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A federal judge has allowed criminal charges to proceed against a US soldier accused of using classified government information to profit from prediction market trades, according to a Morgan Lewis news summary published Nov. 2.
Morgan Lewis partners Stacie Hartman and Robert A. Schwartz discussed the ruling’s legal implications with Bloomberg Law. The allegations against the soldier have not been established as findings of guilt.
Jury to Consider Prediction Market Contract Classification
Schwartz said the judge left the classification of the prediction market contracts to a jury. The classification issue concerns whether the contracts fall within the scope of the Commodity Exchange Act.
He compared that approach with how disputed classifications are handled in securities cases: “If it’s disputed whether an instrument is a security, it’s a question for the jury with instructions.”
Wire Fraud Charge Offers a Separate Prosecution Route
Hartman said prosecutors could still pursue wire fraud regardless of how the contracts are classified.
“If these instruments were found by the court not to be within the scope of the Commodity Exchange Act, whether that’s exclusively or otherwise, the Department of Justice still has the wire fraud count,” Hartman said.
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Source: As reported by morganlewis.com.
