Bail In The Federal Courts

The Bail Reform Act of 1984, as amended ("the Act"), Title 18, United States Code, Section 3141 et seq., governs the release and detention of federal criminal defendants before trial. The Act "establishes standards and procedures governing both the pretrial phase of a case, the period between conviction and sentencing, and the period during the pendency of an appeal by either side."

Initially, the defendant will be interviewed by Pre Trial Services, which is a part of the court that handles acquiring information on the defendant and producing a report for the court's review. The Initial Appearance or Initial Hearing is the first court appearance where a federal criminal defendant's release or detention pending trial is determined by a judicial officer. 18 U.S.C. § 3141. At the Initial Hearing, the judicial officer may impose a condition or combination of conditions that should reasonably assure the appearance of the defendant "unless the judicial officer determines that such release will not reasonably assure the appearance of the person as required or will endanger the safety of any other person, or the community." 18 U.S.C. § 3142(b).

The presiding judicial officer may also conduct a Detention Hearing to determine whether any condition or combination of conditions of release will apply. 18 U.S.C. § 3142 (c) and (f). These conditions may include a combination of any of the following: third party custodian; employment requirements; educational requirements; restrictions on personal associations or travel; compliance with a curfew; refraining from the excessive use of alcohol; refraining from the unauthorized use of narcotic drugs or controlled substances; undergoing medical, psychological or psychiatric treatment; execution of an agreement to forfeit property upon failure to appear; execution of a bail bond with solvent sureties; electronic monitoring; and, any other reasonable condition.

RELEASE AND DETENTION FACTORS

The Act contains 13 specific conditions of release which the Court may impose separately or in combination if it finds that a criminal defendant's personal recognizance or unsecured appearance is inadequate. Some of the factors considered by the Court in detention and release proceedings include: the nature of the offense charged, such as whether the charged offense is a crime of violence or involves narcotics; the weight of the evidence; the personal history and characteristics of the person, such as character, family ties, employment, criminal history; and dangerousness, including whether the person poses a threat to others or the community. 18 U.S.C. § 3142(g)(1)-(3). The Court may also consider other factors, such as the source of any property offered as collateral to secure a bond. 18 U.S.C. § 3142(g)(4).

If a person is released by order of a magistrate judge, the attorney for the Government may file a motion for revocation of the order or amendment of the conditions of release. The person may also file a motion for amendment of the conditions of release. Any such motion must be filed with the court with original jurisdiction over the offense. 18 U.S.C. § 3145(a).

If a person is ordered detained by a magistrate judge, the person may file a motion for revocation or amendment of the detention order, with the court having original jurisdiction over the offense. 18 U.S.C. § 3145(b). Typically, this would entail the review of a magistrate judge's decision by a district court judge.

SECURING BAIL

In ordering the release of a criminal defendant, the Court may impose financial conditions. It may authorize an unsecured personal bond whereby the person promises to pay the Court a specified sum of money if he or she fails to appear as required. If an unsecured personal bond is authorized the person is released without deposit of cash bail or collateral and promises to pay sum of money if he or she fails to appear as required. The Court may require that a solvent co-signer, usually a family member or friend, appear where an unsecured personal bond has been authorized.

In cases where release is conditioned upon security, the person may secure a commercial bail bond or may deposit at the Clerk's Office, subject to forfeiture for breach of a condition of release, cash or collateral. A person's relatives or close friends sometimes post their property or act as his or her sureties.

In cases where an estate is the owner of the real property to be posted, all heirs must appear and sign the necessary court forms and other documents, as required.

Conclusion of the Case

At the conclusion of a case, upon the defendant's remand to begin serving any sentence imposed, a surety may request the return of any bond-related documents deposited with the court or Pre Trial Services. Return of cash deposited as collateral must be requested at the conclusion of a case, by written motion to the Court. Said cash will be returned only upon Court Order or some other evidence that the matter has been resolved and the defendant is either free or remanded to prison.

