January 6, 2020

Partner Katherine Goldstein Comments on US v. Blaszczak in Law360 


Milbank Litigation and White Collar partner Katherine Goldstein commented in a Law360 article titled “Wall Street Insider Trading Just Got Easier To Prosecute.” The article discusses the recent insider-trading decision in US v. Blaszczak by the US Court of Appeals for the Second Circuit. The December 30, 2019 ruling found that prosecutors do not have to apply the more intricate rules of the Securities Exchange Act, found in Title 15 of the US Code, to insider trading cases brought under a newer securities fraud law under Title 18, making it potentially easier to prosecute the offense of insider trading.

Ms. Goldstein, a former head of the Securities and Commodities Fraud Task Force at the US Attorney's Office in Manhattan, noted that by greenlighting insider trading cases under Title 18, the decision created the potential for a mismatch between civil and criminal cases. She points out that “the decision does open the door to permitting prosecutors to bring an insider trading case under 1348 even where the proof of personal benefit is such that the SEC can't bring parallel case or would have to bring it under Title 15 and bank on the difference in the burden of proof.”

The article notes that Ms. Goldstein is part of a working group that is preparing to issue recommendations for Congress and the SEC to address the lack of law explicitly banning insider trading. Ms. Goldstein states that “[w]hat everyone — prosecutors, defense lawyers and market participants — wants is clarity, and what this decision could bring is more confusion and uncertainty . . .. The decision further heightens the need for a statute dedicated to the offense of insider trading to bring some consistency to the law."

Ms. Goldstein is a leading advisor to companies, boards of directors and individuals facing high-stakes investigations by the US Department of Justice, SEC and other regulators. She also counsels clients during their most sensitive internal investigations. An experienced trial lawyer, Ms. Goldstein’s practice builds on her nearly 12 years of experience as a federal prosecutor. Most recently, Ms. Goldstein served as the former Chief of the Securities and Commodities Fraud Task Force in the US Attorney’s Office for the Southern District of New York, where she supervised some of the most complex and high-profile white collar and securities matters in the country.

Please click here to read the full Law360 article (subscription required).