In This Update:
Excerpt from: Food and Drug Regulators Step up Prosecution of Corporate Officers for Misconduct:
U.S. regulatory authorities recently have made increasing use of a long dormant doctrine to prosecute business executives for their companies’ violations of the Food Drug and Cosmetic Act (“FDCA”). Under the “responsible corporate officer doctrine,” an officer may be held liable for a first-time misdemeanor or a subsequent felony based on misconduct within their corporation, even if the officer was not involved in or aware of the wrongdoing. Although the doctrine had been little-used since the 1970s, recent enforcement efforts reveal that regulators are now employing it with more frequency.
Excerpt from: Does the Conviction of Galleon Founder on Insider Trading Signal an Increased Use of Wiretapping by Federal Investigators?:
The recent conviction of New York hedge fund founder Raj Rajaratnam on fourteen counts of conspiracy and insider trading sent shockwaves through the financial industry. On October 13, 2011, Rajaratnam was sentenced to 132 months in prison—the longest prison sentence ever for insider trading. He had been widely regarded as one of Wall Street’s brightest stars. At the peak of his success, he managed $7 billion of investors’ funds and his personal fortune was estimated at $1.8 billion. In 2009, it all came tumbling down, as Rajaratnam and nearly two dozen associates, including senior executives at two Fortune 500 companies and lawyers at major firms, were arrested and charged with illegally trading stocks based on confidential information.
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