United States v. Behren, No. 11-3482 (8th Cir. 2013)
Annotate this CaseDefendant pled guilty to one count of securities fraud in violation of 15 U.S.C. 78j(b), 78ff and 17 C.F.R. 240.10b-5 (Rule 10b-5). On appeal, defendant challenged his sentence of five years' imprisonment, arguing that because he had no knowledge that his conduct violated Rule 10b-5, imprisonment was not a permissible sentencing option. However, defendant had admitted to knowing the substance of Rule 10b-5, and this removed him from the protection of the no-knowledge provision. Because defendant failed to carry his burden of showing that he had no knowledge of Rule 10b-5, the court affirmed the judgment.
Court Description: Criminal Case - sentence. Sentence of imprisonment for securities fraud is affirmed. The "no knowledge" defense to imprisonment in 15 U.S.C. sec. 78ff, is not limited to no knowledge of the existence of the pertinent SEC rule or regulation but whether they did not know the substance of the SEC rule or regulation they allegedly violated regardless of whether they understood its particular application to their conduct. Because Behrens admitted to knowing the substance of Rule 20b-5, he was ineligible for the no-knowledge defense exclusion to imprisonment.
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