The Justice Department’s insider trading unit has lost most of its lawyers as Attorney General Todd Blanche prioritizes a fraud crackdown that grew out of a Minnesota daycare scandal.
The team, known as the market integrity unit, has shrunk from more than 40 attorneys at the start of President Donald Trump’s second term to about 10 now, Bloomberg Law reported Friday.
The White House directed a pivot this year toward public benefits schemes when Vice President JD Vance launched the department’s National Fraud Enforcement Division. Former DOJ fraud supervisors told the outlet that shift came at the unit’s expense.
“The rise of Trump admin’s DOJ fraud division has decimated a once elite white collar unit known for convicting market manipulating traders at big banks,” Bloomberg Law senior reporter Ben Penn wrote on X.
Those convictions included traders at JPMorgan Chase & Co. and Deutsche Bank AG, Penn reported.
Departures from the unit escalated in recent weeks when its chief and her two deputies left for the new fraud division, several former DOJ attorneys told Bloomberg Law.
Ten of the unit’s trial attorneys had already been reassigned to the fraud division to work on procurement fraud, and others left for private practice, according to the report.
Another unit manager was fired in September over his resistance to a senior DOJ leader’s intervention to dismiss securities fraud charges against Indian billionaire Gautam Adani, the outlet reported.
Supervisors and other lawyers have been “motivated to voluntarily join a fraud division they view as a more stable faction of the department,” with “greater resources and prioritization from the attorney general,” Bloomberg Law reported, citing former DOJ lawyers.
“Why not go to where you’re going to be getting that support and encouragement rather than needing to justify what you’re doing and always having the threat that further attorneys in your unit are going to be taken away?” said William Johnston, a former assistant chief of the unit who is now a partner at Bird Marella.
The fraud division is run by Colin McDonald, whom the outlet described as a close ally of Blanche.
The new fraud effort “sprung up in response to Nigerian daycare benefits theft in Minnesota,” Bloomberg Law reported, and there has been “widespread concern” among current and former department personnel that it will be politically driven by the White House.
“The Fraud Task Force is important bc: 1) It chases peanuts while Trump steals orders of magnitude more on a daily basis 2) It is largely propaganda 3) It was the excuse to destroy white collar policing,” legal expert Marcy Wheeler wrote on X.
The shrunken team is now expected to face significant challenges in pursuing data-driven investigations into insider trading, spoofing, the practice of placing fake orders to move prices, and other market-rigging scams, according to the report.
Criminal Division chief Tysen Duva has started paying supervisors in the White Collar and Corporate Enforcement Section, which houses the unit, 20% of their salaries over six months to stay, multiple people familiar with the plan told Bloomberg Law. Line attorneys will receive a 10% retention incentive.
“This is unheard of. Working in this unit was a very coveted and highly desirable role. The fact they need to pay retention bonuses is truly stunning,” CBS News senior Justice Department reporter Sarah N. Lynch posted on X.
In a statement Thursday, a DOJ official said the section “continues to be the place where attorneys tackle some of the most complex securities fraud” cases.
But a memo the fraud division released later that day showed it would also build out securities investigations, according to Bloomberg Law.
The post DOJ insider trading unit ‘decimated’ as Todd Blanche focuses on daycare ‘fraud’: Bloomberg appeared first on Raw Story.
