Author Archives: Serina M. Vash

The (Il)legitimacy of Compliance?

by Donald C. Langevoort

Each new compliance scandal triggers something of a “what were they thinking” response among those who consider it self-evident that sensible people inside a business organization would try hard to avoid behaviors that can bring such serious legal and reputation harm.  So it is with the current subject of fascination, Wells Fargo. “Salespeople” (many of whom were branch employees serving customers’ basic banking needs) created millions of unauthorized customer accounts of various sorts in order to generate fee revenues.  While some corporate legal violations are implicitly blessed from above because any sanctions can be seen as just the cost of doing business, such was probably not the case here.

To me (working only from official documents and press reports, which admittedly never give the whole story), Wells Fargo probably illustrates a few points consistent with the emerging research in what is becoming known as behavioral compliance. Continue reading →

English High Court Rejects Claims of Privilege Over Internal Investigation Interview Notes

by Karolos Seeger, Alex Parker and Andrew Lee

Overview

In a judgment last week, the English High Court ruled that notes, transcripts and records of interviews prepared by lawyers during an internal investigation are not covered by legal advice privilege.  While the decision may be appealed (RBS has indicated that it intends to seek permission to appeal), it potentially has important implications for companies and their lawyers when internal interviews and investigations are being conducted, even when external counsel are retained. Continue reading →

US v. Newman – Not Quite Dead Yet

by Gregory Morvillo

In 1857 a United States newspaper announced Mark Twain’s death and printed his obituary.  When Twain learned of his passing, legend has it he quipped “Reports of my death have been greatly exaggerated.”  Twain’s supposed quote applies with equal force to the reports floating around the legal community that United States v. Newman met an untimely demise this week.  In both cases, contrary to what some people thought, Twain and Newman at the time of their reported deaths remained very much alive.

Last week the Supreme Court handed down a unanimous opinion in United States v. Salman.  It was a highly anticipated opinion by those of us who follow the evolution of insider trading law … and yes I recognize that following insider trading law is, at the least, a little bit geeky.  Nevertheless, many observers eagerly awaited the Supreme Court’s ruling.  As it turned out, the ruling was kind of a dud. Continue reading →

Legal Person Liability is a Key Component of the Emerging Rules for the Global Economy

by Kathryn Gordon and Brooks Hickman

The liability of legal persons for foreign bribery and related economic offenses is a key feature of the emerging legal infrastructure for the global economy.  Without it, governments face a losing battle in the fight against the bribery of foreign public officials and other complex economic crimes.

In recognition of the essential role that the liability of legal persons plays in combating foreign bribery, Articles 2 and 3 of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) (PDF: 598 KB) require “[e]ach Party … to establish the liability of legal persons for foreign bribery” and to apply “effective, proportionate and dissuasive” penalties to legal persons for foreign bribery. Continue reading →

France’s New Anti-Corruption Framework: Potential Impact for Businesses in a Multijurisdictional World

by Frederick Davis, Andrew M. Levine and Charlotte Gunka

Long criticized for ineffective enforcement of their anti-corruption legislation, French authorities are taking steps to enhance their efforts.  On November 8, 2016, France finally passed a “Proposed Law Regarding Transparency, the Fight Against Corruption and the Modernization of Economic Life,”[1] known as the Loi Sapin II.[2]  The French Constitutional Council currently is examining the law,[3] which is likely to be adopted before the end of the year in the form endorsed by the French National Assembly, subject to minor amendments.  The Loi Sapin II provides for some significant changes in the current French anti-corruption legal and regulatory administrative structure, as well as some specific amendments to the general French criminal law and procedures. Continue reading →

Beyond Caremark: Individual and Corporate Liability Considerations

by Michael W. Peregrine

Delaware court interpretations of the Caremark (PDF: 72 KB) standard provide a daunting pleading barrier to derivative actions based on alleged breach of compliance oversight responsibilities. The Chancery Court’s October 18 decision in Reiter v. Fairbank (PDF: 509 KB) is particularly notable for its thoughtful analysis of the duty of oversight. But corporate leadership should recognize that these decisions may not provide impenetrable protection to them, and to the corporation, from compliance-based liability exposure, especially in the current individual accountability environment. Continue reading →

Deputy Attorney General Sally Q. Yates Delivers Remarks at the 33rd Annual International Conference on Foreign Corrupt Practices Act

Courtesy of Deputy Attorney General Sally Quillian Yates

It’s great to be here today with so many people involved in the fight against international corruption.  The diversity of this crowd – which includes folks from the public and private sector, from the United States and abroad, and from many different industries – demonstrates both the wide scope and the deep impact of our anti-corruption effort.

