*3 LYNCH, Circuit Judges. A. Agrawal’s Employment So- ciété Générale
Judge part POOLER concurs Agra- The crimes at derive from issue part opinion. in a separate dissents employment early between 2007 and wal’s RAGGI, Judge: REENA Circuit November 2009 at SocGen’s New York Agrawal began Defendant Samarth was en- offices. his career as a employer, “quantitative High his in SocGen’s analyst” trusted former Idris, (“HFT”) 12, 2009, following instruc- The On June Group. Trading Frequency Agrawal’s supervisor, copied arbitrage,” in “index tions from engaged HFT Group DQS an electronic folder profit by quickly the code into process that seeks prices in the could retrieve fleeting differences exploiting end, process, the HFT necessary. Toward In the Idris securities. data trading systems, the code three Group copied two also mistakenly used ADP, determine when to “DQS” including “ADP” systems, other into system folder, Each purchase and sell securities. au- though Agrawal was not even complicated com- up highly made to this thorized to have access additional *4 developed over the course puter code code. a cost of several million years
some HFT Agrawal B. Steals SocGen’s Code Using ADP and SocGen. dollars to Duplicate To Trad- and Its executed DQS Group the HFT systems, Offers Competitor ing Systems a more mil- generated trades that than $10 for during for lion in revenue SocGen annual SocGen, Agrawal to was Unbeknownst 2007, 2008, 2009. and job actively pursuing opportu- then outside end, 8, 2009, on analyst, nities. Toward that June Agrawal As had quantitative a representatives he met with of a New DQS underlying no access to the code fund, Tower Rather, hedge York-based Research developed systems. or ADP he (“Tower”). Tower Capital Agrawal told refining “indicators” for others use in running that he was one SocGen’s two other em- DQS system. Like SocGen strategies, “complete index had a however, arbitrage ployees, Agrawal required strategy, of that and could during understanding” periodically to commit neither system help “very similar” he “dis- build employment nor after his would Tower. Tr. 79.1 any any ... entity close furnish to proprietary confidential or information Saturday, days On June 13—five after termination, [SocGen],” he upon and day his Tower and the after meeting with documents, files, pаpers, would return all acquired DQS he access SocGen’s possession in materials his con- other into New Agrawal came SocGen’s code— nected SocGen. GX office, York more thou- printed out than a code,2 DQS pages put sand Agrawal April promoted printed backpack, physi- him into a and DQS, position put pages “trader” for system’s day-to-day oper- cally papers apart- in his transported of that later, days Three Agrawal Jersey. ment New capacity, spent ations. In this met again two June with Tower working Agrawal several hours each week replicating computer programmers: partners SocGen Dominic to discuss July underlying strategies had written for Tower. On Thuillier —who DQS Agrawal Tower hire for this proposed code for Richad Idris. —and meeting, disks. copying a week before from information onto Less than Nevertheless, providing feedback an copy recruiter email on able to Agrawal had had interview with another into paper by pasting parts onto Microsoft competitor, advised to make SocGen gave sequential- Word to which he documents employers prospective pos- clear to that he names, "O.doc,” ly numbered proprietary sessed information. See GX 706. “l.doc,'' "2.doc,” printing then out those documents. place pre- methods 2. SocGen had various venting computers used to HFT code access purpose, him offering salary and bonuses with detailed handwritten descriptions of $500,000, exceeding plus 20% of profits system the HFT build, he wanted them to generated by anticipated DQS clone including mathematical information de- profits and 10% of ADP clone. rived from SocGen’s code that he identified Agrawal informally accepted Tower’s offer DQS.” “what is done in Tr. 621.3 August delayed but disclosing this C. Arrest fact to SocGen and the Seizure for some months in order gain both to the Stolen Code experience more with its HFT systems anticipated and to collect an bonus 19, 2010, On April the day Agrawal was Meanwhile, in October. during August Tower, to begin work at agents FBI ar- September copied and rested him at his home in New Jersey. printed hundreds more pages of SocGen’s apartment Searches of his rеsulted HFT code—these pertaining primarily to seizure of thousands of pages of carefully the ADP mistakenly code to which he had indexed and filed computer code pertain- given been brought access—and them to ing to SocGen’s two HFT systems. Agra- *5 his home. wal admitted to an arresting agent that he months,
During these printed also con- had out the code and taken it home partners, tinued to meet with Tower dis- without disclosing that fact to his SocGen cussing the systems expected he supervisors or receiving authorization to develop for them providing and do assurances so.
that he could find out whatever informa- D. AgrawaVs Prosecution and Convic-
tion he needed systems about SocGen’s tion fill any gaps in knowledge. his At least
one of meetings those was recorded 13, 2010, On May grand jury sitting in representative Tower present. who was the Southern District of New York charged Agrawal in a two-count indictment Agrawal formally resigned from SocGen with violations of the EEA and the NSPA. 17, on November 2009. In the week be- After detailing pertinent facts in 18 num- notice, gave fore he Agrawal deleted from paragraphs, bered charged indictment computer system SocGen’s the Word docu- the two generally crimes both specifi- and ments into which pasted DQS he had and cally. EEA, respect With to the in- code, ADP as well as the ADP code files dictment alleged as follows: that Idris mistakenly copied had for him.
Agrawal’s resignation triggered pe- a leave From at least on or about June months, riod of several during up which he through and including or about paid by was SocGen but did little work for April in the Southern District of Although Agrawal it. prohibited elsewhere, from New York and SAMARTH working for SocGen competitor AGRAWAL, defendant, while unlawfully, leave, he continued meet with Tower willfully, knowingly, and without author- personnel, including pro- copied, sketched, ization duplicated, grammers drew, who were to write the downloaded, code that photographed, up- replicate loaded, would altered, SocGen’s two HFT sys- destroyed, photocopied, tems. Agrawal provided personnel transmitted, Tower replicated, delivered, sent, Thuillier, programmer (“It’s 3. SocGen guage.” the author just Tr. written in code, DQS of the plain English. described explains algorithm. some But it “pseudo notes as scanning code” that it was a "sim- And it's down the real time calcula- plified rewriting details.”). loop DQS of the code in human lan- tion satellite into City, New Jersey to his home communicated, code conveyed and mailed, Jersey. secret, is defined that term trade Code, Section States ¶ Title Indictment to convert 1839(3), intent with trial, in his own Agrawal testified At and secret, related to that was trade subsequent- Rakoff would Judge defense. in a included effectively testimony as ly characterize and in interstate for the elements oath all of “admitting] under commerce, benefit the economic Notably, Agra- Tr. 1211. charges.” thereof, the owner than someone other printed out that he had wal admitted the of- knowing that intending and had ADP code DQS and owner of injure the fense would New to his paper copies printed taken the AGRAWAL, secret, wit, while trade acknowledged that such He Jersey home. York, York, au- New without in New to SocGen and proprietary information was removed printed and copied, thorization nevertheless, that, shared some of he had Institu- the Financial the offices of from his in order to facilitate it with Tower for the computer code proprietary tion he entity. job with that What getting a frequency high Financial Institution’s he the exact time at denied business, to use the intent trading copied each stack transported benefit of economic for the that code was to Jersey, New his intent New York to himself and others. maintained that convert it. He steal or time, ¶ to use the code he intended respect 19. With Indictment *6 following through on a by as follows: SocGen’s benefit NSPA, alleged the indictment that he work from request supervisor’s 2009, about June at least on or From to combine elements project home on a in about including or through and up later, Only in DQS systems. ADP the and District in the Southern April he decide to convert telling, did Agrawal’s elsewhere, SAMARTH New York and Tower’s.4 his own benefit and the code for defendant, unlawfully, AGRAWAL, the this testimo- Agrawal gave Even before knowingly, transported, willfully, and there cautioned that ny, Judge Rakoff had transmitted, in inter- and transferred the commerce, in either indictment goods, was no bаsis foreign and state requiring government securities, the law for wares, merchandise, and in- more, possessed culpable $5,000 Agrawal that prove money, of the value of stolen, printed he precise at the time tent to have been knowing the same wit, HFT code from SocGen’s fraud, removed the by and taken converted York, offices. Insofar as AGRAWAL, New New York in New while in requirement authorization, to locate that York, purported removed without clauses, Judge “to wit” Institu- the indictment’s the Financial from the offices of that those clauses Rakoff observed code for the