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Government Enforcement Exposed - "The GEE"
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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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13 Apr 2015 Recent Enforcement Trends in the Commodity Markets (Part 1)

Last fall, Aitan Goelman – the Director of Enforcement for the Commodity Futures Trading Commission (Commission) – made two interesting points that appear to be indicative 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 Toward 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 or…

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10 Apr 2015 Uniform Fiduciary Standards on the Horizon for Brokers and RIAs

Brokers and registered investment advisors (RIAs) have long been held to differing standards. Generally speaking and barring special circumstances (e.g., discretionary authority for an account), brokers are not held to a fiduciary duty associated in connection with a customer’s account. In contrast, RIAs generally accept the fiduciary duty with regard to many elements of the account. Nevertheless, lawyers on both sides have fought for decades over where the exact contours should be drawn. The issue is even more cloudy when you consider potential distinctions between state law. But, as more and more brokers jump to the RIA business model, it appears the duties imposed on these two groups are about to be unified.   At the quarterly Investor Advisory Committee at SEC headquarters on April…

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31 Mar 2015 THE FALLOUT FROM NEWMAN CONTINUES AS CONGRESS WEIGHS IN

As previously reported, the Newman decision caused turmoil in the world of insider trading and the fallout continues.   Earlier this month, prosecutors told a federal judge in Manhattan that Newman had invalidated the guilty plea for insider trading of John Johnson, former Wyoming Retirement System CIO, because the admissions he had made in 2013 were now insufficient to support the plea. Prosecutors were planning to prosecute if Johnson did not enter a new plea that would suffice under Newman.   Meanwhile, Congress has weighed in with three proposed bills that would statutorily define insider trading and eliminate the requirement under Newman that: the tippee know both that the tipper breached a duty of confidentiality and the tipper received a personal benefit of “some consequence.”…

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18 Mar 2015 Top 10 Takeaways from ABA White Collar Crime Conference 2015 (Part 2)

Continuation of yesterday’s Part 1 of “Top 10 Takeaways from ABA White Collar Crime Conference 2015.”   6. Practitioners offer updated advice for settlement negotiations in corruption cases   Another panel that included former DOJ FCPA chief Chuck Duross addressed strategies for negotiating settlements in corruption cases. These practitioners advised that the company should send high-ranking client representatives (including, if possible, the CEO, CCO, and/or the Head of the Audit Committee) to meetings with DOJ to show the company cares about the matter. They relayed their experiences suggesting the DOJ and SEC are looking for, among other things, contrition from the company, internal discipline of those engaging in illegal conduct, and reasons why an independent monitor is not necessary. They are also looking for a…

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17 Mar 2015 Top 10 Takeaways from ABA White Collar Crime Conference 2015 (Part 1)

On March 4-6, the American Bar Association hosted its annual White Collar Crime conference in New Orleans. As we did in 2014 (here and here), today and Wednesday we will feature our “Top Ten” takeaways from the conference for individuals, companies and white collar practitioners as compiled by our partners in attendance.   Beware any false sense of security from a civil regulatory settlement   There was much discussion at the conference about the interplay between civil regulatory settlements and follow-up criminal investigations and charges. It is clear from recent trends that settling an investigation on the civil side – especially if settled with admissions – will not ward off a criminal investigation and may in fact facilitate one. Defense attorneys agreed that they are…

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