Author Archives: Serina M. Vash

The SEC and Whistleblowers: A Spotlight on Severance Agreements

by John F. Savarese, Jeannemarie O’Brien, Wayne M. Carlin, and David B. Anders

In the space of one week, the SEC brought two enforcement actions that reiterate its focus on protecting the rights of whistleblowers.  In each case, companies attempted to remove the financial incentives for departing employees to submit whistleblower reports to the SEC.  The result instead was a pair of administrative orders (on a neither admit nor deny basis) finding that each company violated SEC Rule 21F-17, which prohibits any person from taking any action to impede a whistleblower from communicating with the SEC about possible securities law violations.  In the Matter of BlueLinx Holdings Inc. (August 10, 2016) (PDF: 224 KB); In the Matter of Health Net, Inc. (August 16, 2016) (PDF: 160 KB).  For earlier developments in this area, see our memo, “The SEC Opens a New Front in Whistleblower Protection” (April 2, 2015) (PDF: 59 KB).

Both recent cases involved severance agreements entered into with individuals in connection with the termination of their employment relationship, as a condition to the receipt of severance payments and benefits.  Continue reading →

Got Prison? Here Are The Top 5 Things A Defendant Should Do Prior To Reporting

by Walt Pavlo

I once told someone that I helped people prepare for a stay in Federal Prison and they thought that I was just kidding.  As they asked me, “Prepare for what?  Don’t you just go?”  The truth is, there is a lot to be done.

At the Compliance & Enforcement blog we write about enforcement and compliance, but what isn’t always apparent is that a lot about enforcement is people going to prison.  Many of those convicted of white collar crimes spend many months, or years, prior to reporting to prison.  In one case that I wrote about extensively, Ross Mandell of Sky Capital was indicted on federal charges for securities fraud in July 2009, went to trial in June 2011, and was found guilty in July 2011.  He was sentenced to prison (12 years) in May 2012 and entered prison in September 2014.  That is a span of over five years!  Continue reading →

Bribery Conspiracies, Foreign and Domestic: Ocasio v. United States and Its Implications for FCPA Complicity Theories

by Shu-en Wee and Daniel Richman*

To what extent can a nonresident foreign national be prosecuted for violations of the Foreign Corrupt Practices Act (FCPA)[1] when he neither is an agent of a domestic concern nor has committed acts while physically present in U.S. territory?  Does the fact that the FCPA explicitly creates criminal liability in only these two situations mean that he cannot be charged for conspiring to violate the Act, or aiding and abetting a violation?  Such was the issue presented to Judge Janet Bond Arterton in United States v. Hoskins.[2]  Her rejection of the government’s conspiracy and accomplice theories in that case is presently up on appeal in the Second Circuit, but an intervening Supreme Court case may well lead the Circuit to see the case a bit differently. Continue reading →

Are Cartel Participants Rogues?

by Harry First*

Corporations sometimes argue that individuals who engage in cartel behavior are “rogues,” a term often used in two different ways. One is the dictionary sense of a “rascal or scoundrel,” one who “wanders apart from the herd” or varies “markedly from the standard.” The other is a low-level employee who participates in cartel behavior out of view of management. Deterring such people requires an understanding of the psychology of rogue behavior, but it is the rogue who is at fault, not the corporation. Indeed, it is this conclusion that makes “rogues” so attractive an explanation to corporations. Continue reading →

FedEx Lives to Deliver Another Day

by Serina M. Vash

It happens all the time in criminal trials: the case ends after opening statements.  Ordinarily, after a powerful opening statement by the government, reality sets in for the defendant.  The defendant changes course and pleads guilty, hoping that he can still reduce his sentence under the Federal Sentencing Guidelines.

But the turn of events in the FedEx Case is unprecedented.  After marching an eight year federal criminal investigation to trial, the U.S. Attorney’s Office for the Northern District of California dismissed its criminal case against FedEx shortly after opening statements and the district court judge declared that FedEx was “factually innocent.”

So what happened in the drug trafficking case against FedEx? Continue reading →

Flying Into Uncharted Territory – The D.C. Circuit’s Course Correction Over Judicial Approval of DPAs in Fokker

by David DiBari

Whether the DOJ chooses to bring criminal charges (and what charges to bring) is traditionally a decision beyond the purview of judicial intervention.  The U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) recently reaffirmed this bedrock constitutional principle with respect to the DOJ’s decision to enter into a deferred prosecution agreement (“DPA”).  On April 5, 2016, in the closely-watched case of United States v. Fokker Services B.V. (PDF: 114 KB), the D.C. Circuit issued its opinion on a matter of first impression and vacated an unprecedented district court order rejecting the DPA between the DOJ and Fokker Services B.V..[1]  Amid the attention surrounding the D.C. Circuit’s Fokker opinion, however, several salient points are worth highlighting. Continue reading →

How Much Does The First Amendment Protect Medical Marketing?

by Julian Ginos

Often thought of as a bastion of countercultural resistance—think the Pentagon Papers, flag burning, the Nazi march in Skokie, IL—the First Amendment is enjoying a renaissance as a powerful antiregulatory tool for business interests. Citizens United, Hobby Lobby, and Zubik are some of the better-known examples of this phenomenon, but drug and device manufacturers have also made strides challenging the regulations governing them on First Amendment grounds. Continue reading →

The Effect of Brexit on UK and U.S. Enforcement

by Anthony S. Barkow and David C. Lachman

The decision by British voters to exit the European Union (EU) has ushered in what is likely to be a prolonged period of uncertainty as the United Kingdom (UK) seeks to define its future relationship with the EU. Brexit’s effect on enforcement policy and the investigation and prosecution of white collar crime is one area that should be of great interest to international companies with operations in the UK, their general counsel, and cross-border practitioners. At first blush, it might appear that Brexit’s impact on enforcement will be minimal, because many of the relevant UK laws are independent of EU law. The uncertainty that Brexit portends for the UK generally, however, is equally applicable in the white collar arena. Continue reading →

Federal Bank Prosecutions

by Brandon L. Garrett

In a recent piece published in the Yale Law Journal Forum, I describe data collected concerning prosecutions of banks.  I describe how while formerly quite rare, bank prosecutions have increased in numbers and in the size of penalties.  I also analyze the approach of prosecutors and ask whether it is sufficiently effective.  Continue reading →

Crediting the Behavioral Approach

by Timothy J. Lindon

The compliance message to companies from Washington is practical and encouraging.  Regulators are not looking to reward check-the-box programs or companies that simply say the right things about integrity in their Codes of Conduct.  They are looking for innovative approaches that work to prevent misconduct in the real world, and can be measured.

The problem of course is identifying and measuring what works.  We have lots of compliance metrics like training completion rates and the number of helpline calls, but none of them measures fully the impact of our programs on ethical decisions by individual employees.  In fact, research shows that many of the activities credited under the federal sentencing guidelines may actually be counter-productive.  For example, training that is regarded by employees as a check-the-box exercise is viewed as insincere and undermines compliance with policies.

So what works? Continue reading →