computer proprietary tion in isolation or divorced not be read high frequency Financial Institution’s of the indict- paragraphs business, preceding ex- value of which trading charged ment, that indicated $5,000, stolen brought that ceeded prosecution light favorable to the by in the most testimony refuted the su- therefore, and, jury rejected assume that Group, HFT who stated pervisor of SocGen's au- Agrawal’s possession was any that systems made claim two a combination of the that Broxmeyer, United States "totally thorized. See they distinct.” Tr. were no sense (2d Cir.2010). the evidence appeal this we review 1037. On and, particular anything” from June on this if spanned period point, conduct law, therefore, As to the through April requested charge court element Judge by statutory Rakoff concluded EEA’s this reference both ie., satisfied proof options, computer intent element could be that the code was requisite in- “related to” or in” a possessed “included tent to convert when he “removed the code for or in produced interstate or any point or at when he was commerce. Tr. 885. The court thereafter agreed so, possession still to do that it unauthorized but observed did code,” computer charged the foresee jury. jurisdictional and so element be- added). ing Tr. 1006 In so “a matter (emphasis going materially instruct- that is to be ing jury, Judge explained disputed Rakoff Id. event.” at 885-86. “without authorization” meant that SocGen The defense never contended otherwise.5 “did not of the approve the removal com- Nor object did the Judge defense puter code for his the defendant intend- Rakoff s further as to instruction how the purpose. example, an employer ed For satisfy this government could EEA ele- might taking an approve employee trade if government ment: “[I]t sufficient secret home it for the employ- to work on proves that the of the purpose computer benefit; the employee er’s but if then trades, was to effectuate securities at using starts secret for his trade own least some of which were interstate or another, benefit or the benefit at that Indeed, foreign commerce.” at 1315. Id. point the removal becomes unauthorized.” Agrawal suggested never to either the dis- Id. at 1314. did not challenge trict court or the EEA, interpretation but main- had failed to plead prove light tained of the “to code was related to or wit” clause effected a constructive amend- included in for or ment of the indictment. Rather, placed in interstate commerce. when,
Judge evidence, also proposed Rakoff had the close of all the *7 charge jury the that convict of to the moved dismiss indictment count, 29, government the EEA pursuant the had to he argued Fed.R.Crim.P. that, matter, prove only “as a the that explicated by factual com- the two counts “as puter code to a by was related that the Court’s the evidence was, produced for, at in part, presented by least or the in this case in, placed foreign interstate or commerce.” a variance a prejudicial constitute[d] Appellee’s govern- Addendum 13. The of the charges constructive amendment ment grand jury remarked that it did not as the indictment” reflected in “know[] exactly going what the is “to wit” argue defense the clauses. Id. at 1214. The Judge prediction proved things Rakoff’s correct. You remember one the summation, government argued In the system designed to do [HFT] is is trade point only by computer the stocks, reference indexes associated those to,” in,” being prod- "included "related not couple stocks and A witnesses futures. produced placed uct that or for in inter- talked about where futures were traded on foreign state or commerce: Exchange Stock and not America[n] code, this, you hear a lot about didn’t shockingly Chicago. plenty That is of inter- but the code was related to state is [commerce]. That satisfied. produced placed for or interstate or added). (emphasis Tr. 1258 The defense foreign require- commerce. It is one of the made no mention in summation of the EEA's Judge you ments that will tell Rakoff about. jurisdictional element. plenty There is of interstate commerce here.
242 (2d motion, Doe, v. 81 Cir. and the States 297
court
denied
2002).
standard,
on
the EEA
Under
Agrawal guilty
both
found
charged.
and NSPA crimes
discretion,
appellate
may,
an
court
in its
an
correct
error not raised at trial
Thereafter,
Judge Rakoff calculated
demonstrates
appellant
where
Sentencing
to recom-
Guidelines
(1)
error;
(2)
there
error is
is an
range
of 63
prison
mend a
sentence
obvious,
subject
or
rather than
clear
Instead,
February
to 78 months.
(3) the error affect-
dispute;
reasonable
discretion to
the court exercised its
rights,
the appellant’s
ed
substantial
of con-
impose
non-Guidelines sentence
ordinary
case means
two
on the
prison
current 36-month
terms
affected
of the district court
the outcome
timely appeal
counts of conviction. This
(4)
seriously
proceedings;
error
followed.
fairness,
public
or
integrity
affect[s] the
reputation
judicial proceedings.
II. Discussion
Marcus,
258, 130
States v.
560
United
U.S.
Legal
Charges
Sufficiency
A.
(2010)
2159, 2164,
versed systems, SocGen’s HFT could satisfy the code, ing entirely that the stolen elec- product requirement, EEA’s similarly form, tangible property, was not as tronic plain review for error because no such wares, necessary to qualify “goods, as [or] objection ever raised in the district merchandise” under 18 2314. See U.S.C. court. Agrawal cannot demonstrate Yates id. at 76-79. error neither prosecution because nor Aleynikov’s construction While presented court ever SocGen’s HFT EEA and NSPA controls on the matters it systems jury “products” satisfy- decides, Agrawal’s distinguishable case is ing jurisdictional the EEA’s In element. Aleynikоv in important respects from event, any any such error would not him preclude plain er- demonstrating “plain,” only possible because basis legal sufficiency ror in of his indict- treating confidential trading systems as We here briefly ment. summarize what we products produced for or placed in inter- further in explain opinion.6 systems state commerce was that such are buy used to and sell securities traded case, As to the EEA in this charge, short, interstate commerce. prosecu neither indictment nor the systems could find HFT quali- SocGen’s arguments tion’s or the court’s fy EEA products (impermissibly, after sys SocGen’s identified confidential HFT Aleynikov), finding without first the “product” satisfy tems as relied on to using systems securities traded those were Rather, jurisdictional the crime’s element. circumstances, products. In these the record indicates relevant any failing error in to distinguish Yates publicly was the traded securities possible products two between the bought and sold SocGen its HFT using not have either affected sub- systems. satisfy Because such securities fairness, or the rights integrity, stantial jurisdictional the EEA’s element without judicial public reputation proceedings. raising Aleyni concerns identified in kov, Agrawal charge, Agrawal’s cannot demonstrate that As to legal- the NSPA pleading insufficiency respect sufficiency challenge step fails at the first systems analysis. his sub- plain-error Agra- affected Because dissenting opinion gaged intrinsically legal, overall tenor 6. The and it does not *9 conviction, address, affirming Agrawal’s reject, theory in we let alone on which respect precedent jury fail to set rever- convicted. Neither the in- Aleynikov. suggestion prosecution’s in in That consider- structions nor the sal summation ably precedential Aley- proffered jury theory of to the over-reads force this case based, jury Aleynikov's That nikov. case establishes which conviction was and Aleynikov any permitted specifi- in not seek instructions did instruction short, disavowing legally theory. cally theory. on a It convict invalid does noth- cannot, not, ing say today do and establish that the kind of we or is inconsistent with the Aleynikov’s Aleynikov in which en- conduct reversal of conviction. copies, dupli- authorization without Aleynikov wal—unlike —stole draws, cates, sketches, photographs, intangible rather than tangible in a alters, downloads, destroys, uploads, form, i.e., onto thousands of sheets printed transmits, error, deliv- replicates, photocopies, demonstrate of he cannot paper, ers, sends, mails, communicates or con- error, in him with charging let plain alone information; wares, veys [or] merchan- “goods, theft of [or] (3) receives, § 2314. possesses 18 U.S.C. such in- buys, dise.” or
formation,
knowing the same
have
(EEA)
obtained, or
appropriated,
been stolen or
Count One
authorization;
converted without
Publicly
a.
Securities
Trad-
Alleged
The
Com-
Using
ed
SocGen’s Confidential
guilty
[is
crime].
Legally
Were
puter Code
Sufficient
added).
The
(emphasis
18 U.S.C.
the Product and Nexus
Satisfy
To
highlighted statutory language
juris-
—the
the EEA’s
Requirements
Jurisdic-
dictional element of
statute —is the
Element
tional
sufficiency challenge.
of Agrawal’s
focus
Act,
Espionage
Electronic
In United States v.
time of
indict
at the
effect
product
“a
phrase
court construed
conviction,
in relevant
ment and
stated
produced
placed
that is
for or
interstate
part as follows:
foreign
or
as a “limitation” on
commerce”
Whoever,
intent to
a trade
with
convert
EEA,
scope
sig-
676 F.3d at
of the
secret,
or
that is related to
included in a naling
did not
Congress
intend
produced
placed
that is
or
product
power
invoke its full
Clause
Commerce
commerce,
foreign
or
to the
in interstate
secrets,
trade
criminalize the theft of
anyone
than
benefit
other
economic
Court
(citing Supreme
id.
