Robert Heim Argued Before the U.S. Supreme Court in Lorenzo v. SEC

On December 3, 2018 Robert Heim argued the case Lorenzo v. SEC before the U.S. Supreme Court.  Mr. Lorenzo’s appeal raises important legal questions about whether the SEC can sanction a person for alleged fraudulent misstatements even though that person didn’t make the misstatements at issue.  This issue comes up in many SEC enforcement cases and it has split the circuit courts of appeals.

Mr. Lorenzo, who is a former investment banker, appealed from a 2017 decision by the DC Circuit Court of Appeals that held that while Mr. Lorenzo did not make the statements at issue he could nevertheless be held liable for those statements under a fraudulent scheme legal theory.  Mr. Lorenzo has argued that the DC Circuit Court’s ruling is contrary to a 2011 US Supreme Court decision in the case Janus Capital Group, Inc. v. First Derivative Traders.

A recording of Mr. Heim’s Supreme Court oral argument can be heard here: www.oyez.org/cases/2018/17-1077

Supreme Court Denies Request to Hear Insider Trading Case

The justices let stand a decision by the federal appeals court in New York last year that threw out insider trading convictions of two high-profile hedge fund managers.

The 2nd U.S. Circuit Court of Appeals overturned the convictions of Anthony Chiasson of Manhattan and Todd Newman, of Needham, Mass., after finding they were too far removed from inside information to be prosecuted.

Prosecutors warned the ruling could hinder the government’s campaign to curb insider trading on Wall Street, a crackdown that has resulted in more than 80 arrests and 70 convictions over several years.

In overturning the convictions, the appeals court said prosecutors needed to show that the person disclosing the information received a clear benefit — something more than the nurturing of a friendship.

The appeals court also said the person being prosecuted had to know about the benefit. That issue wasn’t before the Supreme Court.