Opinion ID: 787481
Heading Depth: 3
Heading Rank: 3

Heading: Recklessness standard for securities fraud.

Text: 62 As discussed above, the district court instructed the jury that it could convict Defendant of both mail fraud and securities fraud if it found that he had made a false statement, which was a representation that either (a) was then known to be untrue by the person making or causing it to be made or (b) was made or caused to be made with reckless indifference as to its truth or falsity. Defendant argues that the recklessness portion of the instruction was error as to the securities fraud counts. 63 The comment to Ninth Circuit Model Jury Instruction 9.7 (2000) states that reckless disregard for truth or falsity is sufficient to sustain a conviction for securities fraud. The comment cites United States v. Farris, 614 F.2d 634, 638 (9th Cir.1979), for this proposition. Defendant argues that the comment incorrectly describes the law to be applied in this case, because Farris was not a 15 U.S.C. §§ 78j(b) or a 78ff prosecution, because Farris relied on a civil securities fraud case, and because the Supreme Court's decision in United States v. O'Hagan, 521 U.S. 642, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997), stands for the proposition that recklessness is insufficient to sustain a criminal conviction for securities fraud. In O'Hagan, the Supreme Court said that, in order to convict a defendant of securities fraud, the government must prove that the defendant willfully violated Rule 10b-5. 521 U.S. at 665-66, 117 S.Ct. 2199 (citing 15 U.S.C. § 78ff(a)). 5 Defendant again cites Bryan, 524 U.S. at 191-93, 118 S.Ct. 1939, for the proposition that willfullness requires actual knowledge and argues that recklessness cannot satisfy this requirement. 64 [14] Defendant's argument fails. Farris explicitly holds that recklessness is adequate to support a conviction for securities fraud. Defendant's attempt to distinguish Farris on the ground that Farris involved a fraud charge under 15 U.S.C. § 77q(a), and not under § 78j(b), is unpersuasive. As we explained above, willfully in the context of § 78ff is best understood to mean voluntarily and knowingly wrongful, not with the intent to violate the law. Therefore, its absence in § 77q(a) does not render Farris distinguishable. We find no error in the recklessness instruction. 65