81-82
cases
thereof,
intending
or
the owner
legislation
distinguishing
invoking
between
injure any
that the offense
knowing
will
activity
Congress’s
over
power
full
sub-
secret, knowingly—
that trade
owner of
stantially “affecting
legis-
commerce”
(1)steals,
limiting language).7 Al-
ap-
using
without
lation
more
or
authorization
takes,
product
for a
to be
eynikov explained
carries
or con-
propriates,
away,
fraud, artifice,
commerce,
ceals,
it must have “al-
deception
“placed in”
or
information;
ready been introduced into the stream of
obtains such
commerce____”);
Aleynikov's
congressional
use in
identification
interstate
(daily
Cong.
ed.
Rec. S6978-03
Nov.
to limit the reach
EEA has since
intent
2012) (statement
itself,
Leahy) (observing
by Congress
of Sen.
been disavowed
Aleynikov
decision "cast doubt on the
pur-
the EEA to
quickly amended
remove the
EEA,
"clarifying legisla-
reach”
and that
limiting language
clarify
portedly
and to
its
today
pass
tion
the Senate will
corrects
broadly
against
protecting
intent to reach
reading to ensure
the court’s narrow
that our
See
the theft of trade secrets.
Theft of Trade
adequately
federal
laws
address the
criminal
Act of
Pub.L. No.
Secrets Clarification
added)).
(emphasis
theft of trade secrets”
112-236,
(providing
126 Stat. 1627
for EEA
phrase
to be amended
strike
"or included
appeal,
have no
On
occasion to
Rather,
in a
that is
for or
construe the revised EEA.
we are
phrase
"a
and to insert
or service
obliged
in”
apply the EEA as
existed at the
in,”
for use
that rele-
used in or intended
so
Agrawal's
time of
conviction and as construed
"Whoever,
language
Aleynikov.
Youngblood,
reads:
vant
now
See Collins
*10
secret,
convert a trade
is related
U.S.
110 S.Ct.
L.Ed.2d 30
intent to
that
(1990).
product or
used in
to a
service
or intended
added).
have
commerce and
reached the market- Tr. 1546-47 (emphasis
This had
Id. at 80. Products
been
place.”
“being devel-
the court’s and the parties’ under-
standing of the
oped
marketplace”
Aleynikov
or readied for the
indictment from
for,’
the start.
In its
qualified
being ‘produced
opinion denying
“as
if
not
de-
indictment,
fendant’s motion to
in,’
dismiss the
yet actually ‘placed
commerce.” Id.
the court noted the parties’ agreement
“product”
But a
could not be deemed
“that the trade secret at issue in
EEA
[the
“produced
simply
for” commerce
because
code,
is the
Count]
source
and that
“purpose
engage
its
is to facilitate or
relevant ‘product’ is the Trading System.”
commerce”;
such a construction of
United States v. Aleynikov, 787 F.Supp.2d
product requirement
EEA’s
would de-
(S.D.N.Y.2010).
It was on this
prive
statutory
language
limit-
understanding that this court held the Al-
ing effect.
(noting
Id.
80-81 & n. 5
eynikov indictment legally insufficient. As
that
had been “unable to
Aleynikov
phrase
construed the
“a product
identify a single product that affects inter-
that
produced
is
for or placed in interstatе
state commerce but that would nonethe-
commerce,”
or foreign
Goldman Sachs’s
by
less be excluded
virtue of the statute’s
trading system could not constitute such a
limiting language”).
product because Goldman Sachs “had no
Aleynikov’s
phrase
construction of the
selling
intention of
HFT system
its
“a
that
placed
for or
licensing it
anyone.”
United States v.
in interstate commerce” controls on this Aleynikov,
satisfied (the prod- the securities code “related to” virtually argument, identical see made uct) purchase for and sale. it identified No. Aleynikov, 10-cr-96 United States v. (DLC), 1485-86, case, in that as we Tr. but indictment did not state
While words, many allege observed, it theory government this in so did already have in engaged “high-frequency that SocGen specifically and the elsewhere identi- court on markets in national trading securities” trading system fied the as relevant Exchange York the New Stock “such as here, Where, pleading, as ar- product. NASDAQ Market.” Indictment and Stock labeled gument, charge ever or ¶¶ 1, effectively identified securities 4. This trading system product less the —much in com- as traded interstate products produced placed in inter- product trial, prosecution offered merce.8 At which the state commerce on allegation. More- evidence proving jurisdictional satisfy relied to the EEA’s summation, over, al- argued quoted government argu- element —the said about the re- though little had been reasonably ment is understood more quirement the stolen identify bought and futures and the stocks produced that was product to a “relate[ ] exchanges products on as the sold national foreign in interstate or com- placed for or Indeed, placed in commerce. interstate merce,” evi- by the element satisfied effectively district court clarified trading system was dence that SocGen’s point by referencing only securities as the designed buy and sell “stocks and fu- charging on exchanges. national Tr. 1258. relevant tures” on purchases prod- particular client does not contend that securities are securities ucts”); SEC, 400, "products.” Int'l See Webster's 3d New F.3d v. 205 400 Gurfel Dictionary (defining "product" (D.C.Cir.2000) 1810 (observing petitioner "something produced by physical labor or investors”). products "sold Nor securities intellectual effort: the result of work or any question publicly is there that securities Exch., thought”); Co. v. Dow Jones Int'l Sec. exchanges traded on market- national —their (2d (dis Cir.2006) 10 451 F.3d 304 n. place "plаced in” interstate com- been —have cussing "intellectual-property rights in the se 676 merce. See United States designed according plaintiff’s to the curities (stating "placed F.3d at 80 formulas”). Indeed, proprietary securities interstate or commerce” where it has routinely products by are discussed as "been into the stream introduced of com- Commission, Exchange the ad Securities marketplace”). merce and has reached agency principally charged with ministrative colleague, dissenting Judge To the extent our laws, enforcing federal securities see Asset- Pooler, produced securities not submits that Securities, Backed SEC Nos. 33- Release by satisfy "product” SocGen could not 34-61858, (Apr. WL against Agrawal, element the EEA count release, 2010) ("Throughout this we refer n.7, reject post at 267 we here that conten- through the securities sold such vehicles as text, Nothing statutory any- tion. in the nor securities, ABS, or asset-based structured fi text, thing Aleynikov’s construction added)); products." (emphasis by nance Con requires “product” at issue in an 78c(a)(56) gress, (defining see 15 U.S.C. prosecution EEA owner of product” "security fu "securities futures misappropriated trade secret. The statute call, straddle, any put, option, privi ture or requires only trade that the stolen secret be future”); lege any security product produced related in a to or included courts, Co., other see Burns v. N.Y. Ins. Life commerce, for or in interstate a re- (2d Cir.2000) (referring quirement re- which can be satisfied without "registered entity as broker-dealer of securi gard to whether the owner of trade secret products”); ties see also United States v. Lau rienti, (9th (dis Cir.2010) product are producer and the one and cussing obligations broker’s disclosure "on same.
247
jurisdictional
superfluous.”
element:
is
erative or
676 F.3d at
“[I]t
EEA’s
81
the
(internal
omitted).
proves
quotation
if
marks
the
Con-
sufficient
[i.e.,
canon,
code
the
the term
computer
of the
sistent with
“related
purpose
the
to effectuate
to” cannot be
as
secret at
construed
coextensive
issue]
trade
Rather,
trades,
some
at least
of which with “included in.”
the
pro-
securities
nexus
in interstate or
commerce.” vision must be read to indicate that a
were
trade
Aleynikov,
may
product placed
In
to
secret
relate
Tr.
contrast
to a
in or
commerce,
produced
here made mention of the confi-
for
court
interstate
without
course,
system.
being
product.
HFT
Of
the EEA
included in
dential
requires a nexus between the con-
further
As the Supreme
recognized,
Court has
product
trade
pro-
verted
secret and
ordinary
meaning
“related to” is
placed
for or
in interstate com-
duced
“
relation;
“broad”:
‘to
in some
stand
to
1832(a)
(requiring
See 18
merce.
