This week reports surfaced that a major shift in the SEC enforcement division had taken place – behind the scenes. The timing is quite interesting as the agency’s annual seminar and SEC Alumni dinner will occur at the end of the month. No doubt this will be a topic, among many, of the annual SEC cocktail regulars in DC.
The reports indicate that the Acting Chairman Michael Piwowar has centralized the power of the enforcement division to “issue subpoenas or formally launch probes,” as Reuters put it. The question that has been asked is – What does all of this really mean, really? Continue reading Changes Are Coming to the SEC Enforcement Division – What Does It All Mean?
On 27th June 2013, the UK announced more details of new rules that would introduce Deferred Prosecution Agreements (DPAs) into the UK for corporate offences. DPAs have been the weapon of choice for US regulators when prosecuting bribery and corruption cases, and the hope is that DPAs will bring greater predictability for those wishing to settle a case with prosecutors on both sides of the Atlantic.
Continue reading Serious Fraud Office Issues Draft Code of Practice on Deferred Prosecution Agreements
On June 6, 2013, the Securities and Exchange Commission (SEC) announced [http://www.sec.gov/news/press/2013/2013-102.htm] that it secured an emergency order freezing over $3 million in profits of a trader based in Bangkok, Thailand. The trader is suspected of trading on insider information about the multi-billion dollar acquisition by China-based Shuanghui International Holdings of Smithfield Foods. The speed of the SEC’s investigation is extraordinary and appears to establish its template for future global insider trading investigations, as we predicted back in April.
While the SEC has taken the fast lead on this case, as most experienced defense lawyers will know, the DOJ is surely lurking closely near. We should expect to see criminal action in this case.
Continue reading Another One Bites the Dust: SEC’s Insider Trading Investigation Strategy Nabs Another Foreign Trader in Nearly Real Time
On May 29, 2013, the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) joined with French enforcement authorities to announce charges against French-based oil and gas company Total S.A. The SEC entered into a cease-and-desist order against Total, wherein Total agreed to pay disgorgement and prejudgment interest of $153 million. The DOJ filed a criminal information against Total, but promised to dismiss the case if Total behaved for the next three years. This is known as a deferred prosecution agreement. The price tag for the settlement was an additional $245.2 million. According to the DOJ, “French enforcement authorities announced earlier today that they had requested that Total, Total’s Chairman and Chief Executive Officer, and two additional individuals be referred to the Criminal Court for violations of French law, including France’s foreign bribery law.” The alleged conduct in this case is egregious, requiring little comment or insight. U.S. authorities stated:
Continue reading The Rise of Multinational FCPA Criminal Prosecutions: First Ever Coordinated French and U.S. Action
On May 15, 2013, the U.S. Securities and Exchange Commission charged CEO Dejun Zou and board chair Amy Qiu, husband-and-wife executives at China-based RINO International Corporation, alleging that they engaged in a scheme to overstate the company’s revenues and divert $3.5 million in proceeds from a securities offering for their personal use. This would be a routine case – except it involves a China-based company, a jurisdiction that the SEC has found difficult to regulate. For some time now, the SEC has been hamstrung in gaining access to information from China. Today’s historic announcement by the Public Company Accounting Oversight Board (“PCAOB”) may be the first major step in alleviating such difficulties.
Continue reading Historic U.S., China Agreement on Auditor Access Announced: Is This a Crack in the Wall Separating The Cross-Border Enforcement Cooperation Impasse?
On May 7, 2013, the U.S. Attorney’s Office for the Southern District of New York unsealed extraordinary criminal charges against two registered representatives of a U.S. broker-dealer and a high-level Venezuelan government official for engaging in a “Massive International Bribery Scheme.” What makes this fraud scheme remarkable is that it involves the activities of a U.S. broker-dealer, its client, a foreign-owned and controlled bank, the Foreign Corrupt Practices Act (FCPA) and several suspicious transactions that potentially should have raised concerns—a perfect storm. This case may be the catalyst that jump-starts a government FCPA sweep of Wall Street that has been predicted since 2011, but not realized.
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On April 5, 2013, the Department of Justice (DOJ) unsealed charges against four former executives of BizJet International Sales and Support, Inc., the U.S.-based subsidiary of Lufthansa Technik, AG, a company that provides aircraft maintenance, repair and overhaul services for alleged bribery payments in Latin America. This news comes less than 30 days since our last blog entry, that quoted the warning by Department of Justice, FCPA Assistant Chief James Koukios, who said that the DOJ has “a lot of cases in the hopper” pertaining to Latin America.What can we learn from the latest case unsealed by the DOJ?
Continue reading The Foreign Corrupt Practices Act (FCPA) Indictments Related to LATAM Are Unsealed
On March 29, 2013, the Securities and Exchange Commission (SEC) announced the settlement of what appeared to be a routine insider trading case involving two traders. For foreign traders, the case is a wake-up call that the SEC is watching and will take action against violators, wherever they are in the world. Moreover, the case reveals the SEC’s patience in finding the insider traders and their courage in taking action. Indeed, the case may also serve as an investigatory template for the SEC’s global policing of U.S. securities laws in connection with insider trading violations by foreign traders.
Continue reading Foreign Traders Beware: Trading in US Markets Will Expose You to US Insider Trading Laws
Most companies fear the FCPA and the harm it will do to their companies. In a recent article published for the Asian-Mena Counsel, I offer a modest proposal – go on the offense with the FCPA and reap millions in potential increased enterprise value.
Here is the secret: if your company sees a potential exit strategy in the near future and you operate in certain regions of the world, you could command, and US suitors would be willing to pay, a premium for your company, into the millions, provided that you have meaningful a FCPA compliance regime. Make a strategic move to make your company FCPA compliant and reap the rewards.
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