1. New York State Mock Trial Introduction

2. 1 Session Overview  Mock Trial Schedule  Responsibilities of Student Participants  Important Legal Terms  Overview of the Case  Sent-in Questions  Suggested Resources

3. 2 Mock Trial Schedule  February, 2010 – May, 2010  Practices: Weekdays, Saturday mornings

4. 3 Role of Student Participants  Attorney:  Prosecution and defense  Direct examinations  Cross examinations  Opening and closing statements  Witness:  Know the facts of his/her affidavit  Respond to direct and cross examinations

5. 4 Important Legal Concepts  Prosecution: lawyers acting on behalf of the state  Defense: lawyers acting on behalf of the defendant  Direct Examination: (examination-in-chief) – questioning of one’s own witness  Cross Examination: questioning of opponent’s witness  Stipulation: agreement made between both parties prior to a hearing or trial  Hearsay: an out of court statement, made by the declarant, offered to prove the truth of the matter asserted  Impeachment: the act of challenging the honesty or veracity of (the goal of cross-examination)  Indictment: a formal accusation that a person has committed a criminal offense

6. 5 People v. Shawn Miller  Step 1: Define the issue  View the indictment (page 43)  Count 1: Conspiracy – Penal Law 105.05 (page 93)  Count 2: Securities Fraud – Martin-Webb Act §352-c(6) (page 92)  Conspiracy (page 93)  Defendant intends to commit, or cause to be committed, a felony and agrees with one or more people to make it happen.  Martin-Webb Act (page 92)  Defines securities fraud and the attorney general’s ability to investigate and prosecute it.  Section 352. Gives the attorney general broad discretion to investigate suspected securities fraud.  Section 352-c. Defines the crime of securities fraud.  Section 352-c(6). Makes it a crime to intentionally engage in fraud, deception, or make a fake purchase or sale while actively encouraging the sale, exchange, issuance, etc. of securities or commodities.

7. 6 People v. Shawn Miller  Step 2: Determine the objectives of each side  Prosecution: Prove each element of the offenses (burden of proof – beyond a reasonable doubt (act & intent))  Defense: Argue that prosecution failed to prove their case  Step 3: Use the provided affidavits and exhibits to prove your case.  Remind the students that not all evidence provided is relevant. Part of the exercise is to determine what is relevant. Remember this problem is for high school students. They are not expected to know the intricacies of securities or securities law and should not get sidetracked. Focus on the charges!

8. 7 QuestionsQuestions  Does a non-compete bar employees from taking clients with them when they go to a new job, or does it just bar them from opening up their own company that might compete with their current employer?  Students should determine if this is a relevant issue.  Non-competes vary. Use the information provided in the affidavits and exhibits.  Customer Account Journal (Exhibit 4) vs. Monthly Stmt of Account (Exhibit 5)?  Customer Account Journal: Internal record of S&S Derivatives  Monthly Stmt of Account: Standard account statement produced for clients. Includes portfolio balances and transaction summary.

9. 8 QuestionsQuestions  How do you know if two sets of books are used?  Conjecture. If it is apparent that the first set of books is inaccurate, the assumption is that the wrongdoers are keeping another set containing accurate numbers for their use.  Is there a difference between a hedge fund and trading in derivatives?  Hedge Fund: A private investment fund or pool that trades and invests in various assets such as securities, commodities, currency, and derivatives on behalf of its clients, typically wealthy individuals.

10. 9 QuestionsQuestions  What are derivatives? All you need to know is on page 47, number 5. Knowing the intricacies is not necessary.  In simple terms, a derivative is a contract that binds one party to pay another based on measurable future outcomes. There are derivatives based on stock prices, commodity prices, harvest levels, currency exchange rates, interest rates, and even weather events. They can get very complex, and you can even have derivatives based on derivatives, or combinations of derivatives.

11. 10 QuestionsQuestions  Do Series 6 and Series 7 certifications qualify you for trading in derivatives?  Series 6: mutual funds and annuities  Series 7: all securities except commodities and futures  When a CPA reviews the books of a firm, what exactly does he/she look for regarding questions about fraudulent practices?  This is outlined in Mickey Pennman’s affidavit.  Is the promise of double digit returns illegal per se under Martin- Webb? If so, where does it say that and why?  No. The focus on double digit returns goes to the issue of reasonability. It was unreasonable/virtually impossible to expect or achieve double digit returns given market conditions. This was a tip-off to potential wrongdoing.

12. 11 Additional Sources  www.investopedia.com  www.investordictionary.com  www.investorwords.com

13. 12 Questions???