U.S.C.
concern;
refer;
bearing
pertain;
have
or
to
to” or
“in-
“relate[]
that trade secret
be
bring
to
into
with or
association
connection
product).
Aleynikov,
in”
where
cluded
”
Airlines,
with.’ Morales v. Trans World
employer’s
system
HFT
was the sole
374, 383,
2031,
U.S.
112 S.Ct.
119
issue,
at
product
prosecution
contend-
(1992)
L.Ed.2d
(quoting
Black’s Law
in-
ed that
stolen
(5th ed.1979))
Dictionary 1158
(holding
Where,
here,
in
product.
cluded
state airfare-advertisement rules preempt-
product
publicly
the relevant
is
traded se-
by
as “relating
ed
federal statute
to [air
curities,
provision
to”
statute’s “related
rates, routes,
services”);
or
carriers’]
play:
into
the stolen code re-
comes
Was
Lines, Inc.,
85,
v.
Shaw Delta Air
463 U.S.
to
lated
traded securities? We answer
103 S.Ct.
er errors on in this fy no error case. prod as the Yates challenge to securities Yates like his satisfying jurisdiction, EEA ucts Further, help- if it might even have been HFT challenge unpreserved ful, hindsight, explicitly to instruct satisfying jurisdic system system could not jury that SocGeris tion, plain for error. is reviewable jurisdic- EEA product supporting Skelly, 442 F.3d v. See United States never instruction tion—an (2d Cir.2006) (declining to reverse authority sought Agrawal points to — challenge in unpreserved Yates basis of thus, and, specificity cannot requiring such error); v. plain United States absence “clear or obvi- demonstrate error (2d Cir.1995) Thomas, 73, 79-80 Marcus, 130 S.Ct. ous.” States challenge Yates (reviewing forfeited (stating at 2164 that second criterion error). satisfy cannot plain requires that error be plain-error standard *15 requirements plain of error. obvious, subject to “clear or rather than (internal quotation dispute” reasonable disjunctive A Yates arises where concern omitted)). in Aleynikov, marks Even of are submitted to a culpability theories systems trading confidential holding that jury general returns a verdict cannot, law, prоd- as qualify a matter of legal- of the theories was guilty, “[one] jurisdiction, EEA nowhere supporting ucts Garcia, States v. ly insufficient.” United specifically states an indictment must Cir.1993). (2d In such a jurisdictional disavow reliance on such circumstances, impossible to tell “it is must system confidential or that the court selected,” ground jury legal- a jury so in the absence of instruct ly ground sufficient or the insufficient one. request charge. certainly Agrawal And to States, 312, 77 Yates v. 354 U.S. at United error identifying cites to no case Yates us 1064. S.Ct. culpability based on insufficient theories that a have for itself jury might conjured Agrawal cannot demonstrate Yates error by the though they argued even were not presents here because his conviction by prosecution charged or the court. ambiguity. jury pre- such with a sufficient and an legally sented both event, In even if could Rather, theory jurisdiction. insufficient (2) Yates error that demonstrate single it was a presented sufficient obvious,” rea- “clear he cannot show “a or theory: that SocGeris stolen affected probability sonable the error code was related to the securities was trial,” necessary [his] outcome trade, prod- used which securities were requisite effect demonstrate adverse in” “produced placed ucts for or interstate rights. his Much less substantial Id. supra commerce. See at 246-47. To the he seriously can show that the error affect- Agrawal urges by argu- fairness, extent otherwise integrity, reputa- ed the public ing jury might nevertheless have This is be- judicial proceedings. tion of trading system relied on as the impossible SocGeris cause for a it would in a product, points nothing system relevant he find that SocGeris argument product the record to for interstate commerce produced raise above Indeed, merely finding that the securities speculative. specula- without also through system products is in Ra- traded were light Judge tion unwarranted placed interstate commerce. On specifically casting koffs instruction in only point, government argued summa- jurisdictional by issue reference 2166; Cotton, things [SocGen’s tion that “one of the S.Ct. at States v. system designed 633, 122 is trade is do HFT] U.S. S.Ct. 1781. stocks, the with those indexes associated reject Agrawal’s We therefore legal suf- couple and futures. A wit- [of] stocks challenge to ficiency the EEA were talked about where futures nesses this case. Exchange on the Stock America[n]
traded plen- shockingly Chicago. and not That 3. NSPA Tr. ty of interstate [commerce].” Property The National Stolen Act states Aleynikov, court a con- In ruled that in relevant as follows: part trading sys- nection between a confidential publicly was le- tem and traded securities transmits, transports, Whoever or trans- itself gally system insufficient to make the or fers interstate commerce a for or inter- wares, merchandise, any goods, securi- Nevertheless, any commerce. im- state money, $5,000 ties or of the value of permissible finding here that such trad- more, knowing the same to have been ing system satisfied the EEA’s stolen, converted or taken fraud ... requirement per- derive from guilty of [is crime]. finding missible that the securities traded 18 U.S.C. United States system products were themselves carefully this court reviewed *16 Thus, in interstate commerce. Supreme precedent and circuit Court con- there is basis for concluding wares, struing phrase “goods, mer- [or] error seriously Yates affected the outcome chandise” and concluded that “[s]ome trial. tangible property must be taken from the discussed, already reasons the con- For owner for there to be a ‘good’ deemed clusion securities traded national on is ‘stolen’ purposes for of the NSPA.” 676 exchanges products placed are inter- “purely F.3d at 77. The theft of intangible beyond state and commerce is dis- property purely embodied in a intangible So pute. computer too the conclusion that format,” as the trading system such identify sole purpose code whose is to case, issue does not state an offense securities be traded to” those “relates under Id. at the NSPA. circumstances, securities. In these Relying Aleynikov, Agrawal on chal- Agrawal having with admitted under oath lenges legal sufficiency of his NSPA code, copied that he SocGen’s proprietary charge, that he too complaining is accused interstate, it transported and converted it computer constituting of stealing code without SоcGen’s authorization to benefit only property. intangible argument and a competitor, himself SocGen we con- ignores it Aleynikov’s fails because em- Agrawal’s guilt clude that evidence of phasis format in which on the intellectual “overwhelming” is so and “uncontrovert- In property is taken. the de- concluding ed” that “there is no basis for computer fendant stole code in an intangi- seriously that the error the fair- affected form, electronically ble ness, downloading the integrity judi- or public reputation of Germany code Indeed, to a server and then proceedings. cial it be the would computer. of a from that server his own reversal conviction such as this which contrast, By See id. at 74. have that effect.” v. stole would Johnson Unit- States, computer in the tangible ed 520 U.S. at form S.Ct. (alteration quotation paper, and internal marks thousands of sheets of which paper omitted); Marcus, see United States v. 130 he then to his home in transported New purloined originals all then restored makes the difference.
Jersey. This
was,
that it
approvingly
concluding
to United
the files.
(citing
See id. at
(1st
Martin,
tangible
14-15
objects
observed that “where no
States v.
Cir.2000)
although NSPA
(stating
transported, a court
were ever taken or
intan
purely
theft
does not criminalize
pressed
would be hard
conclude
information,
apply
statute
“does
gible
‘goods’
transported
had been stolen
item
tangible
some
when there has been
2314,”
meaning
within
but that
taken,
insignificant or valueless
however
are
goods
“where
stolen and
tangible
be,
intangible
may
component”
absent
transported
obstacle to con-
quotation
internal
(emphasis
original;
tran-
demnation is a clever intermediate
omitted))). As
ex
Aleynikov
marks
scription
photocopy
of a
machine
or use
who
plained,
transfers code
a defendant
...
of the
transformation
information
“physical
electronically never assumes
tangible object
papers
in the stolen
into
tangible.
By
Id.
anything
control” over
original
possessed
never
owner
contrast,
Agrawal,
a defendant
immaterial.”
Id. at
should be deemed
in
papers
intangible
who
steals
393-94.
reproduced,
as
property is
does
tellectual
Here,
produced
cop
paper
something
control over
physical
sume
ies of
code “in the com
necessary for
“to
tangible as is
the item
office,
pany’s
paper
on its
and with its
be a
purposes
...
