Author Archives: William Walant

FinCEN Issues Advisory on Kleptocracy and Foreign Public Corruption

by Kara Brockmeyer, Andrew M. Levine, Satish Kini, Robert Dura, and Lily D. Vo

On April 14, 2022, the Financial Crimes Enforcement Network (“FinCEN”) released its “Advisory on Kleptocracy and Foreign Public Corruption” (the “Advisory”), directing covered financial institutions to focus their efforts on identifying the proceeds of foreign public corruption, which is a priority for the Biden administration.[1] The Advisory focuses on so-called “kleptocrats,” defined as individuals who use “their position and influence to enrich themselves and their networks of corrupt actors,” as well as other corrupt public officials who may launder the proceeds of their corruption through financial institutions.

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Recently Enacted Federal Cybersecurity Disclosure Statute Will Significantly Expand Data Breach and Ransomware Reporting Obligations

by Nicholas S. Goldin, Lori E. Lesser, Melanie D. Jolson, and Shanice D. Hinckson

Tucked into the recently enacted 2022 Consolidated Appropriations Act is the Cyber Incident Reporting for Critical Infrastructure Act (the “Act”), which will—once effective—significantly expand the obligation of[1] companies in the energy, communications, financial services and other critical infrastructure sectors to report a range of cyberattacks and ransomware payments. This broad-based federal cyber incident reporting requirement comes on the heels of cyber disclosure rules recently proposed by the Securities and Exchange Commission for public companies.[2]

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U.S. Department of Justice Antitrust Division Releases Updates to Criminal Leniency Program Frequently Asked Questions (FAQs)

by John Terzaken, Abram Ellis, and Elizabeth French

On April 4, 2022, the U.S. Department of Justice Antitrust Division (the “Division”) announced important clarifications and modifications to its Corporate and Individual Leniency Policies (the “Leniency Program”) in the form of revised Frequently Asked Questions about the Antitrust Division’s Leniency Program (“FAQs”).[1]  The Leniency Program is unique to the Division and provides for immunity for companies and individuals who are first to self-report criminal antitrust violations—price-fixing, bid-rigging and market/customer allocation agreements among competing companies (so called “antitrust cartels”). For the last thirty years, the Leniency Program has remained a mainstay of the Division’s anti-cartel enforcement efforts, touted by the Division as its most effective tool for destabilizing and rooting out otherwise clandestine antitrust cartels. The success of the Division’s Leniency Program has led countries around the world to adopt similar programs to combat antitrust cartels within their jurisdictions.

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SEC Brings its First Corporate Anti-Corruption Action of 2022

by Kara Brockmeyer, Andrew M. Levine, Karolos Seeger, and Konstantin Bureiko

On February 17, 2022, the SEC brought a settled FCPA administrative proceeding against KT Corporation (“KT” or the “Company”), a South Korean telecom operator with American depository shares trading on the New York Stock Exchange.[1]  In its Cease-and-Desist Order (the “Order”), the SEC found that KT engaged in multiple schemes to make improper payments in Korea and Vietnam, including through purported charitable donations and third-party payments.  The SEC also found that KT paid executives inflated bonuses in order to generate slush funds to pay for gifts and illegal political contributions.  As a result of the settlement, the Company agreed to pay $6.3 million in disgorgement and civil penalties, and to a two-year reporting obligation.[2]  The settlement with the SEC came several months after the Company and fourteen executives were indicted in South Korea for the political contribution scheme.

Of particular note, the KT settlement is the SEC’s most recent action involving charitable contributions, and it goes somewhat beyond earlier cases in that the Order does not find that the donations were made as part of any quid pro quo.  It is also a cautionary tale demonstrating various ways that slush funds can be created.

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Hong Kong Securities and Futures Commission Imposes $45 Million Fine on Citigroup Global Markets Asia for “Pervasive Dishonest Behaviour” on Trading Desks

by Jonathan J. Rusch

In the Hong Kong securities sector, it is a fundamental tenet that “in conducting its business activities, a licensed or registered person should act honestly, fairly, and in the best interests of its clients and the integrity of the market.”[1]  A recent enforcement action by the Hong Kong Securities and Futures Commission (SFC) indicates the potentially severe consequences when a firm systematically disregards that tenet.

