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Government Enforcement Exposed - "The GEE"
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06 Sep 2017 Don’t Let DOJ Defections Fool You: Corporate Conduct Still in the Crosshairs

  Authors: Michael Battle, Roscoe Howard and Patrick Miles   The early months of the Trump administration have brought about the resignations of the two most prominent lawyers behind the U.S. Department of Justice’s recent campaign against corporate wrongdoing. The departures of Deputy Attorney General and Acting Attorney General Sally Yates, and DOJ Compliance Counsel Hui Chen, coupled with the administration’s business-friendly rhetoric, might tempt corporate compliance officers to conclude that the DOJ is shifting its emphasis away from corporate prosecutions.   They shouldn’t. In fact, neither those high-profile defections nor the change in administration is likely to alter the mindsets of the working lawyers in the DOJ’s 94 U.S. Attorney offices. Those prosecutors will not only continue pursuing the same types of cases they…

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02 Aug 2017 Corporate Law Alert – SEC Issues Guidance on Initial Coin Offerings and Cryptocurrencies

  On July 25, the U.S. Securities and Exchange Commission (SEC) issued its most comprehensive public guidance to date on digital assets such as cryptocurrencies and tokens. Key points from the guidance are:   Initial Coin Offerings (ICOs) are required to be registered with the SEC if the digital assets are securities offered or sold in the U.S. Digital assets can be evaluated for securities status using traditional securities law criteria Automated functions through smart contracts or other code remain subject to securities laws Companies dealing in digital assets should consider seeking counsel as to whether the digital assets are securities Companies dealing in digital currencies may need to register as broker-dealers, securities exchanges, or alternative trading systems Companies investing in digital assets and advising on investment…

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31 Jul 2017 SEC Chairman Announces 8 Core Principles

  In his first public speech since becoming the U.S. Securities and Exchange Commission (SEC) chairman, Jay Clayton shared his eight core principles that he indicates will guide his oversight of the agency, with an emphasis on the “Main Street” investor. This speech is significant because it provides insight into how the agency may balance benefits to investors against costs to the markets under the commission’s enforcement and regulatory powers.   However, he also emphasized part of his plan to help individual investors is by increasing the public investments available to them. To that end, Clayton reminded companies considering IPOs that the JOBS Act benefit of submitting draft registration statements confidentially and gradually phasing in reporting obligations, previously available only to emerging growth companies, now…

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12 Jun 2017 U.S. Supreme Court Delivers Blow Limiting SEC Disgorgement Power

  In a unanimous opinion authored by Justice Sonia Sotomayor and issued on June 5, the U.S. Supreme Court reversed a decision of the U.S. Court of Appeals for the Tenth Circuit, holding that SEC disgorgement constitutes a penalty under 28 U.S.C. § 2462, thereby making such actions subject to the five-year limitations period for “an action, suit or proceeding for the enforcement of any civil fine, penalty or forfeiture.” In the case, Kokesh v. Securities and Exchange Commission , the court found the “SEC disgorgement… bears all the hallmarks of a penalty: It is imposed as a consequence of violating a public law and it is intended to deter, not compensate.”   The ruling resolves a circuit split and will have a far-reaching impact…

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01 May 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 7

  *This is the eighth in a series of blog posts that examines seven FAQs issued by the DOJ in response to questions the Yates Memo raised. The seventh of these questions addresses receiving cooperation credit in a civil matter.   Question: Does the “all facts” cooperation requirement apply in civil matters as well?   Answer: Yes. If a company wishes to receive cooperation credit in a civil matter, it must disclose the relevant facts regarding the individuals involved in the misconduct.   In two speeches following the issuance of the Yates Memo, Bill Baer, who was an associate attorney general at the time, provided additional guidance on what the DOJ expects in terms of cooperation in civil matters.   First, on June 9, 2016, Baer identified…

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27 Apr 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 6

  *This is the seventh in a series of blog posts that examines seven FAQs issued by the DOJ in response to questions raised by the Yates Memo. The sixth of these questions addresses whether companies should enter into joint defense agreements.   Question: Can a cooperating company enter into a joint defense agreement with individuals’ counsel?   As mentioned in a previous post about the Yates Memo, the Department of Justice (DOJ) has certainly cast a pall on joint defense agreements (JDA) in potential criminal investigations. The DOJ’s guidance seems to indicate that any corporation interested in obtaining cooperation credit in the form of a reduced penalty or a deferred prosecution agreement must carefully consider whether entering into a JDA could stymie the corporation’s ability to…

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25 Apr 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 5

  *This is the sixth in a series of blog posts that examines seven FAQs issued by the DOJ in response to questions raised by the Yates Memo. The fifth of these questions addresses what happens if a company cannot determine who did what within the organization.   Question: What happens if a company cannot determine who did what within the organization or is prohibited from providing that information to the government?   The simple answer to this question is that the company seeking cooperation credit has the burden of providing a compelling explanation to the DOJ if the corporation is not able to identify all wrongdoers and provide all relevant facts.   By way of background, before the Yates Memo was issued, the government typically would…

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07 Apr 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 4 (Part 2)

  What does the DOJ’s response to FAQ No. 4 tell us about cooperation?   This is the second of two posts relating to FAQ No. 4. In a previous post, we addressed the DOJ’s response to FAQ No. 4 regarding voluntary disclosure by a company. This post will address what the DOJ’s response says about a company cooperating, which includes, as we noted in Part 1, only a brief but important reference to cooperation:   “In recognition of the significant value early reporting holds for the government, the Principles [of Federal Prosecution Of Business Organizations] were revised to separate voluntary disclosure from cooperation in order to treat prompt voluntary disclosure as an independent factor to be considered.”   While it may be a rare,…

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04 Apr 2017 The Yates Memo – DOJ Issues Questions and Answers: Question 4 (Part 1)

  *This is the fifth in a series of blog posts that examines seven FAQs issued by the DOJ in response to questions the Yates Memo raised. The fourth of these questions concerns when a company should voluntarily disclose misconduct.   Question: When should a company report misconduct?   Let’s investigate what the DOJ’s response tells us about voluntary disclosure:   It is fair to say that the Yates Memo focuses on a company’s cooperation with the DOJ, focusing primarily on a company providing information about culpable individuals. For example, five of the seven FAQs refer to “cooperation” or “cooperating.” Yet, FAQ No. 4 relates to reporting misconduct and does not specifically mention cooperation. Similarly, the DOJ’s response to FAQ No. 4 makes only a brief, but…

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31 Mar 2017 DOJ’s Corporate Compliance Program Guidance Provides Succinct Resource for Companies

  The U.S. Department of Justice (DOJ) Criminal Division, Fraud Section recently issued guidance, “Evaluation of Corporate Compliance Programs,” that provides a succinct resource to guide companies in their review and evaluation of their compliance programs. Notably, this is the first formal guidance on corporate compliance issued by the DOJ under the Trump administration and newly appointed Attorney General Jeff Sessions. Much of the guidance can be gleaned from other sources, such as the United States Sentencing Commission’s “Guidelines Manual” or the “United States Attorneys’ Manual,” however the new guidance is a useful collection of topics and sample questions that may be asked during a fraud investigation.   In its introduction, the guidance references the commonly known “Filip Factors” that “describe specific factors that prosecutors…

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