Behind Enemy Phone Lines: Insider Trading, Parallel Enforcement, and Sharing the Fruits of Wiretaps

Two key trends were present in the successful prosecution of Raj Rajaratnam and his coconspirators in one of the largest insider-trading conspiracies in history: the use of wiretaps to investigate and prosecute insider trading and a joint effort between the Department of Justice (DOJ) and the Securities & Exchange Commission (SEC) to conduct the investigation. Despite the close working relationship between the DOJ and the SEC, the DOJ never disclosed the fruits of the wiretaps to the SEC, presumably due to its belief that Title III of the Omnibus Crime Control and Safe Streets Act of 1968 (as amended, the “Wiretap Act”)—the comprehensive framework that authorizes the government to conduct wiretaps in certain circumstances—prohibited it from doing so. Though the Second Circuit in SEC v. Rajaratnam ultimately held that the SEC could obtain wiretap materials from the criminal defendants as part of civil discovery, the question of whether direct disclosure of the wiretap materials from the DOJ to the SEC is prohibited has been raised but not yet addressed. This Note analyzes previous cases addressing the construction of the Wiretap Act’s disclosure provisions and concludes that direct disclosure from the DOJ to the SEC is not prohibited by the Act. It further proposes a process by which civil enforcement agencies, such as the SEC, can request disclosure of wiretap materials through the DOJ in such a way that balances the benefits of disclosure against the privacy interests of the parties whose conversations were intercepted

Punishing Pharmaceutical Companies for Unlawful Promotion of Approved Drugs: Why the False Claims Act is the Wrong Rx

This article criticizes the shift in focus from correction and compliance to punishment of pharmaceutical companies allegedly violating the Food, Drug, & Cosmetic Act (FD&C Act) prohibitions on unlawful drug promotion. Traditionally, the Food and Drug Administration (FDA) has addressed unlawful promotional activities under the misbranding and new drug provisions of the FD&C Act. Recently though, the Justice Department (DOJ) has expanded the purview of the False Claims Act to include the same allegedly unlawful behavior on the theory that unlawful promotion “induces” physicians to prescribe drugs that result in the filing of false claims for reimbursement. Unchecked and unchallenged, the DOJ has negotiated criminal and civil settlements with individual pharmaceutical companies ranging from just under ten to hundreds of millions of dollars. In part, companies settle these cases to avoid the potential loss of revenue associated with the exclusion regime administered by the U.S. Department of Health and Human Services, under which companies risk losing the right to participate in federal health care programs. Even more disturbing, these settlements allow DOJ to circumvent judicial review of its enforcement approach, preventing any type of accountability for its legal theories or procedures. This article discusses the traditional enforcement methods employed by the FDA as well as the more recent DOJ prosecutions under the False Claims Act. Although it concludes that the FD&C Act should provide the sole means for prosecuting unlawful drug promotion, it also suggests that when prosecuting pharmaceutical companies under either Act, the government must avoid the temptation to mine companies for large settlements in lieu of developing a more coherent and responsible enforcement strategy

Equality in the Age of the Internet: Websites under Title III of the Americans with Disabilities Act

Under Title III of the Americans with Disabilities Act, no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation. Currently, courts are split on whether websites are places of public accommodation under Title III. There are two predominant methods to determining whether a website is a place of public accommodation: (1) the nexus test, under which websites are places of public accommodation only if a sufficient nexus exists between the website and a physical place; (2) websites are places of public accommodation regardless of a nexus to a physical place. The circuit split highlights the need for the Department of Justice (DOJ) to pass the Title III regulations for websites to provide direct guidance for businesses and courts. The DOJ was expected to release Title III regulations for websites in 2016, but have pushed back the expected release to 2018. Regardless of when, or if, the DOJ releases Title III regulations for websites, companies would benefit from using the many resources available to make their websites accessible as soon as possibl

Analyzing Vertical Mergers to Avoid False Negatives: Three Recent Case Studies

This article analyzes three recent vertical mergers: a private antitrust case attacking the consummated merger of Jeld-Wen and Craftmaster Manufacturing Inc. (“CMI”) that was cleared by the DOJ in 2012 but subsequently litigated and won by the plaintiff, Steves & Sons in 2018; and two recent vertical merger matters investigated and cleared (with limited remedies) by 3-2 votes by the Federal Trade Commission in early 2019 -- Staples/Essendant and Fresenius/NxStage. There are some factual parallels among these three matters that make it interesting to analyze them together. First, the DOJ’s decision to clear Jeld-Wen/CMI merger appears to be a clear false negative, and the two dissenting Commissioner suggest that the recent FTC decisions similarly are false negatives. Second, the DOJ and possibly the FTC in Staples/Essendant may have overlooked the “Frankenstein Monster” scenario of input foreclosure. Third, both the DOJ and the FTC in Fresenius/NxStage also apparently relied on the absence of complaints in making their clearance decisions. The analysis of these mergers also suggests several policy implications involving the need to analyze the full range of anticompetitive concerns, the potential for merger retrospectives by independent (as opposed to staff) researchers, the height of the evidentiary burden on the agencies to show competitive harm in light of their limited budgets, and the need for greater transparency in Commission statements, as well as the potential errors in relying on a lack of complaints

