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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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03 Aug 2015 Partial Victory for Blagojevich: Seventh Circuit Concludes Criminal Statutes Do Not Prohibit “Logrolling”

In mid-July, the Seventh Circuit reversed five of former Illinois Governor Rod Blagojevich’s 18 felony convictions. The court’s ruling may not be of much help to Blagojevich – the court noted that his sentence remains below guidelines – but it does have significant implications for public officials who face federal prosecution for “logrolling,” or trading one public act for another.   In 2008, Blagojevich infamously sought to benefit from his power to appoint a successor to Barack Obama’s soon-to-be vacated Senate seat. The Seventh Circuit focused on the government’s claim that Blagojevich offered to appoint Obama advisor Valerie Jarrett to the Senate in return for, alternatively, a Cabinet appointment or help obtaining a private-sector job.   The court found a critical difference between these two…

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08 Jun 2015 Justice Department Guidelines Seek to Focus Enforcement of Structuring Law on Most Serious Cases

Prosecutorial discretion is a powerful and necessary component of our justice system. Prosecutors exercise charging decisions with few limits and often use their charging discretion to extract valuable information from targets. Nevertheless, the Department of Justice (DOJ) has recently implemented a number of high-profile initiatives aimed at directing the exercise of prosecutorial discretion in a manner that focuses enforcement actions on the most serious violations of federal law.   One of the DOJ’s initiatives limits the use of asset forfeiture in connection with the federal structuring law found at 31 U.S.C. § 5324. The Bank Secrecy Act requires banks to report cash transactions over $10,000. The structuring law prohibits individuals from structuring banking transactions in order to evade that reporting requirement. Congress passed the law…

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10 Apr 2015 Uniform Fiduciary Standards on the Horizon for Brokers and RIAs

Brokers and registered investment advisors (RIAs) have long been held to differing standards. Generally speaking and barring special circumstances (e.g., discretionary authority for an account), brokers are not held to a fiduciary duty associated in connection with a customer’s account. In contrast, RIAs generally accept the fiduciary duty with regard to many elements of the account. Nevertheless, lawyers on both sides have fought for decades over where the exact contours should be drawn. The issue is even more cloudy when you consider potential distinctions between state law. But, as more and more brokers jump to the RIA business model, it appears the duties imposed on these two groups are about to be unified.   At the quarterly Investor Advisory Committee at SEC headquarters on April…

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18 Jul 2014 Corporations and Unreasonable Searches and Seizures: Does the Supreme Court’s Decision in Riley v. California Signal the Rebirth of the 4th Amendment in White Collar Cases?

There has been much attention paid to the Supreme Court’s recent decision in Riley v. California, Nos. 13-132 and 13-212 (June 25, 2014), and justifiably so. It was notable because it was a 9-0 decision in a criminal case – a rare occurrence in the Supreme Court’s history, especially for this deeply-divided Court. But it was also an important, landmark ruling for the Fourth Amendment and its protections against unreasonable searches and seizures.   In its narrowest interpretation, the Supreme Court’s decision in Riley rejected the argument made by law enforcement that cell phones could be searched without a valid warrant if they were seized at the time of arrest. The Supreme Court has repeatedly recognized that there are appropriate exceptions to the Fourth Amendment’s…

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15 Jul 2014 The Acquittal of Rengan Rajaratnum: A Precursor for Acquittals or No Action in Other “Remote Tippee” Cases?

The recent acquittal in the trial of Rengan Rajaratnum may be a harbinger of good tidings for future insider trading defendants. A key issue in some recent insider trading prosecutions, including this one, is whether the government is required to prove that the defendant/tippee (who received the tip) knew about the benefits provided to the tipper (who provided the tip). In a traditional insider trading case, this knowledge requirement is typically not difficult to prove because the defendant usually directly provided the insider with the benefit. But in some recent stock-tipping cases, prosecutors have pursued “remote tippees:” individuals that received a tip but have at least one layer between them and the insider.   The question of whether the knowledge requirement should be applied to…

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30 May 2014 Federal Appellate Court Adopts Broad Definition of “Instrumentality” as used in the Foreign Corrupt Practices Act

  In a ground-breaking decision, the United States Court of Appeals for the Eleventh Circuit has defined “instrumentality” under the Foreign Corrupt Practices Act (FCPA). Until now no federal appellate court had weighed in on a definition of “instrumentality,” leaving individuals and entities only the government’s interpretation of the statute for guidance.  Not surprisingly, the government’s interpretation of what constitutes an “instrumentality” of the state for purposes of a bribe to one of its officials or employees included state-owned or state-controlled entities.[1]   The Eleventh Circuit’s decision in United States v. Esquenazi, No. 11-15331 (May 16, 2014), in large part adopted the government’s interpretation, defining an “instrumentality” as “an entity controlled by the government of a foreign country that performs a function the controlling government…

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20 May 2014 District Court Bolsters the Five-Year Statute of Limitations Defense to SEC Civil Enforcement Actions

  A recent decision by a federal district court judge in the Southern District of Florida held that the five year statute of limitations in 28 U.S.C. § 2462 applies to civil enforcement actions by the Securities & Exchange Commission regardless of the relief requested.   The district court’s holding in SEC v. Graham, Case No. 4:13-10011 (S.D. Fla. Ruling May 12, 2014), is an important expansion of the US Supreme Court’s ruling in Gabelli v. SEC, 568 U.S. __ (2013). In Gabelli, the Supreme Court held that the five-year statute of limitations in section 2462 for the SEC to bring a civil enforcement action begins to tick when the fraud occurs, not when it is discovered. Since the Gabelli decision, the SEC has argued that the…

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15 May 2014 Magistrates’ Revolt: Unexpected Resistance to Federal Government Efforts to Get “General Warrants” for Electronic Information

  Any White Collar practitioner, and anyone interested in current and future efforts by the Federal Government to access electronic communications in its investigations, should take note of a recent mini-trend amongst a number of United States Federal Magistrates around the country. That trend, recently noted by the Washington Post, involves United States Magistrates – the “work horses” of the Federal courts who handle much of the day-to-day work carried out in the Federal court system. In a number of rulings issued without generating much publicity, a series of Federal Magistrates around the country have been denying Government requests for search warrants for broad, and sometimes all encompassing, swaths of electronic communications of suspects. These requests typically come before the Magistrates in the form of search warrants addressed to telecommunications companies to provide…

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