The Market for Global Anticorruption Enforcement

by Samuel W. Buell

The explosion in Foreign Corrupt Practices (FCPA) enforcement is a turning point for white collar practice to which many discussions on this blog owe their origins. For over two decades the FCPA rested mostly dormant. From 1977, when the statute was enacted, until 2000, the federal government pursued only fifty-two FCPA enforcement actions. No more than five such actions were brought in a single year, and in four of those years, zero actions were commenced. But then, at the beginning of the twenty-first century, U.S. prosecutors and securities enforcers eagerly embraced the statute, initiating 379 FCPA cases between 2001–2015,  reaching an annual high of 56 cases in 2010.[1]

In a new paper in Law & Contemporary Problems, my colleague Rachel Brewster and I offer a broad theoretical accounting for this dramatic development. It is an outside-in, inside-out story, featuring international organizations, policy makers, prosecutors and regulators, and the defense bar as the central characters responsible for awakening the FCPA and creating the robust anti-corruption enforcement regime that exists today. Continue reading

Recent DOJ Speeches Promise Continuity in White-Collar Enforcement

by John F. Savarese, Marshall L. Miller, and Jonathan Siegel

Earlier this year, we noted that it was difficult, if not impossible, at that point to predict with confidence how the new administration might change white-collar criminal law enforcement priorities and practices.  Three months later, however, some clearer signals are beginning to appear.  In a pair of speeches delivered last week, on April 18 and April 20, Acting Principal Deputy Assistant Attorney General Trevor McFadden, a Trump Administration appointee, gave strong indications that the Department of Justice will continue to engage in active white-collar criminal enforcement, without substantial changes in direction from the previous administration.  And in a speech yesterday, Attorney General Jeff Sessions promised continued prosecution of corporate fraud and misconduct and strong enforcement of the Foreign Corrupt Practices Act and other anti-corruption laws.

In his more detailed speeches, McFadden rejected what he called the “myth” that DOJ under AG Sessions was not interested in prosecuting white-collar crime.   Continue reading

Yates Memo – Time for Reassessment?

by Sharon Oded

A year and a half ago, the DOJ changed the rules of the game with the introduction of a memorandum entitled “Individual Accountability for Corporate Wrongdoing” (known as the “Yates Memo”).[[i]] In a memorable announcement in September 2015 at the NYU School of Law, Sally Quillian Yates, then-Deputy Attorney General, decisively announced: “Effective today, if a company wants any consideration for its cooperation, it must give up the individuals, no matter where they sit within the company.”[[ii]]

The Yates Memo continued a steady trend of strengthening enforcement against individual perpetrators involved in corporate fraud. Realizing the significant challenges faced by the DOJ in establishing individual liability for corporate wrongdoing, Yates Memo sought to enlist culpable corporations to assist the DOJ in pursuing individual offenders. Continue reading

SEC Reboots Employment Agreements via Whistleblower Protections

by Eric Young and Brandon Lauria

Confidentiality and employment agreements have not historically been a matter of concern for the nation’s leading securities regulator.  However, since August, the SEC has settled eight enforcement actions involving allegations of improper conduct with respect to employment agreements as part of its efforts to encourage, protect and reward whistleblowers.  If this enforcement blitz surrounding Rule 21F-17 continues, it could ultimately change the terms of confidentiality provisions at a far ranging list of employers from publicly traded companies to financial institutions to government contractors.

What is SEC Rule 21F-17?  It is the 2011 regulation adopted by the SEC as part of the rules governing its Dodd-Frank Act authorized whistleblower program.  It prohibits, with a few small exceptions, “any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement ….”  17 C.F.R. 240.21F-17(a).  In short, it bars efforts to impede whistleblowers from reporting misconduct to the SEC. Continue reading

A Deliberate Process for Conducting a Compliance Risk Assessment

by Randall CookWaqas Shahid and Melanie Reed

A proactive, systematic risk assessment is an essential first step to developing and implementing any corporate compliance program, regardless of your industry or the compliance areas you are targeting. As US enforcement authorities have explained, “One-size-fits-all compliance programs are generally ill-conceived and ineffective because resources inevitably are spread too thin, with too much focus on low-risk markets and transactions to the detriment of high-risk areas.”[1] The Department of Justice specifically identified the effectiveness of a company’s compliance risk assessment as a foundational consideration when evaluating whether to bring charges against a company and in negotiating a plea or other remedies.[2] Moreover, in a corporate environment characterized by lean performance, tailoring your compliance program to your company’s actual risks is a business necessity.

