Second Circuit Decision Curtails Title 18 Insider Trading Liability

On December 27, 2022, a divided panel of the Second Circuit issued a majority opinion in United States v. Blaszczak ("Blaszczak II"), reconsidering the contours of Title 18 insider trading liability. While the decision does not come as a surprise, it does have potentially far-reaching ramifications for the government's ability to make use of Title 18 to prosecute fraud and theft charges.

Factual and Procedural Background

The Blaszczak prosecution involved allegations that a political intelligence consultant received nonpublic information from the Centers for Medicare & Medicaid Services ("CMS"), a government agency, concerning planned changes to Medicare reimbursement rates for particular drugs. The consultant then shared that information with two clients, who allegedly traded in securities of companies that would be affected by CMS's forthcoming changes.