U.S. v. Stringer

Case Updates

Disagreeing with NCLC, the Ninth Circuit decided that the Securities and Exchange Commission (SEC) did not violate the Fourth or Fifth Amendment. The court vacated the dismissal of the indictment because the SEC had provided the defendant with a standard form disclosing the possibility that information revealed to the SEC in a civil proceeding might be used in a criminal proceeding.

NCLC urged the Ninth Circuit to decide en banc whether and to what extent a governmental entity can actively conceal the existence of a parallel criminal investigation. In this case, the Securities and Exchange Commission (SEC) intentionally shielded from the defendant its knowledge that criminal investigations had already been initiated against the defendant, and that the SEC had already shared information with the prosecutors. NCLC argued that defendants are entitled to be made aware of the existence of parallel civil and criminal investigations. Because civil and criminal investigators share information, secret parallel criminal investigations increase the risk that defendants will share information in a civil proceeding that could be prejudicial in a criminal proceeding. NCLC argued that the appeals court’s decision will encourage government entities to tactically conceal the existence of criminal proceedings. The fear of secret criminal proceedings will dissuade defendants from cooperating in civil proceedings, undermining the enforcement capabilities of government entities. NCLC also argued that the decision contradicts prior Supreme Court precedent in United States v. Kordel.