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Government Enforcement Exposed - "The GEE"
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12 Jun 2017 U.S. Supreme Court Delivers Blow Limiting SEC Disgorgement Power

  In a unanimous opinion authored by Justice Sonia Sotomayor and issued on June 5, the U.S. Supreme Court reversed a decision of the U.S. Court of Appeals for the Tenth Circuit, holding that SEC disgorgement constitutes a penalty under 28 U.S.C. § 2462, thereby making such actions subject to the five-year limitations period for “an action, suit or proceeding for the enforcement of any civil fine, penalty or forfeiture.” In the case, Kokesh v. Securities and Exchange Commission , the court found the “SEC disgorgement… bears all the hallmarks of a penalty: It is imposed as a consequence of violating a public law and it is intended to deter, not compensate.”   The ruling resolves a circuit split and will have a far-reaching impact…

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28 Mar 2017 Recently Announced: DOJ Will Extend the FCPA Pilot Program

  Acting Assistant Attorney General Kenneth A. Blanco recently announced that the Department of Justice (DOJ) will extend the Foreign Corrupt Practices Act (FCPA) Pilot Program (the Program) beyond the one-year period ending on April 5, 2017. This announcement was made on March 10 at the American Bar Association’s National Institute on White Collar Crime. However, it is unknown whether this will result in a permanent implementation of the Program. Blanco specifically stated that the DOJ will soon begin evaluating the worth and efficacy of the Program, noting that “the Program will continue in full force until we reach a final decision on those issues.”   The Program began on April 5, 2016, not necessarily as a new policy initiative, but instead as a means…

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08 Apr 2016 Department of Justice Rolls Out FCPA Enforcement Pilot Program

On April 5, the Department of Justice (DOJ) issued a press release and accompanying memorandum detailing what it is terming a one-year FCPA “pilot program” as part of an effort to provide more transparency and guidance to companies on the benefits of self-disclosing FCPA violations and cooperating with government investigations. The memorandum sets out three components of the DOJ’s “enhanced FCPA enforcement strategy,” which are:   Increasing law enforcement resources for FCPA prosecutions by hiring 10 new prosecutors for the Fraud section’s FCPA unit; Strengthening coordination with foreign counterparts in order to share leads, documents and witnesses; and Establishing the pilot program to motivate companies to voluntarily self-disclose FCPA-related misconduct, cooperate and remediate.   The central theme of the enhanced strategy appears to be the…

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25 Jun 2015 U.S. v. Sigelman: Another FCPA Enforcement Setback for the DOJ

On Monday, June 15, 2015, the criminal trial of Joseph Sigelman, a former co-chief executive of PetroTiger Ltd. came to an abrupt end when he pleaded guilty to a single count of conspiracy and, the following day, received a sentence of probation. Mr. Sigelman had faced a potential 20-year sentence for charges including alleged violations of the Foreign Corrupt Practices Act (FCPA). All charges except the guilty plea to a single count of conspiracy to violate the FCPA were dropped as a result of the plea. While the sudden conclusion to the Sigelman trial appears to have been brought on by a witness’s surprise change in testimony, it certainly appears to be the latest in a series of setbacks for the DOJ in its efforts…

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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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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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27 Feb 2015 M&A DUE DILIGENCE FAILURES: FCPA & GOODYEAR

On Feb. 24, 2015, the SEC announced charges against Goodyear Tire & Rubber Company for violating the Foreign Corrupt Practices Act (FCPA). These charges involve Goodyear subsidiaries in Kenya and Angola paying bribes to government and private-sector workers in exchange for sales in each country. As a result, Goodyear was sanctioned $16.2 million by the SEC. The heart of the SEC’s investigation found that Goodyear violated books and records rules when officials of its African subsidiaries falsely recorded $3.2 million in bribes as legitimate expenses over a four (4) year period.   In charging and sanctioning Goodyear, the SEC found that Goodyear “did not prevent or detect these improper payments because it failed to implement adequate FCPA compliance controls at its subsidiaries in sub-Saharan Africa.”…

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05 Sep 2014 Foreign Corrupt Practices Act – Keeping the Wolf at Bay

  Anti-bribery laws, including the United States’ own Foreign Corrupt Practices Act, seem to be becoming the stuff of Aesop’s Fables, with many asking whether the resounding alarm over bribery-exposure is akin to the cries of “wolf” by the shepherd boy. The alarm is real enough, however. The Securities and Exchange Commission and the Department of Justice have brought an average of 30 cases per year since 2005. These laws impact small and medium-sized companies and their executives, as well. In July 2014, Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit explained that “small and medium-size businesses that want to enter into high-risk markets and expand their international sales” must be compliant with the FCPA.   So, if the wolf is really amongst…

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11 Jun 2014 REDUCING THE COST OF FCPA MONITORING

  FCPA settlements with the SEC and the DOJ increasingly require an offending company to allow an independent monitor to keep watch over internal compliance efforts for a specified period of time. Regulators admittedly see monitoring as a way to reduce recidivism of corporate crime and to protect the integrity of the market place. As many companies have come to learn though, this process can prove both intrusive and expensive. Indeed, at least one former DOJ official has acknowledged that fees for “runaway monitors” can exceed $50 million. There are, however, ways for companies to structure their monitoring relationships so as to minimize disruption and contain costs.   Negotiate a Cost-Effective Settlement Agreement   The settlement agreement is the guiding text for any effective monitorship….

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06 Jun 2014 Canadian Corruption of Foreign Officials Act Update: Three Takeaways from the Cryptometics Case

The Royal Canadian Mounted Police (the RCMP) recently announced charges against Robert Barra, Dario Bernini and Shailesh Govindra, three individuals connected with Cryptometrics Canada (Cryptometrics), a subsidiary of U.S.-based Cryptometrics Corporation (Cryptometrics USA), for violations of Section 3.1 of the Canadian Corruption of Foreign Officials Act (the CFPOA).  These charges relate to a failed scheme to bribe Indian officials to secure the award of a $100 million contract for facial recognition software, and come in the wake of the conviction and sentencing of Nazir Karigar, a Canadian citizen and former agent for Cryptometrics, for his involvement in the scheme.   The charges are significant for U.S. companies – particularly those doing business in Canada – for three reasons.   First, the charges were brought against…

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