Court docket tosses convictions of former Wilmington Belief execs | Enterprise Information


Meanwhile, before its 2011 fire sale to M&T Bank, Wilmington Trust raised $287 million in a 2010 stock offering, intended partly to help repay the TARP funds, while hiding the truth about its shaky financial condition from investors, prosecutors said.

Defense attorneys argued that the waiver practice had been in place for decades and was no secret. They also maintained that instructions for filing reports with the Federal Reserve and for disclosing financial information in Securities Exchange Commission filings were ambiguous, and that the term “past due” was not clearly defined. They based their argument partly on guidance from the Office of Thrift Supervision, a now-defunct Treasury Department agency that was separate from the Federal Reserve.

The appeals court agreed that the reporting requirements were ambiguous, while noting that the case involved a question of first impression regarding the burden of proof to establish falsity in the face of ambiguous reporting requirements. To prove falsity beyond a reasonable doubt, prosecutors needed to demonstrate either that their interpretation of the reporting requirement was the only objectively reasonable one, or that the defendants’ statements were also false under each alternative, objectively reasonable interpretation, the panel said.

The panel also said the question of reasonableness is an issue for the jury, not the judge. The trial judge had ruled that the reporting requirements were not ambiguous and that defense arguments to the contrary were not reasonable.

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