The complaint further alleges that Defendant Robert applied for, but did not secure, a $100,000 business loan with a lender in an attempt to cover the shortfall in January of 2021. Thereafter, the Scheme collapsed in early 2021.The complaint seeks permanent injunctive relief and disgorgement of ill-gotten gains and asserts seven claims of relief against Defendants for violations of: (i) Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. § 77e; (ii) Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1); (iii) Section 17(a)(2) of the Securities Act, 15 U.S.C. § 77q(a)(2); (iv) Section 17(a)(3) of the Securities Act, 15 U.S.C. § 77q(a)(3); (v) Section 10(b) and Rule 10b-5(a) of the Securities Exchange Act, 15 U.S.C. § 78j(b); (vi) Section 10(b) and Rule 10b-5(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b); 10b-5(b); and (vii) Section 10(b) and Rule 10b-5(c) of the Securities Exchange Act, 15 U.S.C. § 78j(b); 10b-5(c).

On July 21, 2022, the Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) each alleged insider trading violations against a former Coinbase employee, his brother, and another alleged acquaintance of his. Coinbase is one of the leading exchanges in the United States for the trading of cryptocurrencies. The DOJ brought charges of wire fraud against the three defendants in the Southern District of New York without any allegations of securities law violations, while the SEC brought a civil claim for insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder in the Western District of Washington against the same three defendants.The SEC action raises questions about the state of digital asset regulation in the United States and could hamper digital asset development in the United States if there are not changes to this “regulation by enforcement” strategy by the SEC.

The information provided the timing and substance of upcoming proposed CMS rule changes (the “Information”), which the hedge funds used to short stock in certain healthcare companies that would be negatively affected by the rule change. Blaszczak and several other defendants were indicted on multiple charges, including insider trading charges brought under both Title 15 (15 U.S.C. § 78j(b)) and Title 18 (18 U.S.C. § 1348). At trial, the court refused the defendants’ request to include the personal benefit test in the jury instructions for both the Title 15 and Title 18 charges, including it only for the Title 15 instructions.

The information provided the timing and substance of upcoming proposed CMS rule changes (the “Information”), which the hedge funds used to short stock in certain healthcare companies that would be negatively affected by the rule change. Blaszczak and several other defendants were indicted on multiple charges, including insider trading charges brought under both Title 15 (15 U.S.C. § 78j(b)) and Title 18 (18 U.S.C. § 1348). At trial, the court refused the defendants’ request to include the personal benefit test in the jury instructions for both the Title 15 and Title 18 charges, including it only for the Title 15 instructions.

Id. at 452-53.15 USC. § 78j(b) (2018).17 C.F.R. § 240.10b-5 (2019).

52 Id. at 1100 (quoting 17 C.F.R. § 240.10b-5, 15 U.S.C. § 78j(b), and 15 U.S.C. § 77q(a)). 53 Id.

United States v. O’Hagan, 521 U.S. 642 (1997)The “misappropriate theory” of securities fraud involves a corporate “outsider” who violates Rule 10b-5 by misappropriating confidential information for securities trading purposes, in breach of a fiduciary duty owed to the source of the information, rather than to the persons with whom he trades. In this case, the Court holds that this conduct amounts to a criminal violation of the securities laws.United States v. Newman, 773 F.3d 438 (2d Cir. 2014)The Second Circuit announced a new standard for insider trading cases, holding that in order to support an insider trading conviction under Section 10(b) of the 1934 Act (15 U.S.C. §78j(b)), the government must prove that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit.United States v. McKye, 734 F.3d 1104 (10th Cir. 2013)Whether a particular transaction involves a “security” is a mixed question of fact and law that, pursuant to Gaudin, must be submitted to the jury to be decided under the reasonable doubt standard.