‘good’
393. The
equipment.” Id. at
fact that
NSPA.” Id. at 77.13
intangible
code had
in an
form before
been
comports
construction of
NSPA
This
Agrawal,
employee,
a SocGen
himself re
of the statute in
our discussion
Unit-
company paper
it on
is irrele
(2d
Bottone,
253
by
Although
to state an NSPA offense. United
scribed
as
NSPA.
court
F.3d at 78.
In-
Aleynikov,
required
States
676
was not
in Aleynikov
to decide
deed,
that conclusion is dictated not
tangible
what
the theft
formats
of intellec-
Dowling v.
by
but
United
by
property
tual
physical
would constitute “a
States,
473
105 S.Ct.
87
U.S.
NSPA,
theft” for
purposes of
United
(1985).
case,
152
In that
L.Ed.2d
(dis-
Su-
v. Aleynikov,
States
F.3d at
676
78
NSPA
preme Court held that the
was not
cussing possibility
code’s be-
transportation
violated
interstate
ing stolen
“compact
disc or thumb
“bootleg” phonograph recordings where
drive”), it
recognize
did
that “in virtually
themselves,
the recordings
neither
nor
every case involving proprietary computer
tangible property, were
other
themselves
code worth stealing, the value of the intan-
rather,
but,
they
“em-
stolen
converted
gible
vastly
code will
exceed the value of
performances
composi-
of musical
bodied
any physical
which might
item on
right
Dowling
tions that
had no
to distrib-
stored,”
79;
id. at
see United States v.
214-15,
Id. at
3127 (noting
ute.”
105 S.Ct.
Martin,
States, 105 or S.Ct. 473 U.S. Vericker, of In re 446 subject commerce.” Congress decided that Insofar as Cir.1971) (2d 244, (Friendly, goods, of F.2d apply to theft 248 NSPA should C.J.). ie., merchandise, wares, recognized “mere tangible prop- We there or or chemical for- papers” containing maps erty, respect Congress’s proper a goods or wares be- a defendant who steals mulae could constitute may choice allow “ordinarily subjects] of only intangible they in cause were property intellectual cases). (collecting Id. form, prosecution to avoid sale license.” defendant, FBI But a such as But we that stolen documents the NSPA. held under there was evi- property qualify intellectual did because Agrawal, who steals form, “ordinarily were papers will not be heard to com- dence that such tangible Id. insufficiency pros- bought when he is in commerce.” plain legal and sold conduct that falls within con- ecuted for In a considering whether market gressionally parameters. defined item, question exists for an is not sum, le- we conclude legitimate. whether the market is A black gal insufficiency challenge to his NSPA market See United States v. will do. error, much fails for lack (9th Weinstein, 1454, 1463 Cir. plain less error. 1987) to be property subject (recognizing if it can be sold “even on a commerce Proving Sufficiency B. the Evidence market”); also United States v. thieves NSPA Crime (8th Cir.1988) 291, Stegora, F.2d 292 that, even in the ab Agrawal submits price market” (applying proper “thieves’ insufficiency, NSPA con legal sence of his value); States v. good’s measure of reversed because the trial viction must be (3d Cir.1978) Moore, a support evidence was insufficient (same). necessary it to show that Nor is guilty heavy verdict. He carries burden SoeGen to sell or license its planned itself in making argument. Not must Plainly, code the market. did not. light the evidence in the most view Nevertheless, evidence al considerable all prosecution, drawing favorable to the a market lowed to find that did exist favor, v. inferences in its see United States buying licensing trading sys for the (2d Broxmeyer, 616 F.3d Cir. and the tems such as SocGen’s 2010), but also we must affirm the convic they were based. have “any tion if rational trier of fact programmer example, For SoeGen elements of the crime found essential to an occasion when a Thuillier testified doubt,” beyond a reasonable Jackson hedge purchased financial institution Virginia, 443 U.S. 99 S.Ct. acquire high frequency fund in its order to (1979) (emphasis origi L.Ed.2d 560 *19 system, allowing trading thereby the insti- nal). arbitrage. tution to in index See engage argues that the evi- Agrawal specifically sys- of a purchaser trading Tr. 651. The to demonstrate that dence was insufficient necessarily purchases tem also code on market for the HFT there was a stolen Indeed, based. with- system requirement expressly a is not code. Such code, system. out the is no there Nevertheless, in stated in the NSPA. con- wares, permitted jury “goods, the NSPA’s Trial evidence struing [or] looking pur infer Tower was to language, we have stated merchandise” chase otherwise unavailable HFT personal terms denote “such SocGen’s these
255 proposed code when it to hire Agrawal Agrawal Had raised objections these court, systems. duplicate trading In- district warranting de novo re- deed, Agrаwal appeal, view on convinced Tower to hire he carry would a heavy burden in by representing urging him vacatur. only he had access to Not would he have to SocGen’s code and could clone demonstrate that trading requested its he end, systems. from the district gave Toward this he Tower court that accu- rately represented the law in every notes derived from SocGen’s re- HFT code spect, but also he would have to show and stated that he had “a lot of things in the charge given was print.” Tr. 124. From erroneous and actual[] this evi- him dence, prejudice, caused a matter jury by decided reasonably conclude looking only to the challenged instruc- Agrawal effectively offering to tion, See, but to the charge as a whole. “sell” agreeing “buy” and Tower e.g., Applins, United States v. code, F.3d with that transaction to be (2d Cir.2011). Agrawal Because did not by effected Tower’s hiring Agrawal. Such raise of the charging errors me, about a “hire get the code” inference is which he complains now in the district reinforced compensa- the fact that the court, required 30(d) by Fed.R.Crim.P. package tion Tower offered to (requiring party objects who jury would have him paid percentage of prof- charge to inform district of “specific court its realized from the trading systems he objection grounds and the for the objec- would clone from SocGen’s code. tion”), see Masotto, United States v. record, This light viewed most (2d Cir.1996), his burden favorable to the government, was sufficient on appeal is heavier still because we will permit a reasonable jury to find that error, review plain which is not there was a market for code here, evident 30(d), see Fed.R.Crim.P. such as that by Agrawal. stolen We there- 52(b); Cain, States reject fore his evidentiary sufficiency chal- (2d Cir.2012) (reviewing unpreserved lenge to his NSPA conviction as without challenge jury plain instruction for er- merit. ror). Jury C. Instructions 1. EEA Count submits numerous errors a. Intent Instruction in the district jury court’s instructions re- Agrawal contends that the district court quire vacatur of his conviction. As to the erred as a matter of law effectively count, (1) EEA he argues that the district instructing jury “if court’s instruction on “intent” was incor- formed an intent to convert [SocGen’s law, rеct as a matter of a “knowl- he copied HFT] had re- and/or after edge” instruction wrongfully omitted it, moved that intent could somehow relate count, from the charge. As to the NSPA back to the initial act and render it crimi- Agrawal complains that the district court nal.” Appellant Br. 25. He further main- (1) failed jury to submit to the question objection tains that this preserved wares, of whether goods, or merchandise court, novo, the district so as to warrant de stolen; (2) were failed to instruct rather than plain-error, review. Both ar- $5,000 how to determine whether the *20 guments are defeated the record. satisfied; value element was and im- properly charged on requisite the inter- As to the argument, second the record state commerce nexus. shows that objected never to the actions—the un- proscribed a misstatement of referenced two charge court’s
district law, ie., removal of a trade secret from that the lan- authorized he never submitted guilt its owner’s offices the unauthorized only upon § 1832 guage of admitted possession intent to convert at of that trade secret—either of of a defendant’s proof conviction, support EEA he or removed a trade could an copied the time Rather, engaged a the provided maintained that such that when defendant secret. he possession, the removal or he compelled by had narrow instruction to convert. requisite the wit” clause the indict- formed the intent fact that “to 1832(a)(1),(a)(3). § to theo- government ment limited the this See id. See Tr. ry culpability. As the record demonstrat evidence may have a con- argument That raised ed, Agrawal’s unauthorized removal of challenge to the structive amendment computer his unautho printouts charge, point a we discuss at Part infra began possession printouts rized of those (rejecting constructive amendment II.D prohibit on But the the same date. while but alert argument), it did not the district ed removal was concluded discrete any to that its mis- court claim instruction days, Agrawal’s possession unauthorized the thus construed EEA. We review uninterrupted for some ten continued 30(d). error. Fed.R.Crim.P. plain See months, after resigned even he contention, Contrary to cirсumstances, the dis SocGen. these district court did not that, correctly trict recognized court subsequently formed intent could relate law, government carry matter of back to otherwise innocent conduct and intent if its burden on the element of Judge render it criminal. What Rakoff proved requisite rea “when mens in addition to charged other iden- code, [Agrawal] removed the or at any crime, gov- tified elements of an EEA point thereafter when he was still unau beyond prove, ernment had a reason- possession thorized code.” computer doubt, able Tr. 1314. [Agrawal] that when removed the code Whatever constructive amendment com- offices], any or at point [from SocGen’s plaints Agrawal may have about was still in thereafter when he unautho- charge’s “possession” reference al- code, possession
rized
clause,
leged in the
“to wit”
indictment’s
defendant formed
intent to con-
II.D,
Part
no merit
there is
infra
vert the code to the economic benefit of
his
that it
the law. In
argument
misstates
others, knowing
intending
himself or
sum,
identify
legal
we
no
error in
because
Société
injure
would
Générale.
identify
charge,
necessarily
Tr. 1313-14.
plain error.
comports
This instruction
with the lan-
EEA,
guage of the
which makes it a crime
Knowledge
b.
