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Government Enforcement Exposed - "The GEE"
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03 Mar 2014 The Government Has Frozen My Bank Accounts, What Do I Do Now? Analyzing Asset Forfeiture After Kaley v. U.S.

By Jason R. Barclay |   On Feb. 25, 2014, the United States Supreme Court issued an opinion in Kaley v. United States, No. 12-464, 571 U.S. ___ (2014), a case eagerly followed by many in the white collar defense bar.  Brian and Kerri Kaley, who were indicted by a grand jury for transporting stolen medical devices and laundering the proceeds from the sale of those devices, took a simple legal position.  After the United States froze their assets, including a certificate of deposit that contained the only source of funds the Kaleys had available to pay their lawyers, the Kaleys argued that the Government should have been required to establish that there was probable cause to restrain those assets in an adversarial evidentiary hearing…

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03 Mar 2014 The SEC and Its “Strange Bedfellows” Argue Against Investors Seeking Damages for Fraud – Are Rebuffed by the Supreme Court

By Brian E. Casey |   When the SEC interprets the breadth of a federal securities statute the same way as the Defense Research Institute (DRI) and the Securities Industry and Financial Markets Association (SIFMA) – two prominent associations who traditionally interpret such laws narrowly – something is up. So it was in Chadbourne & Parke LLP v. Troice, a case interpreting the preemptive scope of the Securities Litigation Uniform Standards Act (SLUSA). As one senior SEC official admitted at the recent SEC Speaks conference, this case made for some “strange bedfellows.” But in a decision last Wednesday, the Supreme Court disagreed with all of them.   Troice arises out of the massive Ponzi scheme orchestrated by Allen Stanford. Stanford induced investors to buy certificates…

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27 Feb 2014 A Little-Known Exception to the 4th Amendment: Is Your Company’s Confidential, Proprietary Data Safe from Government Inspection When Entering the U.S.?

By Brian Weir-Harden* |    You arrive home to the United States from an international business trip. Customs directs you to open your bags for an inspection. Unconcerned, you acquiesce. The Customs Agent goes through your bags and finds nothing of interest, except your work laptop. To your surprise, the Customs Agent asks you to turn it on. He randomly opens files and reviews their contents. To your further surprise, the Customs Agent informs you that he will need to temporarily confiscate your work laptop in order to conduct a forensic examination. He takes your computer and makes an image of all its contents. You think to yourself, “This must be a violation of my Fourth Amendment rights against unreasonable searches and seizure, right?”   The answer:…

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19 Feb 2014 The Position Of Assistant Attorney General For The Criminal Division May Be Filled In The Near Future

By Mark Stuaan |   Leslie Caldwell, a partner at Morgan Lewis & Bockius LLP, was nominated in September 2013 by the White House for the position of Assistant Attorney General for the Criminal Division in the Department of Justice. She was re-nominated for the position in January 2014, and her nomination took a step forward when she testified last week before the Senate Judiciary Committee. If confirmed, she would fill the position left by Lenny Breuer when he returned to private practice in 2013.   In her prepared remarks, Caldwell told the Committee: “I will do my best to ensure the vigorous enforcement of our criminal laws, and to apply them with equal force whether the wrongdoing is in a boardroom, across a computer…

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13 Feb 2014 The CFTC: Armed and Dangerous

By Trace Schmeltz |   Matt Taibbi, a well-respected journalist who covers the commodities world, recently remarked about the commodities market that, “Certain people always win and certain people always lose.”  “How Markets Are Rigged Against You,” CBC Business News, Dec. 9, 2013.   Matt was referring to a variety of phenomena, including several recent high profile cases involving allegations that large banks have rigged the LIBOR market, the currency market, and even the metals market.  See, e.g., “Goldman Sachs Creating Artificial Shortages of Metals Rigging.”  Real or perceived market manipulation threatens the commodities markets—threatening the very fabric of an American capitalism that is largely based on our access to grains, oil, metals, and other valuable commodities.   Recently, Congress has provided the Commodity Futures…

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08 Feb 2014 DOJ Wins Big Insider Trading Case: Martoma Conviction; Bad News for Cohen and SAC

By Patrick J. Cotter |   On February 6, 2014, a federal jury in New York handed the Department of Justice and U.S. Attorney Preet Bharara another victory in their ongoing campaign against perceived insider trading on Wall Street.  Martoma, once a top lieutenant to Steve Cohen, the owner of large hedge fund SAC, was convicted of acquiring and using inside information about drug tests being conducted by drug manufacturer’s Wyeth and Elan to inform SAC stock sales and purchases which netted over $275 million in profit.   The Martoma conviction, while closely watched by Wall Street insiders, the media, and, no doubt, Mr. Cohen, was not altogether unexpected. The “timeline” that the prosecution put before the jury, showing Mr. Martoma visiting with one of the…

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07 Feb 2014 SEC Continues to Struggle in Insider Trading Jury Trials

By Brian E. Casey |   The SEC’s difficulties trying insider trading cases continued to mount this past week.  Two different juries, in Texas and Illinois, concluded that the SEC failed to prove its allegations of insider trading in separate cases brought by the agency.  These results form part of what seem to be a growing trend of losses in insider trading jury trials which perhaps may cause Chair Mary Jo White to temper the agency’s enthusiasm for pushing the envelope in deciding what cases to try.  They may also encourage defendants to press on to trial, knowing that the SEC’s recent track record includes an increasing number of defeats.   For the second time in a month, juries in the Northern District of Illinois…

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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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