Tag Archives: Rahul Mukhi

Second Circuit Denies Gupta Appeal of Insider Trading Conviction—Continuing to Give Broad Meaning to “Personal Benefit” Requirement

by Joon H. Kim, Rahul Mukhi, Alex Janghorbani, Shannon Daugherty, and Destiny D. Dike

On January 11, the Second Circuit Court of Appeals denied the appeal of Rajat Gupta, who was seeking to undo his insider trading conviction.  Relying on the Second Circuit’s decision in United States v. Newman, Gupta argued that—to satisfy the requirement that Gupta personally benefit from tipping inside information—the Government must show “a quid pro quo – in which [Gupta] receive[d] an ‘objective, consequential . . . gain of a pecuniary or similarly valuable nature.’”[1]  In other words—intangible benefits should not, standing alone, constitute a personal benefit sufficient to uphold a criminal conviction.  The Second Circuit rejected this argument, finding that the Supreme Court’s decisions in Dirks v. SEC and Salman v. United States foreclosed such a narrow definition of “benefit,” opting instead for a test that looked at “varying sets of circumstances”—including those that involve indirect, intangible, and nonquantifiable gains, such as an anticipated quid quo pro that can be inferred from an ongoing, business relationship—to satisfy the “personal benefit” test.[2]  This case is the latest in a line of decisions—in the Supreme Court, as well as the Second and Ninth Circuits—to reject defendants’ arguments for a narrow definition of the “personal benefit” element of insider trading law based on Newman. Continue reading

Supreme Court Hears Argument to Determine Whether Mandatory Federal Restitution Statute Covers Professional Costs Incurred by Corporate Victims

by Joon H. Kim, Rahul Mukhi, Rusty Feldman, and Samantha Del Duca

On April 18, 2018, the U.S. Supreme Court heard oral argument in Lagos v. United States.[1]  On appeal from the United States Court of Appeals for the Fifth Circuit, Lagos presents the important issue of whether a corporate victim’s professional costs—such as investigatory and legal expenses—incurred as a result of a criminal defendant’s offense conduct must be reimbursed under the Mandatory Victims Restitution Act (“MVRA”).[2] 

The issue has been subject to a recurring circuit split and Lagos now offers the Supreme Court an opportunity to resolve the conflict.[3]  Moreover, as noted by the certiorari petition, the Court’s decision will necessarily have implications “every time corporations engage in internal investigations or audits at the suspicion of wrongdoing.”[4]  Continue reading