Of Mules and Securities Laws

BACKGROUND

Mules, in common parlance, are understood as beasts of burden. They mindlessly carry out severe labor work often for relatively small rewards. In the narcotic drug business, mules are those who carry/smuggle drugs from one place to another. In securities laws too, now, the term ‘mules’ has acquired a similar meaning. They refer to persons who do illegal work under the instructions of another mastermind. Theyget small rewards for doing such work or allowing their names to be used. The question is how they are treated in securities laws since the violations are carried out in their names?

USE OF MULES TO CARRY OUT NUMEROUS TYPES OF SECURITIES LAWS VIOLATIONS

The typical use of mules is to use their names to carry out certain acts, which if carried out in one’s own name, would be illegal or otherwise help links to be established whereby the acts would be held to be illegal. A corrupt person, for example, would take bribes and build wealth in the name of another person, and thus himself being free of scrutiny. Having wealth in one’s own name could be a presumption of having acquired it through corrupt means. In securities laws, there are similar reasons. An insider having Unpublished Price Sensitive Information (UPSI), for example, may use mules to carry out trades with benefit of such i