Socially Beneficial Mergers: A New Class of Concentration Indices

The prominent Herfindahl-Hirschman index (HHI), yields a higher concentration level in response to any merger between firms, implying that any merger will decrease the social welfare. Although HHI is used by the Anti-trust Division of the U.S. Department of Justice (AD-DoJ), its merger implications are not fully embraced by the anti-trust authorities. We propose a class of concentration indices that is in line with the spirit of the AD-DoJ’s merger policies and consider different theoretical models which indicate that the AD-DoJ is justified in allowing mergers especially among smaller firms, as they counter the market power of dominant firms.Horizontal Mergers, Industry Concentration, the Anti-Trust Division, Hirfindahl-Hirschman Index (HHI), Dominant Firm(s)

Investigating Discretionary Environmental Enforcement: a pilot experiment

In this work, we conducted a laboratory experiment in order to test the findings of a theoretical environmental enforcement model played as a strategic game where the firm’s behavior is influenced by the course of actions discretionally undertaken by both the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ). Our experimental findings suggest that the presence of the DOJ can be counterproductive in increasing social welfare, since it implies solely additional enforcement costs, which, in turn, might reduce the probability of conducting inspections by the EPA without affecting the probability of firm’s compliance.classroom experiments, environmental enforcement, environmental economics

The Misplaced Trust in the DOJ\u27s Expertise on Criminal Justice Policy

As should be clear, this is less a book review and more an in-depth exploration of a key point Professor Barkow makes in Prisoners of Politics as applied to the federal criminal justice system. Sure, we need expertise in order to make data-driven criminal justice policy decisions--as Barkow puts it, “[t]he key is to create and foster an institutional framework that prioritizes data” and “expertise” so as to “create incentives for key decisionmakers to be accountable for real results” (pp. 14-15). But in creating reforms, the kindof expertise is also important. Many federal policymakers currently view the DOJ and NAAUSA as possessing the most salient expertise on all criminal justice matters. This Review, I hope, calls that premise into serious doubt. In Part I of this Review, I explain how the DOJ and NAAUSA have had a vise-like grip on federal policymakers when deciding criminal justice issues. In Part II, I detail their lobbying efforts in favor of longer sentences and against any reforms that would reduce sentences, and I explain why their claims against reform are flawed. Part III addresses the DOJ\u27s and the NAAUSA\u27s active opposition to criminal justice policies set by the presidents whom they serve because federal prosecutors seek to retain power to the exclusion of all other policy goals. If we want a federal criminal justice system that reflects the goals of public safety, fairness, and equal enforcement, then federal policymakers should give less deference to the views of federal prosecutors because they do not possess the requisite expertise or will to move our policies toward those ends

Evaluation of the Victorian Community Crime Prevention Program: final report

This evaluation finds that the Community Crime Prevention Program is a highly valued contribution to the Victorian community crime prevention and community safety field. Abstract The Community Crime Prevention Program (CCPP), established by the Victorian Government, aims to enhance communities’ capacity to deliver local solutions to crime. It is part of a broader suite of initiatives to reduce the impact of criminal behaviour on Victorians. The Community Crime Prevention Unit (CCPU) is a business unit within the Department of Justice (DOJ) to administer the CCPP. The mainstay of the CCPP is a competitive grants program available to a wide variety of community organisations and local government authorities. Bodies that comply with the qualifying criteria are able to apply for funding in the allocated funding rounds. DOJ commissioned the Australian Institute of Criminology (AIC) to conduct an evaluation of the Victorian CCPP. In order to assess the strategic appropriateness and efficacy of the CCPP the AIC, in consultation with the CCPU and the Regional Directors forum that operates across the DOJ, developed a program logic model and evaluation framework. This informed the development of a comprehensive methodology combining qualitative and quantitative research methods. This included: consultation with key stakeholders; online survey of local government and community organisations; review of CCPP-sponsored interventions; and analysis of administrative data and program documentation relating to the operation of the CCPP. The project was undertaken between February and September 2014

Updating the Merger Guidelines: Comments

These comments (originally submitted to the DOJ and FTC in November 2009) make a number of comments relevant to revising the Merger Guidelines. The comments focus on the use of the GUPPI (gross upward pricing pressure index) in unilateral effects analysis. They also comment on the deterrence and incipiency standard, exclusionary effects of horizontal mergers and market definition when there are multi-product firms or pre-merger coordination, among other issues

The AT&T/Time Warner Merger: How Judge Leon Garbled Professor Nash

The US District Court in the AT&T/Time Warner vertical merger case has issued its opinion permitting the merger. At of this writing in August 2018, the Department of Justice (DOJ) has appealed to the DC Circuit and filed its brief, as have several Amici. I was disappointed that the DOJ was unable to prove its case to the satisfaction of Judge Leon, the trial judge. Notwithstanding the court’s confidence that the merger is procompetitive, I remain concerned that it will have anti- competitive effects, both on its own and following the subsequent vertical mergers in the TV industry, which this decision may will encourage and permit. This commentary offers some reflections on Judge Leon’s opinion, not the future of the industry. It sets out a critical analysis of the court’s sceptical treatment of the Nash bargaining theory that formed the basis of the DOJ’s complaint and the economic errors he made. Judge Leon also rejected the empirical inputs that were used by DOJ’s expert economist, Professor Carl Shapiro, in his quantitative analysis, though this article will not analyse these issues. It will, however, raise questions about whether Judge Leon’s economic errors in analysing the bargaining model might have affected his interpretation of the evidence. The commentary also will offer some critical thoughts about the DOJ’s treatment of efficiencies from the elimination of double marginalization