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Government Enforcement Exposed - "The GEE"
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02 Jan 2015 Year in Review: Government Enforcement/Financial Litigation Developments

This year we have seen a number of interesting and important developments in the world of government enforcement and financial/regulatory litigation. Here are our “Top 5:”   Wal-Mart permits the discovery of privileged internal investigation documents   As we discussed in August, the Wal-Mart decision out of the Delaware Supreme Court was significant because it made clear that the attorney-client and work product privileges are not impenetrable when it comes to internal investigations – at least not in Delaware. The Court, in formally adopting the Garner Doctrine, found that even when all parties agree that the privileges exist and apply, the privileges may be overcome and shareholders may be entitled to privileged documents if they can show “good cause.” While the decision was important and…

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23 Dec 2014 CRIMINAL INSIDER TRADING CONVICTIONS OVERTURNED IN FAR-REACHING RULING

In a stunning reversal that threatens Southern District of New York U.S. Attorney Preet Bharara’s signature achievement, the Second Circuit recently reversed the insider-trading convictions of former hedge fund managers Todd Newman and Anthony Chiasson. Over the last seven years, Bharara’s office has secured more than 80 convictions for insider trading. Many of those may now be imperiled by the appellate court’s decision, which appears to substantially raise the bar for what most be proved in an insider trading case.   Newman and Chiasson were “remote tippees,” individuals who allegedly received material inside information indirectly, and often several steps removed, from corporate insiders. Remote tippees were part of Mr. Bharara’s effort to aggressively push the envelope with respect to who might be liable for insider…

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22 Dec 2014 Still Waiting: House of Representatives Over-Criminalization Task Force Report

Over the past six months, we have been keeping a watchful eye on the U.S. House of Representatives Over-Criminalization Task Force and awaiting the results of their efforts. Since June 2013, the Task Force has held eight hearings to discuss a wide array of topics and to obtain expert testimony pertaining to the federal criminal code and the consequences of this country’s perpetually expanding federal criminal laws. The Task Force concluded its proceedings in early August 2014, but a report has not yet been issued. As we await the report, we anticipate some very interesting observations and recommendations from the Task Force – recommendations that may have a significant impact on the federal criminal landscape.   In its first session in June 2013, the Task…

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15 Dec 2014 DOJ Offers Opinion on Successor Liability Under FCPA

The Department of Justice recently issued Opinion Release 14-02, its second release of the year regarding the Foreign Corrupt Practices Act, and it offers valuable insight for any U.S. company looking to merge with or acquire a foreign entity. The opinion request came from a U.S. consumer products company that intends to acquire a foreign manufacturer with no direct sales or distribution contracts in the U.S. In the course of its pre-acquisition due diligence of the foreign company, the U.S. entity identified a number of likely improper payments to government officials, as well as substantial accounting and recordkeeping problems. In light of these identified concerns, the U.S. company set forth a plan to take remedial pre-acquisition measures and post-acquisition integration steps. The opinion request, however,…

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02 Dec 2014 Prosecutorial Over-criminalization: Fishing for Guilty Pleas

On November 5, 2014, the Supreme Court heard oral argument in a case involving a fisherman, Mr. Yates, who was convicted of violating the so-called “anti-shredding” provision of the Sarbanes-Oxley Act, which was passed in 2002 in the wake of the Enron scandal. The case arose from a 2007 search of the Miss Katie, Mr. Yates’ fishing vessel. A Florida state officer boarded the ship at sea and noticed fish that appeared less than 20 inches long, which was under the minimum legal size of grouper. The officer placed the smaller fish into a crate, issued Yates a citation, and ordered Yates to take the crate to port for seizure.   Instead, Yates ordered his crew to throw some of the smaller fish overboard. Officials…

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21 Nov 2014 ASSISTANT ATTORNEY GENERAL URGES COMPANIES TO COOPERATE AND CONDUCT THOROUGH INTERNAL INVESTIGATIONS OF FCPA VIOLATIONS

