financial regulations, whistleblowers are entitled to 10 to 30 percent of an enforcement action's recovery.

If they can ever get it. According to a review by The Wall Street Journal, 83 percent of the whistleblowers who have applied for their awards have yet to have their claims addressed.

KBR Inc., a Texas tech and engineering company, has settled the first SEC "pretaliation" enforcement action under Dodd-Frank, Inside Counsel reported yesterday. KBR's standard confidentiality agreement, used in internal investigations, forbids employees from "discussing any particulars" about the investigation without prior authorization from the law department. That's illegal pretaliation, according to the SEC.

In-house counsel, get ready to spend your weekend reviewing your company's confidentiality policies!

Justice Dept. Seeks Clarification on Insider Trading

Last week, the United States went back to the Second Circuit to ask for a rehearing in United States v. Newman, where that court overturned the convictions of two hedge fund managers for trading on inside information.

The Second Circuit rejected Newman and Chiasson's convictions on a "tipper/tippee" theory of liability, prompting onlookers to urge Congress to clarify what the heck qualifies as insider trading.

SEC OKs Share Registration for Calif. Marijuana Company

Every startup needs a lawyer, but startups are already shaky value propositions if you think you're going to burst onto the GC stage, or advance your extant career by working for a company that develops an app to check the temperature of your bath water. (It's even worse when you consider that a lot of startups pay their "employees" in equity that's basically kindling until they're bought by Facebook for a billion dollars.)

What's even riskier? Being GC for a pot dispensary. They're legal under state laws in Colorado, Washington, Oregon, and Alaska, but the Feds still list marijuana as a Schedule I narcotic, along with heroin and LSD.

So you'd think your new pot company can't be publicly traded, right?

Apple Faces Yet Another eDiscovery-Aided Antitrust Suit

Stop me if you've heard this one before: Apple is being sued for anticompetitive behavior, and the evidence includes an email from the late Steve Jobs.

Yep. It's the e-book antitrust lawsuit all over again, except this time, the claims are swirling around the company's legendary iPod and related iTunes service. When the products were launched, the two were inseparable: Only iTunes music files would play on iPods.

Lawyers say this is anticompetitive behavior. Apple said that the record companies forced it to use the security measures. According to 9 to 5 Mac, Steve Jobs allegedly said this in a 2003 email:

We need to make sure that when Music Match launches their download music store they cannot use iPod. Is this going to be an issue?

Lawyer-Witness to JPMorgan Mortgage Fraud Claims Federal Cover-Up

One of the most infuriating things about the 2008 subprime mortgage crisis and subsequent collapse of the economy was the absolute lack of accountability. Banks and big businesses were bailed out, nearly nobody was charged with crimes, and the executives who caused the whole mess continued on with massive salaries -- especially Jamie Dimon, who received a 74 percent raise after JPMorgan Chase agreed to a $13 billion (on paper) settlement with the government.

Now, with the settlement booked, and the statutes of limitations nearing their end dates, Alayne Fleischmann, the lawyer who was the key witness used to leverage the settlement, has come forward in a Rolling Stone feature, hoping that it will pressure the Justice Department to prosecute those responsible -- those who allegedly intentionally packaged and mislabeled junk subprime mortgages before selling them to investors.