On January 28, the SFC announced that it had reprimanded and fined Citigroup Global Markets Asia Limited (CGMAL) US$45 million (HK$348.25 million) “for allowing various trading desks under its Cash Equities business to disseminate mislabelled Indications of Interest (IOIs).”[2]  As part of that decision, the SFC found that “such pervasive dishonest behaviour would not have continued but for serious lapses and deficiencies in its internal controls, compliance function and management oversight.”  This post will summarize the SFC’s key findings, conclusions, and sanctions, and offer some observations on the significance of the SFC’s action.

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Second Circuit Reverses LIBOR Convictions

by John F. Savarese, David B. Anders, Sarah K. Eddy, and Remy Grosbard

In a careful but blunt opinion (PDF: 3.3 MB) yesterday, the Second Circuit reversed the convictions of two Deutsche Bank derivatives traders charged with wire fraud for manipulating LIBOR. The decision underscores that not all conduct deemed unfair is criminal, and represents the latest blow to a theory of criminal liability that DOJ has invoked to extract billions of dollars in penalties from financial institutions—all before the theory’s viability could be tested in the courts. 

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Returning to the Future of Work: Considerations for the Virtual Board Room in the ‘Post’-Pandemic Era

by Jeffrey D. Karpf and Fernando A. Martinez

Almost two years into the COVID-19 pandemic, it is clear that the corporate workplace has changed for good. As the world continues to reopen and companies return to the office, what we are returning to is not business as usual, but a new future of work – a future characterized by a shift from the traditional workplace to remote and hybrid models that provide opportunities to work in effective and efficient ways from anywhere. Companies are faced with challenges as they return to the office and are finding they need to adapt to remain competitive, attract talent and stay prepared for future crises. Boards of directors of public companies should play an important role in defining what this future looks like and ensuring companies are set up for success.

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SEC Contemplates Several Lessons from Meme Stock Activity

by Anthony O’Reilly

Looking beyond the headlines around payment for order flow (PFOF[1]), the SEC’s recent report[2] on the meme stock volatility in early 2021 provides some clues on where we might see further rulemaking – and where we likely won’t.

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Getting Ready for 2023: What Companies Can Do Now to Prepare for New Privacy Laws

by Jeremy Feigelson, Avi Gesser, Johanna Skrzypczyk, Michael Bloom, Michael R. Roberts, Tricia Reville, and Kate Saba

The Virginia Consumer Data Protection Act (“VCDPA”) and amendments to the California Consumer Privacy Act (“CCPA”)—enshrined in the California Privacy Rights Act (“CPRA”)—take effect on January 1, 2023.  In addition, the Colorado Privacy Act (“ColoPA”) takes effect on July 1, 2023.  These developments have companies understandably concerned about complying with a patchwork of state laws.

How can companies prepare?

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AMLA 2020: New Penalties for Concealing Transactions Involving Senior Foreign Political Figures

by Barak Cohen, David B. Massey, Jamie A. Schafer, David Sewell, and Paul M. Korol

On New Year’s Day 2021, Congress passed the Anti-Money Laundering Act of 2020 (AMLA 2020). The AMLA 2020 included sweeping reforms aimed at strengthening protections against money laundering, terrorism financing, and other illegal activities.

In this article, we examine two new criminal penalties established by the AMLA 2020. In a nutshell, these penalties prohibit concealing or falsifying information related to ownership or control of funds in transactions involving senior foreign political figures and entities designated to be of primary money laundering concern. This is a potentially significant new tool providing for criminal prosecution targeting a broad swath of intermediaries who may be involved in facilitating transactions involving senior foreign political officials, including brokers, nominees, lawyers and any other person or entity that may communicate with a financial institution in the course of a transaction falling under these provisions.

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