Second Circuit Holds That Certain Political Intelligence Is Not “Property” Under Title 18

The insider trading saga involving David B. Blaszczak, government employee Christopher M. Worrall and three analysts at Deerfield Management Company, L.P. continues. In 2018, all five were convicted of insider trading, wire fraud and other charges under Title 18 of the United States Code for trading on nonpublic information about pending changes to Medicare reimbursement rates. Three of the defendants appealed all the way to the U.S. Supreme Court, which, at the government’s request, remanded the case to the Second Circuit for reconsideration in light of the Supreme Court’s 2019 decision in Kelly v. U.S. On remand, the government conceded that such information is not “property,” and the Second Circuit agreed that all substantive Title 18 fraud charges should be dismissed. This article presents these latest critical developments, with commentary from David I. Miller, Greenberg Traurig shareholder and former Assistant U.S. Attorney for the Southern District of New York. For more on political intelligence, see “Mitigating Insider Trading Risks: Expert Networks, Political Intelligence, Meetings With Management, Data Rooms, Information Barriers and Office Sharing (Part Two of Two)” (Oct. 11, 2018); “Self-Evaluation Policies Are Insufficient for Political Intelligence Firms to Avoid MNPI Violations” (Dec. 17, 2015); and “How Can Hedge Fund Managers Identify and Mitigate Insider Trading Risks Associated with Gathering and Using Political Intelligence?” (Jul. 11, 2013).

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