In United States v. McKye, No. 12-6108, 2013 U.S. App. LEXIS 17297 (10th Cir. Aug. 20, 2013), the United States Court of Appeals for the Tenth Circuit reversed the conviction of Brian William McKye for securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). The Tenth Circuit held that in a criminal action for securities fraud, the jury must be permitted to determine whether a “security” actually exists.

esented, including “what constitutes ‘statements made’” and “when a statement is misleading as a half-truth.”55 Thus, while the Court made clear that a Rule 10b–5(b) claim must be tied to an affirmative statement, it did not provide express guidance on how strong the connection between the statement made and the alleged omission must be. But given the unambiguous language in the unanimous opinion rejecting a pure-omissions theory of liability, it is likely that courts will require plaintiffs to plead a strong connection between the affirmative statement and the alleged omission. For example, it is unlikely that a general statement about demand or other revenue indicators would be enough to support a claim based on omissions of “known trends or uncertainties.” Ultimately, the answers to these questions will be left to the lower courts to sort out: As Macquarie’s counsel responded in answer to Chief Judge Roberts, “that’s [the] kind of question that district courts answer every day.”561 15 U. S. C. § 78j(b); 17 C.F.R. § 240.10b–5(b).2Macquarie Infrastructure Corp. v. Moab Partners, No. 22-1165, 601 U.S. ___, slip op. at 2 (Apr. 12, 2024) (citing Stoneridge Inv. Partners v. Sci.-Atlanta, Inc., 552 U.S. 148, 157 (2008)).3 Stanford Law School, Federal Securities Class Action Litigations 1996 – YTD, https://securities.stanford.edu/charts.html (last visited Apr. 19, 2024). Because securities class actions are frequently followed by shareholder derivative suits, meanwhile, the total number of related lawsuits is considerably higher.4Stoneridge Inv. Partners, 552 U.S. at 157. The elements of a claim under Section 10(b) and Rule 10b–5 are: “(1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation.” Id.5Universal Health Servs., Inc. v. United States, 579 U.S. 176, 188 (2016).6Junius Con

ul to “employ any device, scheme, or artifice to defraud,” and 10b-5(c) makes it unlawful to “engage in a[n] act, practice, or course of business" that "operates . . . as a fraud or deceit.” Further, the Supreme Court has recognized that subsections (a) and (c) “capture a wide range of conduct” and embody “expansive language.” Nonetheless, it is perhaps unlikely that subsections (a) or (c) would be deemed to extend to nondisclosure under Item 303. Courts generally require “deceptive conduct” to impose liability under Rule 10b-5(a) and (c), and reject claims where the “sole basis” is “alleged misrepresentations or omissions.” On the other hand, Macquarie teaches that the holdings of lower courts are not necessarily absolute or permanent, and seemingly established precedent can rise or fall at the Supreme Court’s command. Thus, the ultimate fate of Rule 10b-5 and its subsections, (a), (b), and (c), remains to be seen.1 -- S.Ct. -- , No. 22-1165, 2024 WL 1588706 (U.S. Apr. 12, 2024).2See 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5; Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 729–31 (1975).3 17 C.F.R. § 240.10b-5.4Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 267 (2014).5 Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 44 (2011).6Id. (quoting 17 C.F.R. § 240.10b-5(b)).7 17 C.F.R. § 229.303(b)(2)(ii).8 17 C.F.R. § 229.105(a).9See, e.g., Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307, 1330 (11th Cir. 2019) (“[N]o court of which we are aware has found a private right of action under Item 303, and the rule itself doesn’t seem to contemplate one.”); In re NTL, Inc. Sec. Litig., 347 F. Supp. 2d 15, 37 (“[T]here is no private cause of action violation of Regulation S-K.”); Jaroslawicz v. M&T Bank Corp., 962 F.3d 701, 711 n.10 (3d Cir. 2020) (finding that neither the language of Item 105 nor the SEC’s interpretive guidance suggests that there is a private cause of action under Item 105).10 After the consolidated complaint in this case was filed, Macquarie announced on Octo