This past year marked the 40th anniversary of the U.S. Foreign Corrupt Practices Act (“FCPA”). Since its enactment in 1977, the U.S. Department of Justice (the “DOJ”) has brought approximately 300 FCPA enforcement actions, while the U.S. Securities and Exchange Commission (the “SEC”) has brought approximately 200 cases. This anniversary year, the first year of the Trump administration, demonstrated that the FCPA continues to be a powerful tool in combating corruption abroad and encouraging compliance at global companies.
The NYU Program on Corporate Compliance and Enforcement is pleased to announce that Pablo Quiñones will be PCCE’s new Executive Director. Mr. Quiñones will assume his new position on February 1, 2018 and will serve for the rest of the academic year. Next academic year, Mr. Quiñones will return to private practice but will continue to work with PCCE as a Senior Fellow.
Mr. Quiñones joins the Law School after serving as Chief of Strategy, Policy and Training for the U.S. Department of Justice’s Criminal Fraud Section in Washington, D.C. In that role, Mr. Quiñones supervised a unit that worked with senior leaders, supervisors and trial attorneys within the DOJ to develop and implement enforcement strategies, policies, and educational programs related to prosecuting financial crimes. He helped foster cooperation among foreign and domestic government agencies, promote the evaluation of corporate compliance programs and monitors, and implement investigation, prosecution and trial training programs. Among other things, Mr. Quiñones oversaw the Section’s first detail of a prosecutor to a foreign regulator and first expert compliance counsel, assisted in the development of FCPA enforcement policies, and advised on important litigation and appellate matters. Continue reading →
Many constituents have a vested interest in determining a firm’s culture of compliance: regulators, investors, prospective employees, among others. Investment advisers registered with the Securities and Exchange Commission must demonstrate their compliance culture during periodic examinations by the Office of Compliance, Inspection and Examinations. Current and former SEC examination staff often state that the primary indicator of a healthy compliance culture is the “tone from the top.” There are a number of steps that a firm can take to demonstrate that top management fosters an effective compliance culture. Continue reading →
Prominent law enforcement and regulatory officials have referred to financial sector compliance officers, as “essential partners” in ensuring compliance with relevant laws and regulations, whose “difficult job[s]” merit “appreciat[ion] and respect.” Officials have noted the critical role these professionals play in shaping the culture of financial institutions, as well as the industry more generally. However, a series of recent enforcement actions in which financial sector compliance officers have been personally sanctioned has strained this partnership, fueling concerns among financial sector compliance officers that they are being unfairly targeted.
Law enforcement and regulatory officials have responded to these concerns with assurances that both the ethos of a partnership and their even-handed enforcement approach remain intact. Officials have stressed that in the rare instances in which financial sector compliance officers have been held personally accountable, the majority had engaged in affirmative misconduct. Rarer still, they contend, are cases where compliance officers were found to have exhibited “wholesale” or “broad-based” failures in carrying out responsibilities assigned to them. In these particular cases, officials have stressed that the enforcement actions proceed only when, after carefully weighing the evidence, the facts indicate that the compliance officers “crossed a clear line.”Continue reading →
On December 20, 2017, President Trump issued a new Executive Order (EO) targeting corruption and human rights abuses around the world.
The EO implements last year’s Global Magnitsky Human Rights Accountability Act (the Global Magnitsky Act), which authorized the president to impose sanctions against human rights abusers and those who facilitate government corruption. The US Department of the Treasury’s Office of Foreign Assets Control (OFAC), which will administer the EO, also added 15 individuals and 37 entities to its Specially Designated Nationals and Blocked Persons List (SDN List). Continue reading →
“Corporate criminal law . . . operates firmly in a deterrence mode.” The ultimate goal of that deterrence is prevention. But recent evidence suggests that deterrence—and in particular, the corporate fine (the favorite tool of deterrence theorists)—is not particularly good at the job. For a host of structural and practical reasons, corporate fines do not influence corporate behavior as we might have hoped. In a forthcoming article, Clockwork Corporations: A Character Theory of Corporate Punishment, I propose abolishing the corporate fine and offer an alternative framework for structuring corporate punishment. The proposal expands on a strategy prosecutors already employ, albeit imperfectly, as part of corporate deferred prosecution agreements: mandating corporate reform. On this new approach, such government-directed reform would be the exclusive means of corporate punishment, and judges and judge-appointed monitors, rather than prosecutors, would be in the driver’s seat. This “character” theory of punishing corporations could beat deterrence theory at its own game by preventing more corporate crime. Continue reading →
Large-scale data breaches can give rise to a host of legal problems for the breached entity, ranging from consumer class action litigation to congressional inquiries and state attorneys general investigations. Increasingly, issuers are also facing the specter of federal securities fraud litigation.
The existence of securities fraud litigation following a cyber breach is, to some extent, not surprising. Lawyer-driven securities litigation often follows stock price declines, even declines that are ostensibly unrelated to any prior public disclosure by an issuer. Until recently, significant declines in stock price following disclosures of cyber breaches were rare. But that is changing. The recent securities fraud class actions brought against Yahoo! and Equifax demonstrate this point; in both of those cases, significant stock price declines followed the disclosure of the breach. Similar cases can be expected whenever stock price declines follow cyber breach disclosures. Continue reading →
Treasury’s Financial Crimes Enforcement Network (“FinCEN”) recently announced the creation of the FinCEN Exchange, a new voluntary platform to facilitate information sharing between the government and industry on topics related to anti–money laundering (“AML”) and other financial crime issues. The program represents a significant step forward on two related priority areas for FinCEN: information sharing and public-private partnerships. Continue reading →
On 13 December 2017, the UK Financial Conduct Authority (“FCA”) issued three new consultation papers providing further details on its extension of the Senior Managers and Certification Regime (“SMCR”) to almost all firms regulated by the FCA. Some of the FCA’s key proposals are summarised below. We have previously published a client update outlining the main features of the extended SMCR.Continue reading →