I’ve spent much of my professional career at the Department of Justice.  During my time as an Assistant U.S. Attorney and U.S. Attorney in Atlanta, I had the opportunity to prosecute and supervise a wide variety of cases, from drug trafficking to corporate fraud to domestic terrorism.  But I’ve always had a particular focus on corruption matters.  Early in my career in Atlanta, when I served as the chief of our Fraud and Political Corruption Section, I saw the corrosive impact of corruption – from big-city mayors pocketing government funds to small-town officials peddling their influence to the highest bidder.  The damage caused by this type of illegal activity is real and significant.  It undermines the public’s faith in our democratic institutions.  It gives a bad name to the vast majority of public servants who care deeply about doing what’s right.  And by allowing decisions to be made based on personal greed rather than public benefit, corruption deprives our citizens of their right to good, effective governance. Continue reading →

A New Model for SEC Enforcement: Producing Bold and Unrelenting Results

by Chair Mary Jo White

Introduction

Good morning and thank you, Dean [Trevor] Morrison for that very kind introduction. It is a pleasure to be here today and I want to thank the NYU Program on Corporate Compliance and Enforcement and the NYU Pollack Center for Law and Business for co-sponsoring this program. These programs provide important forums for sophisticated dialogue on critical white collar enforcement issues, which have an increased prominence post-financial crisis. I am honored to join your list of distinguished speakers.

Consistent with the core missions of these programs, I will talk to you today primarily about the SEC’s enforcement program, but also more broadly, about how best to punish and deter white-collar wrongdoing.As you know, the SEC is the primary regulator and enforcer of the federal securities laws. How we go about our job is thus critical to the protection of investors and the integrity of our capital markets. After nearly four years as Chair of the SEC, following almost nine years as U.S. Attorney for the Southern District of New York, where the criminal prosecution of white collar wrongdoing was – and still is – a major priority, this seemed like the right time to speak here about this important topic. And, as you might guess, after spending much of my career in law enforcement, I have strong views about the importance of strong enforcement in the white collar space and what it takes to achieve that. Continue reading →

What Does the OECD Know About Organizational Liability?

by Kevin E. Davis

The OECD Working Group on Bribery – the group responsible for monitoring implementation of the OECD’s Anti-Bribery Convention – has just closed a request for comments on the topic of liability of legal persons for foreign bribery. I submitted a comment, and I hope that others did as well, but I am afraid that instead of focusing on the issues I was asked to comment on I focused on my worries about the overall purpose of the exercise.

There is no question that the issues raised by the OECD are important. Imagine if the U.S. legal system did not have corporate criminal liability, how would it affect the scope and the intensity of corporate compliance? Would we still have compliance officers reporting directly to the board, supplier agreements replete with anti-corruption reps and warranties, and multi-million dollar internal investigations? Consider the potential effects of even a modest reform, such as treating the existence of an effective compliance program as a complete defense. Or, moving in the opposite direction, what if firms convicted of foreign bribery were automatically disbarred from all government contracts? Continue reading →

The Difficulty of Defining a Declination: An Update on the DOJ’s Pilot Program

by Bruce E. Yannett, Andrew M. Levine and Philip Rohlik

On September 29, 2016, the U.S. Department of Justice (“DOJ”) issued two letters “closing its investigations” into alleged violations of the U.S. Foreign Corrupt Practices Act by HMT LLC, a Texas based manufacturer, supplier and servicer of above ground liquid storage tanks, (the “HMT Declination”)[1] and NCH Corporation, a Texas based industrial supply and maintenance corporation (the “NCH Declination).[2]  Unlike in the three earlier “declinations” the DOJ issued since the start of its FCPA Enforcement “Pilot Program,”[3] the companies here (HMT and NCH) are not issuers, so there were no parallel Securities and Exchange Commission (“SEC”) enforcement actions.  Each declination also includes what are described as findings of the DOJ’s investigation underlying violations of the FCPA and a requirement that each company pay “disgorgement” to the U.S. Treasury.  The HMT and NCH declinations therefore raise the question of whether and to what extent the Pilot Program, in addition to offering guidance on how to receive a declination, has altered the meaning of what a declination ordinarily will be.  Specifically, under what circumstances can a company receive a declination without the DOJ publicizing its “findings” and the company paying disgorgement (i.e., a “clean” declination)? Continue reading →