John Liolos, Partner in Sullivan & Cromwell’s Litigation Group and a member of the Firm’s Criminal Defense & Investigations Group, and associate Sam Bonafede co-authored an article for Bloomberg Law discussing implications of the United States v. Andrew Left decision for social media-based securities fraud enforcement.
The article analyzes the application of traditional securities fraud principles to markets increasingly shaped by social media, online influencers and retail investor participation, including the disclosure, intent and materiality questions likely to shape future enforcement efforts.
“Left marks the first criminal trial conviction for the government’s social-media securities fraud theory, which also survived a challenge in United States v. Constantinescu and prevailed in a civil trial in SEC v. Gallagher,” the authors write. “The DOJ has framed prosecutions such as Left consistently as classic fraud cases protecting retail investors from economic harm rather than efforts to regulate speech or short selling,” they add. “That framing may influence future prosecutions in areas where social media, retail participation, and rapid information dissemination play central roles.”
Read: “Andrew Left Conviction Is a Social Media Securities Fraud Signal”