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Government Enforcement Exposed - "The GEE"
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29 May 2015 THE BENEFITS OF COOPERATION – HYPERDYNAMICS AVOIDS INDICTMENT

On May 21, 2015, the Department of Justice (DOJ) announced that it has closed its investigation involving Hyperdynamics Corporation regarding possible violations of the Foreign Corrupt Practices Act (FCPA). In doing so, Patrick Stokes, Deputy Chief of DOJ’s Fraud Section noted that “the Department values cooperation with investigations such as shown here.”   In September of 2013, Hyperdynamics received a subpoena from the DOJ seeking company records pertaining to its operations in Guinea, West Africa. The Guinean operations involved obtaining and retaining oil and gas concession rights off the coast of Guinea. The DOJ also inquired about Hyperdynamics’ relationship with various charitable organizations.   Hyperdynamics cooperated with the government during the investigation, conducted its own internal investigation into issues raised by investigators and provided information…

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28 May 2015 RENEWED GOVERNMENT INTERFERENCE IN ATTORNEY FEE ARRANGEMENTS?

For decades, employees who were not in a position to be covered by Director’s & Officer’s insurance have relied upon employment agreements or the simple generosity of their employer to pay legal fees associated with government investigations and prosecutions. Moreover, in an age where the Department of Justice’s jurisdictional reach seems to be growing by the minute, companies facing long-lasting and wide-reaching government investigations many times rely upon one single law firm to represent multiple employees who may be interviewed by the government or serve as a grand jury witness. The benefits to the company are obvious and numerous – the company does not have to pay an additional set of lawyers to familiarize themselves with the facts of the investigation and it is able…

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26 May 2015 THE SEC EXPLAINS ITS RATIONALE IN FORUM SELECTION IN CONTESTED CASES PART II – THE SEC’S GUIDANCE AND FURTHER QUESTIONS

Our post last week explained the background behind the growing concern regarding the potential home-court advantage the SEC may have in contested matters it litigates as in-house administrative proceedings rather than in federal district court. Since “in recent years an increasing percentage of enforcement actions have been filed as contested matters, as opposed to being fully settled at the outset,” and those figures are “expected to continue to grow,” as Chair Mary Jo White testified recently to Congress, the SEC’s choice of forum takes on increasing significance.   Against this backdrop, earlier this month, the SEC’s Enforcement Division issued a memorandum describing the factors the agency considers when deciding the proper forum in which to bring a contested action. The Commission began by saying it…

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22 May 2015 THE SEC EXPLAINS ITS RATIONALE IN FORUM SELECTION IN CONTESTED CASES Part I - Complaints About SEC's Forum Selection

  Earlier this month, after substantial criticism from defendants, practitioners, and even a federal judge, the SEC’s Enforcement Division issued its first formal guidance explaining how it determines whether to bring an enforcement action in federal district court before the SEC’s own administrative law judges. The Enforcement Division’s “guidance” makes clear that it leaves itself with substantial discretion to decide the appropriate forum in which to bring a contested case. Just as interesting, however, is what the SEC does not say factors into that decision. This post discusses some of the issues surrounding the SEC’s forum selection issues. Part II will address the agency’s just-published guidance to address those concerns.   By way of background, the SEC has long had the ability to choose the venue…

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05 May 2015 Extradition from Japan: The Gamble

It is no secret amongst criminal antitrust practitioners that the U.S. Department of Justice (DOJ) has had difficulty extraditing foreign nationals indicted for Sherman Act violations.  Indeed, the extradition process is complex and uncertain given the multitude of hurdles the DOJ faces when attempting to extradite a citizen of a sovereign country.   Japanese nationals are no exception. The reality is that Japanese law and extradition proceedings afford the Japanese government a huge amount of discretion as to whether or not to comply with an extradition request made by the United States government.  Interestingly, despite the nearly insurmountable challenges faced by the DOJ in extradition proceedings, a surprising number of Japanese executives and employees have acquiesced to the U.S. justice system, the result of which…

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28 Apr 2015 Self-Reporting: A Wise Strategy or Chasing Unicorns?

