The U.S. Court of Appeals for the Second Circuit issued an opinion recently in the appeal brought by William Walters, who was convicted in an insider-trading case after the FBI leaked details of an investigation to reporters from the New York Times and the Wall Street Journal. The appellate panel declined to overturn his conviction, but it did have some strong language about the FBI leaks. My favorite part was the concurrence from Judge Dennis Jacobs, who notices the irony that Walters and the FBI agent both apparently misused confidential information, but that only one of them is going to jail:
Walters' crime was the illegal leaking of confidential information, which is why he is going to jail for five years. The arresting feature of this case is that the supervisor of the FBI investigation was likewise involved in the illegal leaking of confidential information; and the leak of grand jury testimony is in some respects more egregious than anything Walters did — the FBI supervisor took an oath to uphold the law and was acting in a supervisory capacity to discharge an important public function.
The district court had discretion to forgo a hearing on what happened; still, without a hearing, it is unknown how far or where the abuse reached. The FBI depends on the confidence of the public, jurors and judges. That confidence is critical to its mission; so this kind of thing is very bad for business.
The most recent update the Justice Department's criminal division provided the district judge handling the case, Kevin Castel, came December 13, 2018. It is mostly redacted in the public docket, but promises a further update on or before March 15, 2019.
The New York Times reported the Second Circuit opinion in its "White Collar Watch" column earlier this week under the headline "Insider Trading Remains A Fixture for Securities Enforcement." The Times column says: "The government admitted before trial that David Chaves, an F.B.I. special agent, leaked information about the investigation to reporters at The Wall Street Journal and The New York Times....The appeals court called the agent's conduct 'highly improper' and said that the leaks 'violated the grand jury secrecy provision' of Federal Rule of Criminal Procedure 6(e)."
