Munger, Tolles & Olson Secures Favorable Appellate Ruling in High-Profile Insider Trading Case

As lead appellate counsel, Munger, Tolles & Olson secured a favorable ruling from the Second Circuit overturning a first-of-its-kind conviction that applied insider trading law to the alleged misuse of confidential government information.

The defendants in the case, United States v. Blaszczak et al., were charged with wire fraud and various other property-related federal crimes for allegedly obtaining predictions about Medicare reimbursement rates and then trading securities based on those predictions.

MTO represented defendant Robert Olan on appeal before the Second Circuit. MTO argued that the relevant federal statutes require proof that the government was deprived of property and that the confidential information at issue does not count as property because it is regulatory information with no economic value to the government. 

Following a split decision in favor of the government in 2019, MTO filed a petition for writ of certiorari and the U.S. Supreme Court remanded the case to the Second Circuit for further consideration in light of the recent decision in Kelly v. United States.

In 2021, MTO again argued before the Second Circuit that the confidential information does not constitute property within the meaning of the relevant criminal statutes and that a ruling in the government’s favor would raise serious constitutional concerns. In December 2022, the Second Circuit overturned the defendants’ convictions and halted the government’s efforts to expand insider trading and fraud laws to include alleged misuses of confidential government information.

The MTO team was led by Don Verrilli and included Elaine Goldenberg, who led the strategic aspects of the case.