Insider Trading at its Finest: FrontPoint Manager Cautioned Regarding Trades

National securities law prohibits the use of material, non-public information when conducting trades of stocks and bonds. Put another way: feel free to use any tips or information you like in trading so long as the information is public. This relatively obvious and simple rule has recently landed a hedge-fund manager at FrontPoint Partners in hot water.

Joseph F. "Chip" Skowren is a doctor that the Firm hired in 2003 to manage investments in health-care stocks. FrontPoint recently put Mr. Skowron on leave pending the outcome of an insider trading investigation concerning a bio-technology stock. Although documents filed in United States District Court in Manhattan by the United States Attorney's Office and the Securities and Exchange Commission do not name Mr. Skowron or FrontPoint, the firm acknowledged that the hedge-funds in question are theirs. As Jenny Strasburg and Jean Eaglesham explain in the New York Times, "[t]he prosecutors documents allege that tips from Dr. Benhamou, a 50-year-old liver-disease specialist in Paris, in late 2007 and early 2008 enabled the hedge-fund firm to avoid $30 million of losses."

So far only Dr. Benhamou has been named in the indictment which alleges two counts of securities fraud. Neither FrontPoint nor Mr. Skowren have been indicted nor are any such indictments expected. Dr. Benhamou's charges do, once again, focus our attention on insider trading and government oversight.

Large firms which control billions of dollars worth of securities are not the only groups that come under the scrutiny of the federal government and independent regulatory bodies. Rather, individuals often become the focus of these investigations. When this occurs, these individuals certainly need quality representation by counsel experienced in fighting for their rights. Nishay K. Sanan is an attorney with more than 14 years experience in federal litigation, with a focus on securities fraud. For questions regarding representation in such matters our website in the banner at the top of the page.

Portions of this article are based on the New York Times' November 5, 2010 article "FrontPoint Cautioned Manager On Trades" by Jenny Strasburg and Jean Eaglesham.

FINRA Offers Aid to SEC

Because registered investment advisors are not a self-regulating professional group, the Securities and Exchange Commission ("SEC") is responsible for ensuring proper practices. As part of that effort, the SEC now examines registered advisors once every 10 years, however, the agency has never actually examined some in the field. As the SEC begins to notice the need for more examinations of investment advisors, the Financial Industry Regulatory Authority ("FINRA") is offering its assistance. As Suzanne Boyle of the New York Times explains, "[a] comment letter to the SEC from Richard Ketchum, FINRA's chairman, extols the virtues of self-regulatory organizations to deal with the agency's limited resources." Mr. Ketchum stated in his letter that, "[g]iven the SEC's funding limits, it is unlikely that the Commission, despite its best efforts will be able to accomplish" increased examinations of investment advisors. While FINRA and the SEC examine more than half of broker-dealers annually, the SEC examines only 9% of investment advisors each year.

Numerous trade groups, including the Washington-based Investment Advisor Association, opposes increasing the frequency of examinations. The Association believes that the frequency of examinations does not necessarily correlate with quality of oversight according to the IAA's executive director, David Tittsworth. Regardless of the outcome of this matter, broker dealers and investment advisors are increasingly coming under personal scrutiny.

So what happens if this increased scrutiny leads to more reviews and more formal investigations of questionable practices? Well, first and foremost, broker-dealers and investment advisors will want to secure counsel to represent them from the very beginning.

Having counsel at the outset of an investigation can help clear up misunderstandings, protect the individual's rights, and most importantly, avoid formal prosecution while protecting everyone's reputation. Attorney Nishay K. Sanan has extensive experience in representing well-respected and successful clients who have been investigated by FINRA as well as the SEC, with positive results. Visit http://www.sananlaw.com for more information.

This post is based in part on the New York Time's November 8, 2010 article, "Finra Seeks to Examine Investment Advisers," by Suzanne Barlyn.