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Government Enforcement Exposed - "The GEE"
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31 Jan 2014 Securities Regulators’ Increasing Use of Real-Time Monitoring Systems – Is Skynet Next?

By Anne DePrez |   While the Department of Health and Human Services may have become jaded in the past few months about computer programs, the Securities Exchange Commission (SEC) has not been scared off from computers. It is instead dramatically expanding its use of computer-based tools to assist in their enforcement activities.   First it was the Accounting Quality Model (“AQM”), announced at the end of 2012.  AQM (or “Robocop” to some) rummages through the SEC EDGAR XBRL filings of more than 8000 registrants to spot red flags that might indicate questionable accrual, reserving and other accounting practices.  This information will be particularly useful for the newly-formed Financial Reporting and Audit Task force which is focusing on disclosure issues.   Then, earlier this month,…

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Latin American Flags
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30 Jan 2014 Going South: What U.S. Companies Need to Know About the FCPA and Doing Business in Latin America

By Pat Cotter |   Like the legendary Spanish explorers, Coronado, Pizarro and Cortes, every day more and more U.S. companies are turning their eyes south to Latin America looking for golden opportunities. With over 500 million potential consumers, rapidly expanding economies and opportunities to literally “get in on the ground floor” in hundreds of industries, the incentives to explore business opportunities to the South of the United States are many.   But leaving the United States does not mean leaving behind all U.S. law. The Foreign Corrupt Practices Act (FCPA), makes it a crime for U.S. companies, domestic concerns, or foreign nationals doing business in the United States, as well as organizations and individuals acting on their behalf (e.g. Agents, Representatives, joint ventures), to…

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27 Jan 2014 Warrant Required to Search Cell Phone?

By Mark Stuaan |   In mid-January the Supreme Court granted certiorari in two cases which reached different answers to the question of whether the police must obtain a warrant before searching a person’s cell phone incident to that person’s arrest. The cases are likely to be argued in April. With 90 percent or more of adult Americans owning cell phones, and today’s cell phones being far more than just mobile phones, the Court’s decision could have significant impact on police activity concerning the vast majority of adults in this country.   In Riley v. California (Supreme Court No. 13-132), after police stopped Riley for expired tags on his license they found firearms under the hood of the car during an impound search of the…

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Typewriter Welcome
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18 Jan 2014 Welcome to The GEE Blog

Do you ever want to know what the government is doing and why? Interested in knowing why that manufacturing plant down the street seems to be doing the same things you are without any intervention by the Environmental Protection Agency (EPA)? Whether or not you are subject to liability for how you coded your Medicare reimbursement request—even if it was an honest human error? Why the Securities and Exchange Commission (SEC) issued a subpoena to you for your profitable trading? The Government Enforcement Exposed Blog (“The GEE Blog”) could be the forum for you!   The GEE Blog aims to give you the “who, what, when, where and why” of government (or the “G”) enforcement. Our lawyers regularly try cases against the government, both civilly…

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18 Jan 2014 Let the Light of Day Shine

By Trace Schmeltz |    As just one example of what The GEE Blog hopes to accomplish, we want to spend a moment talking about an old subject—the Securities and Exchange Commission’s insider trading case against Mark Cuban—and Cuban’s new business venture that has resulted from that case. The case, the SEC’s handling of the matter, and Cuban’s reactions (then and now) say a lot about how “the G” does business and may even be revelatory in the future.   As you recall, the SEC charged Cuban with insider trading in 2008. The case was originally dismissed by the trial court. The Fifth Circuit Court of Appeals reinstated the case, concluding that the inquiry into whether Cuban had, in fact, traded on the basis of material,…

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16 Jan 2014 Barnes & Thornburg Legal Alert – Government Regulators Continue to Make Insider Trading a Trial Priority

By Trace Schmeltz |   From a recent client Alert that we issued yesterday:   Government regulators have started 2014 as they did throughout 2013 by continuing to go after insider trading both civilly and criminally. However, the U.S. Attorney’s office has had substantially more success in trying its criminal cases than the SEC has had recently in its civil trials. Why the government’s criminal prosecutors are having greater success proving criminal fraud than the SEC is having proving civil fraud might be because the SEC is pursuing cases that push the envelope on insider trading liability, either factually or legally. Whatever the reason, a trend might be developing…   You can download a PDF of the Alert in its entirety by visiting our website…

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14 Jan 2014 FINRA Examiners to Focus on Brokers with Histories of Discipline

By David L. Young |    With the beginning of the new year, the Financial Industry Regulatory Authority (FINRA) has laid out its “examination priorities” that give an overview of the issues that it will review in 2014. Two of those issues relate to tracking brokers who have either come from firms with disciplinary problems or have had disciplinary problems themselves.   FINRA, which issued the overview on Jan. 2, will review the process that firms use to research problem brokers before hiring and will seek to identify whether the firms are utilizing additional controls to supervise such brokers to avoid future misconduct.  And although a broker leaving a firm that may have been expelled from the securities industry may not be barred, FINRA has concerns…

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05 Jan 2014 Supreme Court Case Likely to Resolve Dispute on What Government Must Prove in Bank Fraud Prosecutions

By Mark D. Stuaan |   The U.S. Supreme Court plans to hear arguments later this year related to Loughrin vs. United States, which involves a bank fraud prosecution out of the Tenth Circuit. At issue is whether the government must prove that the defendant intended to defraud a bank and expose it to risk of loss in every prosecution under 18 U.S.C. § 1344. The question reflects a split in the federal courts of appeals. The Supreme Court granted Loughrin’s petition for certiorari in mid-December 2013.   The case was premised on the defendant allegedly stealing checks out of mailboxes, altering the checks, and then using the altered checks for purchases at a large retail store. Even though the defendant did not defraud a financial…

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02 Jan 2014 SEC Highlights 2013 Accomplishments and Outlines 2014 Enforcement Priorities

By Brian E. Casey |   The SEC recently published its annual agency financial report which, among other things, provides a peek into the Commission’s priorities for the coming year and outlines its enforcement accomplishments in 2013.   According to the SEC, in the past year, it took steps to “further enhance” its already “robust” enforcement program with the goal of “ensur[ing] that its enforcement and examinations programs continue to be as vigorous and aggressive as possible.” Among its actions, the agency: (1) “began to demand admissions of wrongdoing in certain cases where an added measure of accountability was considered necessary”; (2) it “broadened [its] coverage of market participants, pursuing actions against a range of individuals and entities, including gatekeepers, like accountants and fund directors;…

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