To
Failure
Submit
in a
engage
range
for a defendant to
Jury
intent
listed conduct “with
convert
trade secret ...
to the economic
faults
district court for not
benefit
thereof,
jury that
anyone
charging
other than the owner
will,
beyond
intending
required
prove
a reasonable
knowing
offense
injure any
pro-
trade
18 doubt
when he took
actions
owner of that
secret.”
EEA,
he
with
this statu-
scribed
did so
knowl-
U.S.C.
Consistent
scheme,
actions
not author-
tory
Judge
edge
Rakoffs instruction
that those
were
*21
argument
ized
SocGen. This forfeited
would not
seriously
here
affect the fair-
step
plain-error analysis
fails at the final
of
ness, integrity,
public
or
reputation
judi-
of
light
overwhelming
evidence that
cial proceedings. See United States v.
Agrawal possessed the requisite knowl- Cotton,
632-33,
1781;
U.S. at
122 S.Ct.
edge
he
when
removed the code
States,
Johnson v. United
520 U.S. at
brought
from SocGen’s office and
it to his
258 count suggesting that an element from one
b.
To
Failure
Differentiate
the
to an element from
might
related
Elements
Jurisdictional
Thus,
jury
count.
charging
and EEA
other
the
NSPA
EEA,
that
Judge
to the
Rakoff made clear
jurisdic-
jury as to the
charging
the
pertained to the
required jury finding
the
NSPA,
of the
the district
tional element
prove
computer
government
Did the
code.
the
was
that
court instructed
a
doubt
the com-
beyond
reasonable
“that
obliged
beyond a reasonable
prove
in,
to, or
a
code was related
included
puter
defendant,
the
knowing
doubt “that
the
was,
part, pro-
that
at least in
stolen, purposely
was
computer code
for,
in,
or for-
interstate
duced
it
in interstate
commerce.”
transported
eign commerce”? Tr. 1314. In connection
that
Although
Tr. 1315.
concedes
burden, Judge
explained
this
Rakoff
law,
he sub-
this is
correct statement of
if the government
“it is
that
sufficient
court
mits that it
error
the district
was
computer
of the
proves
purpose
the
the
emphasize
not to
difference between
trades, at
code was to effectuate securities
jurisdictional
its EEA
this
element and
least some which were
interstate or
counterpart.
sought any
Agrawal never
By
con-
foreign commerce.” Id.
1315.
the district
such further
instruction in
trast,
jury
juris-
in instructing the
on the
court.15
NSPA,
the
Ra-
Judge
dictional element of
AgrawaFs
jury
that a
contention
jury’s
focused
attention on the
koff
given
conflate
instruction with the one
this
actions and state of mind. Did
defendant’s
en-
jurisdictional
on
EEA’s
element is
beyond a reasonable
government prove
tirely speculative and at
with the
odds
defendant, knowing
“that
doubt
general assumption
juries
law’s
follow
stolen,
purposely
they
See
given.
instructions
are
transported
in interstate
it
commerce?”
225, 234,
v.
528
120
Angelone,
Weeks
U.S.
Id.
(2000) (“A
jury
S.Ct.
whether
was trade
the warranting vacatur with respect to either
district court
“Any-
asked if there was
count of conviction.
thing from the defense on this [instruc-
tion],”
to which
replied,
counsel
D. Constructive Amendment
EEA
“No, your honor.” Id.
response
This
was
Count
consistent with the
strategic
defense’s
de-
Agrawal argues that
the EEA
challenge
cision to
nothing about the case
constructively
amended in vio
except
government’s
ability
prove
lation of the Fifth Amendment’s Grand
Agrawal’s culpability at
precise
time
Clause,
Jury
insofar as his conviction rests
copied
he
and removed
on facts outside the “to wit” clause of the
printouts.
decision,
Such a strategic
evi-
count,
EEA
which alleges only his unau
merely by
denced not
silence but
thorized copying, printing, and removal of
negative response on the record to a dis-
SocGen’s confidential computer code. We
trict court
invitation to
objection,
voice
review a constructive amendment chal
does more than forfeit the
objec-
unraised
lenge de novo. See United States v.
tion;
it waives it. See United
States
Banki,
(2d Cir.2012).
99,
685 F.3d
118
To
Olano,
Even were this argument merely was convicted of defendant conduct forfeited, however, Agrawal could not dem the subject grand jury’s plain onstrate error. Frank, The trial evidence indictment.” United Stаtes v. 156 (2d showed that Tower willing pay Cir.1998); accord United Agrawal several (2d hundred thousand Rigas, dollars States v. based professed ability Cir.2007); Salmonese, on his to duplicate United States v. (2d Cir.2003). system. confidential HFT That F.3d Although con system earned SocGen tens of millions of structive amendment is viewed a per se Clause, cally, telephone. of a See id. Jury suffi use Grand
violation of the 413-414. any showing relief without cient to secure proceeded has cau court prejudice, ex- argument, DAmelio Rejecting error, “consis tiously identifying such criminality” the “core of plained that flexibility in tently significant permitting] crime, terms; general “the essence of *24 the defendant proof, that provided how a defendant effected particulars the of criminality to given of the core notice purview.” the outside that Id. of crime falls v. at trial.” United States proven be is if constructive amendment evident While Cir.2012) (2d 412, D'Amelio, 417 F.3d 688 on a of complex a convicts “based (emphasis original; quotation internal from which distinctly facts different omitted). marks indictment,” in the grand jury the set forth arises where the indict-
no such concern
contrast
constructive
By
single
ment
“a
set of discrete facts
charges
amendment, “variance,”
of which
proof
at
government’s
from which the
when
charging
also
occurs
the
complains,
most a
variance.” Id. at
non-prejudicial
unaltered,
are
but
terms
indictment
of an
(internal
omitted).
marks
quotation
419
materially
proves
the trial evidence
facts
concluding
In
that DAmelio fell into the
alleged in
indict
different from those
category,
second
this court
observed
D'Amelio,
v.
ment.
States
683
See United
criminality
charged
core
for the
of
Salmonese,
417;
States v.
F.3d at
attempted
crime
enticement over
was the
A variance
352
at 621.
raises consti
F.3d
particular person
period
of time of
only if it
a de
deprives
tutional concerns
minor)
(believed
into
activi-
to be a
sexual
jeopardy
notice and
fendant of the
double
ty.
All of the communications relied on
indictment,
protections of an
see United
to demonstrate that en-
DAmelio,
States v.
683
at
ticement,
telephone
e-mails or
whether
prejudice the defendant must establish to
calls,
of
place
took
in furtherance
the same
appeal,
secure relief
United States
Further,
criminality.
core
See id.
Salmonese,
v.
F.3d at
352
621-22.
ap-
defendant
in DAmelio did not—and
parently
argue that he was sur-
could not—
DAmelio,
In
most
our
recent discussion
prised by
government’s
reliance on
crime
concepts,
charged
of
these
communications,
telephone
having been
pur
enticement of a
attempted
minor for
of such evidence
months
given notice
activity poses of sexual
violation of 18
before
trial. See id.
2422(b).
§
An
of
U.S.C.
essential element
case,
of
the core of
“facility
that crime was the use
criminali
commerce,”
ty proscribed by
id.
the EEA is the theft of
means
interstate
sure,
2422(b),
only
§
To
title of
specifically
which was
identified
trade secrets.
be
statutory
in the
“to wit”
uses the common law
indictment’s
clause as
section
D'Amelio,
Nevertheless,
Internet,
term
States v.
