On December 30, 2019 the Second Circuit upheld the convictions of David Blaszczak and three others for their roles in a scheme to trade on information about upcoming regulatory changes by the Centers for Medicare & Medicaid Services (CMS). In so doing, the Court ruled that, in a prosecution brought pursuant to 18 U.S.C. § 1343 and § 1348, which criminalize wire and securities fraud, respectively, the government need not prove that the defendants received a “personal benefit” in exchange for the provision of material nonpublic information as is required under 15 U.S.C. § 78j(b), which prohibits insider trading. The Court’s holding could prompt the government to make greater use of § 1343 and § 1348 in prosecuting insider trading cases.
The majority of the Court also held that pre-decisional regulatory information regarding upcoming rule changes could constitute “property” for purposes of 18 U.S.C. § 1343 and § 1348. One judge dissented, however, arguing that the government’s interest in rule-making information is purely regulatory.