As we noted in an earlier post, Department of Justice (DOJ) representatives have been emphasizing this spring the financial benefits of cooperation. They did so again last week at the Practicing Law Institute’s Enforcement 2015: Perspectives from Government Agencies, during which enforcement officials from the DOJ, SEC, CFTC, FINRA and Consumer Financial Protection Bureau (CFPB) all pushed back last week against complaints that the benefits of self-reporting are illusory and the costs far too high.   Director of the SEC’s Division of Enforcement Andrew Ceresney claimed that significant benefits of self-reporting are evidenced by three FCPA settlements earlier this year: a disgorgement-only settlement with Goodyear, a deferred prosecution agreement with PBSJ Corporation and a settlement with FLIR Systems, Inc. which entailed only a “minimal penalty”…

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23 Apr 2015 FCPA / BRAZIL: THE PERFECT STORM FOR ANTI-CORRUPTION ENFORCEMENT

With ever increasing pressure on its government to stamp out corruption, Brazil presents a “Perfect Storm” for Foreign Corrupt Practices Act (FCPA) / Anti-Corruption enforcement approaching the 2016 Olympics. Having the Olympic Games centered in Rio de Janeiro presents the perfect opportunity for Dilma Rousseff’s government to show that it takes enforcement of anti-corruption laws seriously. As such, companies should ensure their compliance initiatives are being vigorously updated and monitored. This is especially the case with regard to third-party relationships.   While passage of the Clean Companies Act (CCA) brought Brazil in line with an ever growing international consensus against corruption, the CCA has been sparingly enforced. Though the CCA penalizes both corporations and individuals for corrupt conduct, implementing regulations called for by its passage…

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17 Apr 2015 What you need to know about United States of America v. Michael Coscia

This week, we have posted about two commodity enforcement trends (here and here). Yesterday, Judge Harry D. Leinenweber of the United States District Court for the Northern District of Illinois issued his opinion on the defendant’s motion to dismiss in the matter of the United States of America v. Michael Coscia, Case No. 14 CR 551. The decision is not remarkable, insofar as it is a motion to dismiss that takes the allegations of the criminal indictment as true, but it is instructive. Following are a few of the pertinent highlights.   The Commodity Exchange Act’s Anti-Spoofing Provision is not void for vagueness.  Coscia had argued that 7 U.S.C. §§ 6(c)(a)(5)(C) and 13(a)(2) were void, under the Due Process Clause of the United States Constitution,…

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17 Apr 2015 Recent Enforcement Trends In The Commodity Markets (Part 2)

Last fall, Aitan Goelman – the Director of Enforcement for the Commodity Futures Trading Commission – made two interesting points that appear to be indicative of a couple of enforcement trends. Specifically, he stated that: (i) real deterrent of market manipulation requires putting people in jail; and (ii) the CFTC is going to start trying cases before Administrative Law Judges. Jean Eaglesham, “CFTC Turns Towards Administrative Judges,” The Wall Street Journal (Nov. 9, 2014). At a minimum, these two points demonstrate the beat cop’s resolve to triage all available resources in order to ensure the sanctity of the swaps and futures markets. At the outside, they define a troubling scenario in which administrative law judges with no trading experience will determine whether complex trading was…

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16 Apr 2015 SENTENCING COMMISSION AMENDS FRAUD GUIDELINES

On April 9, 2015, the U.S. Sentencing Commission (Commission) adopted changes to the sentencing guidelines addressing fraud. In doing so, the Commission confronted previously held concerns regarding harm to victims, individual culpability for “bit” players in a fraud scheme and an individual offender’s intent.   These proposed adjustments to the guidelines include more significant penalties for white collar crimes that “resulted in substantial financial hardship to one or more victims,” and where “the defendant intentionally engaged in or caused the conduct constituting sophisticated means,” according to Commission materials. The proposed change, if adopted by Congress, would increase the severity of the offense by four levels at five or more victims (currently 50 or more victims), with an increase of six levels where 25 or more…

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