“theft.”
numbered
see United
subsections,
text
statutory
so exhaus
argued
lenge to intangi- cause, although the itself was' merits. Agrawal stole it property, ble intellectual III. Conclusion of sheets tangible form thousands in the summarize, as follows: paper. conclude
To Agrawal’s plain-error 1. On review plain-error review of 3. On challenge to insufficiency legal defaulted challenge, defendant jury charge defaulted fails to conviction, EEA defendant his carry his at one or more of fails to burden pleading in the purported error show claims of steps analysis on his the four element affected jurisdictional law’s of the (a) on the legal error the instruction fairness, integ- rights or the his substantial (b) intent, EEA the omission of requisite reputation judicial pro- rity, public EEA knowl- requisite on the an instruction ceedings, because: (c) jury find the failure to have the edge, (a) at issue in although the trade secret ware, good, the stolen code was a whether case, code, was included NSPA, merchandise for purposes trading system in a confidential (d)the emphasize failure differences “produced itself be could not of the NSPA jurisdictional elements *26 in” commerce placed or interstate for (e) EEA, an instruc- and omission of and el- necessary satisfy jurisdictional the requisite how the tion as to to assess EEA, the States v. ement of see United value. NSPA 81-82, prod- Aleynikov, 676 F.3d at con- preserved claims of Agrawal’s as the statute’s requirement uct as well vari- prejudicial structive amendment and nonethe- requiremеnt were “related to” fail on the ance merits. the less satisfied the securities to trade on designed code was and used Accordingly, the of conviction judgment markets; national hereby by the court entered district (b) pros- the neither the nor indictment AFFIRMED. arguments or the court’s ecution’s trading sys- charge ever identified the POOLER, dissenting: Judge, Circuit only relied on to product tem as rather, the indict- jurisdiction; establish majority opinion in the I concur its ment, sig- all arguments, and and con- controlling of the law statements product naled that securities were Property to the clusions as National Stolen commerce; and placed in interstate (“NSPA”) Jury and Instructions. Act (c) if there have been even however, respectfully I dissent as to Part confusion on this for point, II.A.2.a, majori- I that the because believe system found the to be a trading have Espionage ty’s discussion the Electronic commerce, it neces- product interstate (“EEA”) with our directly Act conflicts sarily had to find that the securities Aleynikov, decision United States v. products were using system traded (2d Cir.2012). majority ig- The in interstate commerce. Aleynikov the factual similarities of nores EEA, its narrow plain-error 2. On review of construction ren- challenge after legal insufficiency defaulted months the decision to, dered, effect, retroactively conviction, fails in order his NSPA defendant changes Congress’s statutory made apply show that the theft of interim For this rea- “goods, during period. did not law’s satisfy son, decisis, applying principle of stare In Aleynikov, under a self-admittedly I must dissent.1 narrow construction of the statute’s two
requirements, we reversed the defendant’s Aleynikov Espio- I. and the Economic EEA conviction. We concluded “pro-
nage Act
placed
duced for or
in” created a statutory
limitation, under which Goldman’s HFT
EEA,
Under
a violation occurs
System did
qualify
“product.”
as a
when, “[wjhoever, with intent to convert a
Id. at 80.
Requirement
Product
We further determined
district
requirement,
Aleyni-
phrase
the first
court read the
for”
“produced
As to
too
kov,
broadly
we decided
when
found Goldman’s HFT
that Goldman’s
System
System
“product.”
was not
was a
Id. Just because
“product”
placed
in” interstate
used
“to
“produced
System
rapidly
for
Goldman
exe-
lim-
high
because the
was of
trades in
phrase
commerce
cute
volumes of
various
Trading
his-
Observing
legislative
Sys-
reach.
financial markets” and “[t]he
ited
“produced
generates
in” had tem
of dollars in annual
tory
millions
*28
Aleyni-
against
application
leg-
we decided
tion
3. When
these two issues
retroactive
islation,
amendments[,]”
kov,
including
understanding
this Court
we did it with
that our
obligation
has an
withhold those amendments
See
construction of
EEA was narrow.
taking
retroactively.
effect
v. San-
Judge
Velez
Aleynikov,
district court about the market leged, and the “the Financial spent Institution mil- profitability of System, evaluated the lions of dollars to develop and maintain a product requirement “in a vacuum.” Id. computer system that was high- used in interpretation, (the Under “untenable” “ev- frequency trading ‘Trading System’). ery product actually sold or licensed is [And Trading System t]he generally definition purpose of en- composed of a network of computers and commerce, gaging every (the ‘Code’).” product that is computer code Indictment ¶ in’ ‘placed commerce necessarily would at 5. ‘produced also be for’ commerce—and the government The continued to assert its
phrase ‘placed in’ commerce would be a theory, the HFT System surplusage.” Id. product and the code was its trade secret. Conversely, we product held that a “pro- level, At the district court government duced for or in interstate or foreign point belabored the the HFT code commerce” could not organiza- include an was “the building blocks of [the] software ” tion’s internal tools such as program Goldman’s system and it was “the [that] System. HFT Only actually huge made a number of trades per day, “produced for” interstate commerce could which up added to millions of dollars in Therefore, qualify. because profits a year.” “[Goldman] Transcript at 19. In sum- great went to lengths to maintain the government stated, se- mation the “the whole crecy [S]ystem” of its and the System’s point of stealing [the was to turn it code] profits “enormous ... depended on no use,” one into something that Tower could into it,” having else we concluded that “the that “Tower and that want[ed]” HFT [S]ystem not designed to enter was “system.” Transcript at commerce,” pass added). and thus it (emphasis did not 1257-58 Even the dis- qualify “product” as a under the statute. trict court government’s echoed the Id. at 82. System-as-product theory when it instruct- ed the that “Soeiété prop- Générale’s Here, the same apply. facts Since the erty [was] some or all of the computer case, stages initial used Soeiété Générale in high its identified SocGen’s HFT System as the frequency trading operation.” Transcript ¶ product. Indictment at plain at 1315. words of the indictment clearly allegе un- *29 One,
der Count product SocGen’s was In appeal, its brief on the government “the Financial high that,6 Institution’s frequency again once asserted “SocGen’s HFT fact, ¶21 added). In the word "securities” is no- (emphasis almost more.” ever, Id. at How- cursory these two the where mentioned in mentions of word the indictment. The “securities” do not undermine the fact that page word is used on the first to state that government alleged along the all that the HFT "The engaged among Financial Institution in fact, System product. was the In that same activities, high-frequency other financial trad- NSPA section of the indictment identifies the ¶ ing in securities markets.” Indictment at 1. System product HFT "proprietary as the Additionally, in reference to the NSPA Count computer code.” Id. the indictment mentions trans- ferred, wares, merchandise, "goods, securi- government In appeal, high- its brief on the ties, $5,000 money, lighted of the value of profitable the nature and secret treat- multiple trading in in se- engaged ‘high-frequency securities on system, which traded ” States, ‘pro- jury in in-
