Public Companies Should Implement Sufficient Internal Controls to Avoid Becoming Victims of Cyber-Related Frauds and to Comply With the Exchange Act
On October 16, the SEC issued a report on an investigation into whether nine public issuers that were victims of cyber-related frauds may have violated Sections 13(b)(2)(B)(i) and (iii) of the Exchange Act by failing to have a sufficient system of internal accounting controls to provide reasonable assurances that those frauds were detected and prevented.
The issuers, which the SEC stated represent a variety of industries, were victims of two types of “business email compromise” scams that resulted in mostly unrecovered losses ranging from $1 million to over $45 million.
While the SEC determined not to pursue enforcement actions against the issuers under investigation, it issued its report of investigation to make issuers aware that the cyber-related threats exist and concluded that all companies should reassess the sufficiency not only of existing internal controls, but also of policies and procedures that ensure employee compliance with controls. Continue reading →
The CFTC Focused a Series of Recent Enforcement Actions on Manipulation, Aiding and Abetting, Spoofing, and Insider Trading; and the CFTC Announced an Insider Trading and Information Protection Task Force
In recent actions, the U.S. Commodity Futures Trading Commission (the “CFTC”) has continued to pursue cases alleging market manipulation and attempted market manipulation, aiding and abetting of market manipulation, and spoofing. Describing its recent efforts, the CFTC has said that it filed 83 enforcement actions in the last Fiscal Year, representing an approximately 25% increase over each of the prior three years. Notably, the CFTC brought more manipulative conduct and spoofing cases over the past year than ever before, resolving more than 25 such cases. Continue reading →
On September 25, 2018, Deputy Attorney General Rod Rosenstein announced the rollout of the “Justice Manual” – a revised and renamed version of the U.S. Attorneys’ Manual, a long-used reference for Department of Justice (DOJ) policies and procedures. The most significant changes appear to be confined to anticipated codifications of well-publicized new policies (although one such policy was, puzzlingly, omitted). But some other changes have not been previously addressed by Department leadership, and may provide insight into the Department’s mindset in light of recent events.
The recent rollout was the culmination of a yearlong review and overhaul of the Manual, the first in more than 20 years. This initiative to streamline DOJ policies and revamp the U.S. Attorneys’ Manual was announced by Deputy AG Rosenstein last October in a speech at NYU. Rosenstein explained in his initial announcement that the project would work to identify redundancies, clarify ambiguities, eliminate surplus language, and update the Manual to reflect current law and DOJ practice, including through the incorporation of outstanding policy memoranda. According to DOJ’s recent announcement, the name change from “U.S. Attorneys’ Manual” to “Justice Manual” not only reflects this significant undertaking by DOJ employees, but also emphasizes the applicability of the Manual to the entire Department, beyond the U.S. Attorneys’ Offices.Continue reading →
I have just completed my first month as Director of the Serious Fraud Office.
As a new director, I have spent my first weeks meeting the talented and hardworking SFO team – from lawyers to investigators to accountants to computer experts to the administrative team who are the backbone of every government agency all around the globe. I have come to an office with strong values and a commitment to justice, a dedication for searching for the truth. Continue reading →
Thank you very much for that introduction, Jennifer, and thanks to the entire PCCE staff for organizing this great event. It is always wonderful to be at NYU and especially to appear before such a distinguished audience.
Let me first share with you some general principles we follow with respect to monitors, and then discuss some specific issues, including:
How we determine whether to seek appointment of a monitor;
The factors we consider in selecting a monitor;
How an entity might avoid the appointment of a monitor; and
What, in our experience, makes a monitorship successful?
On September 30, 2018, Governor Edmund G. Brown signed several new workplace laws, and vetoed others, that arose out of the #MeToo movement. We briefly review the newly signed legislation and also highlight bills that Governor Brown rejected. Unless otherwise indicated, these new laws will take effect on January 1, 2019. Continue reading →
Over 3,000 commenters submitted letters to the Securities and Exchange Commission (“SEC”) concerning the agency’s recently proposed amendments to its whistleblower rules. This response reflects the perceived importance of the SEC’s proposal to companies and employees.
The most controversial of the proposed amendments would allow the SEC discretion to decrease the size of an award if it determines that the award would otherwise be too large to advance the goals of the whistleblower program. Under current rules, if a whistleblower qualifies for an award, the SEC determines the size of the award by considering a number of specified factors that can increase or decrease the award amount within the range of 10 to 30 percent of the monetary sanctions recovered. To decrease the amount of an award, the SEC can consider only the culpability of the whistleblower; whether the whistleblower unreasonably delayed reporting the misconduct to the SEC; and whether the whistleblower interfered with the company’s internal compliance and reporting systems.Continue reading →
In an important speech, Deputy Assistant Attorney General Matthew Miner of the Department of Justice’s Criminal Division announced on Thursday that DOJ will “look to” the principles of the FCPA Corporate Enforcement Policy (PDF: 50.6 KB) in evaluating “other types of potential wrongdoing, not just FCPA violations” that are uncovered in connection with mergers and acquisitions. As a result, when an acquiring company identifies misconduct through pre-transaction due diligence or post-transaction integration, and then self-reports the relevant conduct, DOJ is now more likely to decline to prosecute if the company fully cooperates, remediates in a complete and timely fashion, and disgorges any ill-gotten gains. Continue reading →
This post reviews the New York State Office of the Attorney General’s (the “OAG”) Virtual Markets Integrity Initiative Report (the “Report”), which was published on September 18, 2018. The publication of the OAG’s 42-page Report brings to a close its six-month fact-finding inquiry of several virtual currency platforms. The OAG sent out detailed letters and questionnaires to a number of virtual currency platforms seeking information from the platforms across a wide-range of issues, including trading operations, fees charged to customers, the existence of robust policies and procedures, and the use of risk controls. Continue reading →