A deliberate, iterative self-assessment methodology is crucial to obtaining the benefits of both mitigating enforcement risk and achieving a high-efficiency compliance program. Continue reading

Practical Issues in Financial Services and Securities Law Enforcement: A UK Perspective

by Mark Steward

Keynote Speech at New York University School of Law Program on Corporate Compliance and Enforcement – 31 March 2017

Thank you very much for inviting me here today. It is a great privilege to be here, listening to and participating in today’s discussions. I congratulate the New York University Law School for convening today’s program.


Conduct issues give rise to competing tensions within firms. Everyone can feel hard done by, whether justifiably or not. Firms complain about having to shoulder responsibility for errant staff; staff complain about being scapegoated; regulators and other authorities are blamed for not holding to account those who are supposedly ‘really responsible’ with the public too often feeling the regulatory outcomes do not fully attribute blame.I want to speak to you about today’s theme, the expanding scope of individual liability for corporate misconduct, from a UK perspective with reference to recent developments in the UK, especially the Senior Manager’s Regime which commenced operation just over a year ago. Continue reading

Denials and Admissions in Civil Enforcement – Looking Beyond the SEC

by Verity Winship and Jennifer K. Robbennolt

Should agencies require admissions of guilt from the targets of civil enforcement?  The SEC’s policy of letting enforcement targets settle while neither admitting nor denying allegations provoked judicial rebukes and a public debate. But the SEC is only the tip of the iceberg. Administrative agencies rely heavily on settlement as a key enforcement tool.  Admissions of guilt—or, more commonly, declarations that nothing is admitted—form part of these settlement agreements and the underlying negotiations.

Our recent article, Admissions of Guilt in Civil Enforcement, uses the explicit debate over the SEC’s practices to draw attention to the high (and mostly unexamined) stakes of admissions for civil enforcement throughout the administrative system. Continue reading

Firsts for UK SFO with In Principle False Accounting DPA, and for FCA with Market Abuse Compensation, Against Tesco

by Stuart Alford QC, Daniel Smith and Yasmina Borhani

Following a two-year investigation, Tesco PLC has announced that its subsidiary Tesco Stores Limited (Tesco Ltd) had agreed in principle the terms of a Deferred Prosecution Agreement (DPA) with the UK Serious Fraud Office (SFO), subject to final judicial approval at a hearing scheduled for 10 April 2017 before Sir Brian Leveson PC.  The DPA would result in Tesco Ltd paying a $129 million fine to the SFO, together with the SFO’s costs.  It is also likely to include an admission of criminal liability and an agreed statement of facts, albeit publication of details may be withheld to avoid prejudicing the ongoing prosecution of former Tesco executives. Continue reading

SEC Private Equity Enforcement:  A More Aggressive Approach

by Andrew J. Lichtman and Howard S. Suskin

Over the last several years, the Securities and Exchange Commission (“SEC”) has targeted private equity funds for various fee allocation arrangements and conflicts of interest.  Rather than describing the fee practices as fraudulent, which would require a showing of scienter, the SEC has concluded that the private equity advisers committed disclosure violations.  However, a recent proceeding in which the SEC secured a settlement based on both breach of fiduciary duty and fraud may foreshadow a more aggressive approach.  Some context first. Continue reading

Whistleblower Anti-retaliation Protections in Australian Corporate Codes of Conduct

by Dr. Olivia Dixon

Whistleblowing is considered to be an integral component of corporate governance by exposing and remedying corruption, fraud and other types of wrongdoing in both the public and private sector. Australian whistleblowing legislation emerged in the aftermath of the systemic government corruption inquiries of the late 1980’s, meaning that although whistleblower protection was squarely on the political agenda, legislative development was firmly fixed on the public sector. The Commonwealth, States and Territories have all enacted public sector whistleblower protection or public interest disclosure acts based on a structural approach, which prohibit retaliation against whistleblowers for reporting misconduct. While academic debate continues as to whether private sector legislation should ultimately be based on a structural, anti-retaliation, reward-based or blended model, political will to enact comprehensive private sector legislation has stagnated and current legal avenues that are available to targets of retaliation are inherently complex, fragmented and unpredictable. Continue reading