Peter Henning

What Happened to “Meaningfully Close Personal Relationship” in Insider Trading?

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Did insider trading law almost devolve into an effort to define  what kind of relationship a tipper and tippee must have for  a defendant to be liable? And was any federal judge or jury qualified to say? Since the Second Circuit’s decisions in United States v. Newman[1] and United States v. Martoma,[2] courts, prosecutors, and regulators no longer need to figure out what a “meaningfully close personal relationship” is. Now, merely giving a tip to a complete stranger may actually violate Rule 10b-5.

Newman was the kind of case that my superiors at the Securities and Exchange … Read more

Why It Is Getting Harder to Prosecute Executives for Corporate Misconduct

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The era of large corporate penalties certainly looks to be over, and it is an open question whether we will continue to see companies pleading guilty or settling cases with deferred prosecution agreements. The notion of not imposing costs on “innocent” shareholders has taken hold, so the large fines extracted from banks in the wake of the financial crisis and manipulation of benchmarks like LIBOR are likely a relic of a bygone era.

Whether that is good or bad is a different question, and there are reasonable arguments that corporate criminal liability is a poor way to regulate business behavior. … Read more