In remarks prepared for the American Conference Institute’s 31st International Conference on the Foreign Corrupt Practices Act on Nov. 19, 2014, Assistant Attorney General Leslie R. Caldwell emphasized the DOJ’s recent successful prosecutions under the FCPA and urged companies to cooperate and conduct thorough internal investigations of FCPA violations.   Caldwell emphasized the DOJ’s aggressive prosecution of individuals and companies, citing more than 50 convictions of individuals since 2009 (25 of those since 2013) and resolution of cases against more than 50 companies with penalties in forfeiture of approximately $3 billion.   While the DOJ is more aggressively developing and prosecuting cases, Caldwell still called on companies to self-disclose and cooperate.  Caldwell emphasized that she meant a full and timely cooperation, saying, “We do not…

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07 Nov 2014 Bio-Rad Settlement Reinforces FCPA Trends

On Tuesday, the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) announced that both had reached agreements with medical diagnostics and life sciences manufacturing company Bio-Rad Laboratories to resolve allegations that Bio-Rad violated the Foreign Corrupt Practices Act (FCPA) in connection with its engagement of third party intermediaries in Russia, Thailand and Vietnam. The respective releases reveal information about the settlement that places it squarely in line with some emerging trends in the FCPA enforcement arena.   The SEC alleged that Bio-Rad “lacked sufficient internal controls to prevent or detect” $7.5 million in bribes that were paid to Vietnamese and Thai foreign officials during a five-year period and recorded as legitimate expenses, including commissions. The SEC also alleged that Bio-Rad engaged foreign agents…

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31 Oct 2014 A Cozy Relationship: The DOJ and JFTC, and the Potential Risks of Taking Advantage of JFTC’s Leniency Program

Over the past year, the United States Department of Justice (DOJ) and the Japanese Fair Trade Commission (JFTC) have made concerted efforts to coordinate and join forces in the enforcement of U.S. and Japanese antitrust policies. This growing relationship makes sense, from the agencies’ perspective, given that they are both responsible for upholding their respective antitrust laws and prosecuting violators. The relationship really makes sense when one considers that the DOJ Antitrust Division’s prosecution of Japanese auto parts manufacturers has resulted in over $2.4 billion in criminal fines from their ongoing investigation of price fixing and bid rigging in the auto parts industry. On the surface, the JFTC’s teeth don’t seem as sharp as the DOJ’s, especially in light of the JFTC’s much heralded Leniency…

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06 Oct 2014 Supreme Court Passes on Esquenazi, Makes Instrumentality Test Settled Law

  The Supreme Court today declined to issue a writ of certiorari for the appellants in the case of United States v. Esquenazi.  As readers will recall from our previous post, the Esquenazi decision was noteworthy for adopting the Department of Justice’s relatively expansive definition of who qualifies as a “foreign official” under Foreign Corrupt Practices Act.  Now it appears that this definition is settled law.   While FCPA practitioners had hoped that the Supreme Court might step in to decide this issue, it appears that there was no room on the docket under the circumstances. The decision not to grant review of the Esquenazi decision is likely the result of a lack of any disagreement among the circuit courts on the issue. This is,…

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30 Sep 2014 IS A NON-UNITED STATES CITIZEN WHO REFUSES TO LEAVE HIS HOME COUNTRY TO FACE FCPA CHARGES A FUGITIVE FROM JUSTICE?

South Korean citizen Han Young Kim has petitioned the United States Supreme Court for certiorari to resolve a circuit split regarding whether a non-United States citizen who refuses to come to the United States to face Foreign Corrupt Practices Act charges is a fugitive from justice.   Kim argues that because he lives in South Korea and did not flee the United States to South Korea, he should not be considered a fugitive.  The government’s position that Kim is a fugitive because he refuses to submit to extradition has kept Kim from having an opportunity to seek judicial review of his indictment or from attempting to reach a settlement, since the government will not negotiate with fugitives.   The Ninth Circuit Court of Appeals denied…

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