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Government Enforcement Exposed - "The GEE"
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22 May 2014 CYBERCRIME & YOUR COMPANY – FAILING TO PREPARE = PREPARING TO FAIL, Part 1

  1. The Threat “If you don’t lock your car, it’s vulnerable.  If you don’t’ secure your computer, it’s vulnerable.”   “Reduce your vulnerability, and you reduce the threat.”   Information on how to protect your computer.   There are over 2 billion people worldwide using the Internet.  An alarming number of these people make a decent living as cybercriminals.  In doing so, they cower behind the anonymity provided by the Internet.  They destroy lives.  They injure businesses and compromise the integrity of the global economy.   2. The Reality In a report recently released by the FBI’s Internet Crime Complaint Center (“IC3”), the agency disclosed that it had received 262,813 “consumer” complaints of suspected internet crime in 2013.  These complaints involved an adjusted dollar…

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20 May 2014 Quick Tip: CFTC to Make First Dodd-Frank Whistleblower Award

  The Commodity Futures Trading Commission plans to make its first whistle-blower award under the Dodd-Frank Wall Street Reform and Consumer Protection Act, with the recipient getting about $240,000 for exposing information about commodities law violations, Acting Director Mark Wetjen said in a May 20 statement.   The number of “high quality tips, complaints and referrals” received by CFTC continues to increase, Christopher Ehrman, head of agency’s Whistleblower Office, said in statement.  

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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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29 Apr 2014 Is the Second Circuit About to Put the Brakes on the Government’s Pursuit of Insider Trading “Tippees”?

The Second Circuit Court of Appeals has raised questions about federal prosecutors’ burden to convict the recipient of confidential information of insider trading, suggesting the Court may adopt a “bright line” that would provide much-needed guidance to an ambiguous area of law.   At issue is the knowledge the government must prove to convict the recipient (or “tippee”), who often may be many layers removed from the initial disclosure of the confidential information.  Attorneys for former hedge fund managers Todd Newman and Anthony Chiasson have asked the Court to require the government to prove that the tippee must have known that the information was disclosed in exchange for a reward or “personal benefit.”  Federal prosecutors have argued for a broader definition, seeking to convict only…

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22 Apr 2014 Here Comes Canada: Corruption Prosecutions Likely to Increase Under the Amended CFPOA

Discussions of anti-corruption and anti-bribery prevention and compliance often center on the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act, given the high-profile nature of those laws and the agencies that enforce them.  But companies would be wise to familiarize themselves with Canada’s Corruption of Public Officials Act (“CFPOA”) and the recent cases that have been brought thereunder, given that investigations under the recently amended CFPOA appear to be on the rise. The CFPOA was enacted in 1999 with Canada’s ratification of the OECD Convention.  However, there was virtually no enforcement of the CFPOA for the first 10 years of its existence, in part because the law contained major loopholes that prevented serious enforcement.  Among those loopholes was the inability of Canadian…

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15 Apr 2014 Disgorgement in the Second Circuit: Equitable Relief or Punishment?

  In legal circles, disgorgement is known as an equitable remedy used to force a defendant to return money or property earned from illegal conduct.  Traditionally, disgorgement has not been used as punishment, but a recent Second Circuit decision has suggested that disgorgement may now be a punitive remedy in disguise.   In September 2005, Joseph Contorinis, an investment banker at Jefferies & Company, was given confidential information from a friend and fellow investment banker regarding a major financial acquisition.  Contorinis used the non-public information to make very profitable trades for a Jeffries’ fund that Contorinis managed and controlled.  By virtue of the information Contorinis had received and his subsequent trades, the fund earned a profit of $7,304,738, and avoided a loss of $5,345,700.  Most…

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11 Apr 2014 Feds Issue Guidance for Banks Dealing with Marijuana-Related Businesses

  While marijuana dealing activities are not generally a topic of interest to those who are involved in the prosecution or defense of white collar criminal cases, financial institutions probably are well aware that dealing with persons involved in such activities can lead to prosecution of the financial institution. That is the “stuff” of interest to white collar criminal practitioners. With recent enactments in various states concerning medical marijuana and recreational use of marijuana, however, financial institutions have been scratching their heads about where the line is between permissible banking business and that which crosses the line.   In an effort to give clarity to that question, the Department of Treasury (Financial Crimes Enforcement Network) and the Department of Justice have issued memos providing guidance…

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10 Apr 2014 INSURANCE AND WHITE COLLAR DEFENSE; IF YOU DON’T HAVE ONE, YOU MAY NOT BE ABLE TO HAVE THE OTHER

  The BUGA (“Big Ugly Government Agency”) has just metaphorically pounded on the door of your company, howling about civil and criminal charges, mind-blowing fines and penalties, debarment, seizing your first-born and otherwise threatening your existence. So you seek out a phenomenal white collar firm to defend you and yours and lo, they recommend a vigorous internal investigation, leading to the formation of a rock solid defense that, if needs be, can be deployed to defend against BUGA from here to the Supreme Court and back again.   It will, however, cost a lot of money to defend yourself. But, like many a modern company, you have insurance coverage that, you believe, will fund your defense.  Sadly, when you look to your insurance carrier, it…

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09 Apr 2014 Alert: SEC creates team to examine private equity and hedge funds

  The SEC has created a dedicated team to examine and scrutinize private equity and hedge funds. According to Reuters, the SEC’s private fund team is led by Igor Rozenblit and Marc Wyatt, veterans of private equity and hedge funds respectively. The SEC’s private fund team will examine several areas in the private fund realm including asset valuation, fee structures and disclosures, and other communications with investors. Creation of this team follows the increased scrutiny on private funds that has occurred since passage of the 2010 Dodd-Frank law, which required many advisors to private funds to register with the SEC.  

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