White Collar Crime and Securities Fraud

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White Collar Crime and Securities Fraud
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What is a crime?

• Actus reus
• Mens rea
• Higher burden of Proof beyond a reasonable
  doubt

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What is white collar crime?

• Typically, a violation of law by a corporation or
  one of its managers.
• Some waive the mens rea requirement
• The white collar can be the perpetrator or the
  victim
• Examples include
• Embezzlement
• Racketeer Influenced and Corrupt Organizations
  Act (RICO)
• Wire and Mail Fraud
• Fraud
• Economic Espionage
• Antitrust
• And last but not least, Securities Law Violations

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Securities Law Violations

• 10(b) of the 1934 Act
• 10b-5 disclosure
• Elements
• Interstate commerce component
• Material Misrepresentation
• Scienter (mens rea)
• Omission in connection with the purchase or sale
  or securities
• Reliance
• Misrepresentation the causation of the
  plaintiffs losses

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Securities Law Violations

• Section 17(a) Insider trading which is trading
  by insiders officers and directors typically
  based on material nonpublic information
• Not illegal if the nonpublic info is disclosed
  first
• Tippees also sometimes insiders (derivative
  insiders)

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So whats been happening lately?

• http//www.cbsnews.com/sections/in_depth_business/
  main500154.shtml

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How does punishment work?

• Federal Sentencing Guidelines
• Individuals
• Corporations
• Liability for others actions?
• Works like respondeat superior/ vicarious
  liability

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What does the future hold?

• Sarbanes-Oxley
• Increased disclosure
• Increased Civil and Criminal Liability
• Increased focus on Ethics