Author Archives: Serina M. Vash

A Deliberate Process for Conducting a Compliance Risk Assessment

by Randall Cook, Waqas 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.

Opening

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 →

Mitigating Legal and Regulatory Risks in Winding Down Funds

by Michael C. Neus

A fund manager typically spends most of its time not only contemplating how to maximize returns for investors, but also navigating the array of compliance and regulatory concerns involved in running a private fund. Because the manager is so caught up in thinking about these daily considerations, it may lose sight of the multitude of issues that arise when it comes time to wind down that same fund. If the manager exercises some foresight regarding the fund’s eventual wind-down and puts proper procedures in place, however, the whole process can be both smoother and less fraught with legal and regulatory risks. Once a manager decides to wind down a fund, it must navigate myriad considerations and decisions during the process. Continue reading →

The Rise of FinTech and Compliance

by Tom C.W. Lin

An important transformation is happening in the financial industry. The rise of new technology and compliance has dramatically altered many of the key functions and functionaries of modern finance. Artificial intelligence, algorithmic programs, and supercomputers, instead of human actors, now constitute the core of many financial operations. At the same time, compliance officers have become just as critical to financial institutions as traders, bankers, and analysts. Finance as we knew it has changed and continues to change.

My recent article, Compliance, Technology, and Modern Finance, offers a detailed commentary on these unfolding changes—the crosscutting developments in compliance, technology, and modern finance. It examines the concurrent and intersecting ascents of new financial technology and compliance as well as the potential perils linked with their ascents. It also highlights the larger implications of the changing financial landscape due to the growing roles of new technology and compliance. In particular, it focuses on the challenges of financial cybersecurity, the integration of technology and compliance, and the role of humans in modern finance. Continue reading →

Who Is a Whistleblower Under Dodd-Frank’s Anti-Retaliation Provisions?

by Erika A. Kelton and John W. Tremblay

Who counts as a “whistleblower” when it comes to Dodd-Frank’s statutory protections against employment retaliation? In recent years, corporate defendants have argued that employees who complain internally about wrongdoing are not protected by Dodd-Frank’s whistleblower anti-retaliation provisions if they do not report wrongdoing to the Securities and Exchange Commission before they suffer retaliation. Continue reading →

Why the Securities and Exchange Commission’s Administrative Law Judges are Unconstitutional

by Linda D. Jellum

The Securities and Exchange Commission (SEC) faces a constitutional crisis: the Tenth Circuit recently held that SEC administrative law judges (ALJs) are unconstitutionally appointed.[1] And the D.C. Circuit will likely soon follow suit. So far, the SEC is fighting hard to protect thousands of past and pending SEC adjudications; however, the battle may well have been lost. Here’s the story of how the SEC’s greatest constitutional challenge unfolded. Continue reading →