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Government Enforcement Exposed - "The GEE"
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17 Mar 2017 The Yates Memo – DOJ Issues Questions and Answers: Question No. 1

  *This is the second in a series of blog posts that examines seven FAQs issued by the DOJ in an effort to clarify certain aspects of its Individual Accountability Policy—as articulated in the “Yates Memo.” The first of these questions concerns the change in corporate cooperation requirements.   Question: How did the Individual Accountability Policy change the requirements of corporate cooperation?   Answer: Before the Individual Accountability Policy (the “Policy”) took effect, the United States Attorneys’ Manual (“USAM”) identified a company’s “willingness to provide relevant information and evidence and identify relevant actors” as one of several factors that a prosecutor “may consider” in determining the nature and extent of the company’s cooperation. Thus, a company could be eligible for some degree of cooperation credit even…

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15 Mar 2017 The Yates Memo – DOJ Issues Questions and Answers

  *This is the first in a series of blog posts that will examine seven FAQs issued by the DOJ in response to questions the Yates Memo raised. Check back frequently for more in depth analysis and best practices in response to these questions.   The U.S. Justice of Department (DOJ) nearly two years ago announced an uptick in its battle against corporate wrongdoing, taking the fight into boardrooms and offices in pursuit of individuals involved in corporate misconduct. The effort, announced in a memo authored by then-Deputy Attorney General Sally Yates, applied “new” guidance for both criminal and civil matters.   The memo identified four principal goals: (1) deterring future illegal activity; (2) incentivizing change in corporate behavior; (3) ensuring the proper parties are…

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24 Jan 2017 The SEC’s Appointments Clause Dilemma

  The U.S. Securities and Exchange Commission (SEC) has an Appointments Clause problem. Actually, it has two. Currently, the Commission’s ability to make decisions is limited in two ways: (1) as of last Friday, there are now only two sitting Commissioners, including no SEC Chairperson, rather than the full complement of five; and (2) a recent federal appellate court decision declaring the SEC’s process of hiring administrative law judges (ALJs) unconstitutional, thus casting doubt on the many activities those judges perform. Until these can be resolved, the agency’s ability to function generally, and in particular its ability to act as an enforcement agency, may be compromised.   The Appointments Clause of the Constitution states:   [The President] shall nominate, and by and with the Advice and…

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07 Dec 2016 U.S. Supreme Court Decides Salman, Reaffirms Broader View of Insider Trading

  Just like that, the Newman/Salman insider trading saga has come to a close. For now, at least. These cases have generated a good bit of ink on this blog. Yesterday, the U.S. Supreme Court unanimously decided United States v. Salman, affirming Salman’s conviction for insider trading, just two months after oral argument. The opinion, authored by Justice Samuel Alito, was not much of a surprise in what it decided, but was somewhat more interesting in what it did not address.   The Court concluded that Salman lay in the “heartland” of its prior prohibition in Dirks v. SEC. In Dirks, the Court said that a tipper breaches his or her fiduciary duty (and therefore commits insider trading) when the tipper either receives something of…

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18 Oct 2016 Ceresney Warning: Expect Continued SEC Enforcement Activity Regarding Municipal Securities

  In the keynote address at the 2016 Securities Enforcement Forum last week, Andrew J. Ceresney, Director of the SEC’s Division of Enforcement, made clear that the SEC will continue and even expand its focus on the public finance market, particularly in the municipal securities area.   Ceresney noted that enforcement activity in the municipal securities arena has increased substantially. In the 10 years from 2002 to 2012, the SEC filed enforcement action against 6 government entities, 6 obligated persons and 12 public officials. In contrast, the Commission has filed enforcement actions against 76 government entities, 13 obligated persons and 16 public officials in the last 3 1/2 years.   The SEC has been conducting well-publicized enforcement sweeps in the area. Perhaps the most well-known…

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06 Oct 2016 U.S. Supreme Court Revisits Insider Trading in Salman

  At long last, the U.S. Supreme Court heard oral argument yesterday in United States v. Salman. As readers of this blog know from prior posts, Salman is the first insider trading case the Supreme Court has taken in about 20 years and the most important one since Dirks in 1983. In the last two years, a split has developed in the circuit courts with regard to how to define insider trading – a task made more difficult because Congress has never defined what insider trading is, let alone expressly criminalized it.   The Supreme Court said in Dirks that, to have insider trading, the corporate insider must breach his or her fiduciary duty, which often means that the insider sought to, and did, receive…

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07 Sep 2016 SEC Changes Some of Its Procedural Rules After Constitutional Challenges

  In our last post, we discussed some of the constitutional challenges to the Securities and Exchange Commssion’s (SEC) in-house tribunal. Though these challenges have thus far been unsuccessful, they appear to have prompted the SEC to amend some of its rules of practice to address at least some of the criticisms leveled against its administrative proceedings.   One persistent criticism has been that the length of time from initiation of administrative proceedings through hearing is substantially too short. Previously, an ALJ’s initial decision had to be filed no more than 300 days from the service of the order instituting proceedings. However, the SEC has now increased the time between its initial filing in an enforcement action and the hearing (at least in “appropriate” cases)….

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02 Sep 2016 D.C. Circuit Affirms Constitutionality of SEC’s In-House Tribunals

  The U.S. Court of Appeals for the D.C. Circuit recently became the first appellate court to conclude that the U.S. Securities and Exchange Commission’s (SEC) in-house administrative tribunals are constitutional and do not violate the Appointments Clause.   The constitutionality of the SEC’s in-house administrative courts has been questioned repeatedly since the Dodd-Frank Act dramatically expanded the kinds of cases the SEC could litigate on its home turf and the kinds of remedies it could obtain there, including against entities the SEC does not traditionally regulate. Since Dodd-Frank, the SEC has made no bones about its increased attraction to litigating cases in-house that it previously brought in federal district court. The SEC benefits from a shorter timeframe from initiating the action to its conclusion,…

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29 Jul 2016 Second Circuit Confirms Privacy Rights and Territorial Limits of Search Warrants Under the Stored Communications Act

Recently, the U.S. Court of Appeals for the Second Circuit handed Microsoft and privacy advocates a landmark win limiting the “long arm of justice” to within the United States’ own borders.  In a highly anticipated ruling, the Second Circuit, In the Matter of a Warrant to Search a Certain E-mail Account Controlled and Maintained by Microsoft Corporation, unequivocally stated that the federal government cannot use a search warrant to compel a U.S. corporation to provide the email contents of its customers which are stored outside the U.S.   Historically, the Department of Justice (DOJ) interpreted its jurisdictional reach to have little or no boundaries.  For decades, companies have been required to produce documents and witnesses from overseas for ongoing criminal investigations simply by service of…

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19 Jul 2016 Did the Supreme Court Pave the Way for Court-Sanctioned Mass Hacking?

  In late April of this year, the U.S. Supreme Court adopted an amendment to Federal Rule of Criminal Procedure 41(b) that would allow judges to issue warrants permitting the FBI to access computers located outside the court’s jurisdiction. As many technology and privacy groups point out, this proposed change could have a remarkable effect on a judge’s ability to issue warrants, not to mention the severe impact on data privacy rights.   Deadline Looms for Congress to Act   Currently, Rule 41(b) only allows a court to issue search and seizure warrants for property located within the issuing court’s district. As proposed, the amendment would allow courts to issue warrants authorizing the FBI to remotely access and seize electronic media stored outside its district if:…

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