markets the United curities’ and the district court’s ’ in engaging very purpose the “the required proof duced struction which Br. at Appellee’s interstate commerce.” ... was to purpose computer the code continued, system was trading 58. It “The trades, some effectuate securities at least mar- in various created to trade securities in interstate or were States, the such as kets located in “This,” ma- Id. at 246. the commerce.” Chicago Exchange, from the Mercantile claims, “effectively securi- jority identified In- located in Manhattan. SocGen’s offices in com- products ties as traded interstate deed, engage in interstate commerce merce.” Id. at 246. just primary not the of the purpose However, admits, majority plainly the system; only purpose it the did this “Agrawal’s indictment not state Thus, system. trading the SocGen’s HFT Id. This [securities-as-product] theory.” system is for’ interstate com- ‘produced gloss the in attempts admission over ordi- merce under commonsense and HFT dictment’s clear identification of the nary of those terms.” Id. at 58-59 reading omitted). (internal System as fact that the the Because this citations newly government’s the minted securities- Sys- an HFT Court decided product, as-product theory tem is not a conclude is nowhere revealed should similarly attempts EEA count fails. record. this fact the It evade by pointing charge district to the court’s Instead, majority the tries to distin- jury it the EEA where instructed Aleynikov guish by adopting govern- may upheld govern conviction “if the theory. ment’s new for the Presented proves purpose ment appeal, first time as- was to trades.” effectuate securities supplemental briefing serted its before added). Transcript (emphasis at 1315 securities, this Court However, charge identify jury this did not System were the alleged product. securities as under majority adopts argument and Instead, security EEA. it identified the writes, “in Aleynikov ... the govern- [ ] using trades as a mere result of the HFT ment and the court elsewhere specifically essence, In System. the court’s instruc trading system identified the the rele- also as the System tions identified Where, product. here, plead- vant no product, which was used to effectuate the ing, argument, charge ever labeled way In mention trades. no does mere trading system product.” Maj. gov of the word Op. Instead, “securities” reverse majority at 246. ernment’s and district court’s consistent alleges government’s “argument System-as-produet the HFT reasonably identify more adherence to understood to theory. way the stocks does undermine bought and futures and sold on Thus, national words exchanges products placed as the clear of the indictment. majority’s heavy interstate commerce.” Id. It relies on reliance on this the indictment’s SocGen is misplaced. statement “that We therefore should *30 system, underscoring generating DQS ment of highly profitable, SocGen’s HFT were well product-like profit $10 example its nature. For it stat- more than of in million for SocGen ed, 2007, 2008, systems up “Both years of these were made each of the and 2009. ADP highly DQS complicated computer $10 code that had close to million to devel- cost (internal op.” Appellee’s been refined written and over the course of Br. at 8-9 citations omitted). years by employees of ADP and SocGen. interpretation, theo the System-as-product phrase conclude the HFT Under “re- statute’s ry satisfy require naturally does not thе to” is lated most read to deal ment, Aleynikov7 as we did in things piece specialized like a ma- chinery, which not itself is intended to Requirement 2. Nexus commerce, enter the stream of but which requirement the assuming product Even product makes the does so. In that con- satisfied, opinion is still in- majority’s the trast, “included in” refers those items correctly upholds the EEA conviction be- Coke, like a can are part the require- cause it misconstrues nexus in a product physical sense. Under this provision, ment. the EEA’s nexus Under statute, reading of the relationship the be- a trade secret must be “related to or in- the HFT System tween and the securities in” Like product. cluded the is too attenuated for them be “related requirement, meaning of this phrase is one to” another. governed by statutory the “doctrine of in- Both government and the majority that terpretation which instructs words in fail to meaningfully address this language company they statute are known Aleynikov. While keep.” Aleynikov, F.3d at 80. Simi- something” lar to our that states “make “pro- language determination posited sepa- Aleynikov duced for or in” two is it limiting, simply dismiss- protections, rate does “related to so too it as an reading. es “inconsistent” And included in” distinct reach two characteris- majority while the that Aley- admits “[i]n Thus, interpret- tics. “related must be to” nikov, this that a court ruled connection it way ed such a does not render trading system between confidential in” “included obsolete. legally traded publicly securities insuf- system prod- ficient to make the itself a Aleynikov, In one hint gave we as to uct,” goes it on to this language. dismiss might what “related to” when constitute Maj. Op. Conversely, at 251. “[bjecause majority system we held that the HFT writes, “we conclude that the term ‘related designed pass was not to enter or in com- to,’ merce, does, provision as used the EEA’s nexus something or to make broadly intended to rather than reach Aleynikov’s code relating theft of source Maj. Thus, narrowly.” Op. system at 248. was not an offense under the added). concludes, (emphasis EEA” 676 “the F.3d at 82 stolen code related to [was] years,” company $10 accept 7. Even if we securities were which had cost the mil- alleged "product,” uphold we still it, cannot develop employee lion to and which had majority’s we conclusion. manuals, compliance password protections, wrote, "[bjecause system the HFT storage, special passwords code and surveil- pass designed not ... to enter or commerce it, lance cameras installed maintain Aleynikov’s relating theft of source making, had SocGen no hand in the mainte- system offense under was not an protection nance or the securities. reading "prod- This EEA.” F.3d at 82. entirely securities existed outside of SocGen’s designed something uct” as demands Thus, System. govern- applying even of some be the result amount of newly securities-as-products ment’s invented "physical labor effort.” or intellectual See theory uphold EEA still cannot Maj. Op. (citing to Webster's 3d New n. 8 conviction, where this Circuit’s caselaw can- (1986)). Here, Dictionary Int'l support securities-as-product theory. securities, not been had labored To renders the word conclude otherwise over, in, developed, designed, pro- invested "product” meaningless SocGen had no System duced. Unlike the which had been —as over hand in creation. "written and refined the course of securities's *31 268 Maj. Op. easily 247. It outer limits of that reach because we at
traded securities[.]”
was
conclude that SocGen’s HFT code related
“the confidential code
reasons
a
only
publicly
way
to the
to
traded securities
in relation
securities
valuable
bring
it
as to
the theft
the HFT code
interstate
trades
facilitated.”
whose
Maj. Op. at 248.
Maj. Op.
within the EEA.”
In
at 248.
expansive reading
goes
also
addition this
makes
of “related to”
This construction
against
statutory con
general principles of
First, it
cre-
missteps.
improperly
several
Congress’s
us
read
obligating
struction
to
a
link between
stolen code
ates
direct
narrowly.
statutes
See Fed. Commc’ns
securities,
in fact
when
the stolen
and the
—Inc.,
-,
& T
Comm’n v. AT
U.S.
only
code was not
valuable
relation
1184,
1177,
131
269 System, (1977) (“[W]e make an HFT helped which in L.Ed.2d 707 must bear in turn made the trades the securities. mind that considerations of stare decisis The stolen code cannot be said to have weigh heavily in the area statutory con- directly made the securities. Supreme struction, Congress where is free to precedent, Court longstanding rules of change this interpretation Court’s of its statutory interpretation, legislative and the legislation”). In order to Aley- circumvent history all direct us to the same outcome: nikov, just decided prior months to oral properly securities were not “re- argument case, in this the majority at- lated to” the code under the narrow con- tempts to distinguish present facts struction of the EEA. through mischaracterizations, while simul- taneously stretching Aleynikov and disre- III. Conclusion garding principle of stare decisis. Aleynikov’s interpretation was narrow For this and other explained reasons terms, by meantime, its own and in the above, I must dissent. before Congress clarified the language, Al- eynikov’s interpretation governed. Re-
gardless of Congress’s subsequent change statute,
to the compelled are to follow a panel
decision of an earlier “unless it has question
been called into by an intervening
Supreme Court decision or one of this banc,” sitting
Court United States v. (2d 151, Cir.2001),
Santiago, 268 F.3d
154
or “unless and until its rationale is over-
The BANK OF NEW YORK TRUST
ruled, implicitly
expressly,
by the Su-
COMPANY, N.A.,
Trustee,
as
Court,
preme
banc,”
or this court in
In re
Plaintiff,
Sokolowski,
532,
(2d
535
Cir.
2000). See
Square
also
D Co. v. Niagara
v.
Bureau, Inc.,
409,
Frontier
476 U.S.
Tariff
ADVISERS, INC.,
FRANKLIN
424,
1922,
(1986)
106 S.Ct.
L.Ed. 815 dissenting)) Corp., Chase Manhattan Bank Lon- (stating determinations, that for statutory 13, don Nominee for Seira as Nomi- “it is more important that the applicable nee, Inc., Deutsche Bank Securities rule of law be settled than that it be Nominee, Limited, A Gensec Ireland right.... true, settled This is commonly Nominee, Co., as A Hare & as Nomi- even where the error is a matter of serious nee, Co., concern, Mac & provided correction can Massachusetts Mutu- be had (internal Co., al Life legislation.” Insurance Life quotation Sun Insur- marks omitted)); Canada, Nominee, ance Co. of A (quoting id. at n. 34 NLRB Ass’n, Templeton Advisors, Ltd., Longshoremen’s Int’l Global 473 as A U.S. (1985)) Nominee, 1,” Through “John S.Ct. Doe L.Ed.2d (“ ‘[W]e should follow the normal “John Doe” The Last presump- Twelve tion of stare statutory Being decisis cases of Names Fictitious and Unknown ”); interpretation’ Plaintiff, Illinois Brick v. Illi- Co. Persons or Parties nois, 720, 736, 431 U.S. Being S.Ct. Intended The Beneficial Own-