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Article
Publication date: 25 November 2020

Alan R. Friedman, Dani R. James, Gary P. Naftalis, Paul H. Schoeman and Chase Henry Mechanick

To analyze the U.S, Supreme Court’s decision in Liu v. S.E.C., 140 S. Ct. 1936 (2020) and its potential implications for insider trading cases.

Abstract

Purpose

To analyze the U.S, Supreme Court’s decision in Liu v. S.E.C., 140 S. Ct. 1936 (2020) and its potential implications for insider trading cases.

Design/Methodology/Approach

Provides context on the history of disgorgement in SEC enforcement proceedings; discusses factual and procedural background underlying the Liu decision; summarizes the Court’s opinion and rationale, with a particular focus on the Court’s pronouncements regarding the permissible scope of SEC disgorgement as an equitable remedy; identifies and explores three possible issues in insider trading cases that may be affected by the Court’s narrowing of SEC disgorgement.

Findings

In Liu, the Supreme Court narrowed SEC disgorgement by stating that, as a general matter, SEC disgorgement is not permitted where: (1) the proceeds are not remitted to investors; (2) one defendant is made to disgorge profits that were received by someone else; or (3) the amount of disgorgement fails to deduct legitimate business expenses, in each case subject to possible exemptions as outlined by the Court.

Practical implications

This rule may call into question whether courts may: (a) order disgorgement against insider traders, given the difficulty of identifying investors who have been harmed; (b) order insider traders to disgorge profits earned by others on account of their violations; or (c) order insider traders to pay civil penalties under Section 21 A of the Exchange Act based on profits earned by others.

Originality/Value

Expert analysis and guidance from experienced securities enforcement lawyers with expertise in insider trading.

Details

Journal of Investment Compliance, vol. 21 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 March 1997

Rebecca Davis

Discusses the origin, the purposes, and the development of the Exclusionary Rule and the good faith exception to the rule with special emphasis on the now defunct HR666…

Abstract

Discusses the origin, the purposes, and the development of the Exclusionary Rule and the good faith exception to the rule with special emphasis on the now defunct HR666 (Exclusionary Rule Reform Act, 1995), which would have allowed the admission of evidence not now admissible under the currently recognized exceptions of the rule. Proposes that the judicially created exceptions to the rule have been excessive and suggests that police officers are tempted to violate intentionally the warrant rule, so causing innocent persons to be caught in the net.

Details

Policing: An International Journal of Police Strategies & Management, vol. 20 no. 1
Type: Research Article
ISSN: 1363-951X

Keywords

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