Corporate misconduct allegations often result in investigations by multiple agencies, including foreign, federal, state, and local authorities. Without proper coordination, companies risk being hit with duplicative penalties for the same misconduct. Duplicative corporate penalties can be avoided, but coordinating a corporate resolution with multiple authorities is hard to navigate.
Within the United States, federal prosecutors often have overlapping jurisdiction with other federal criminal and civil prosecutors, federal and state regulators, and local prosecutors. In international investigations, federal prosecutors also have to cooperate with foreign authorities with overlapping jurisdiction. All of these players can have a legitimate interest in protecting the public from economic crimes. Regulatory competition, however, often leads government authorities to want to take the lead over other authorities. Other times, government authorities jump from the sidelines onto the field of play when a corporate resolution is near and refuse to leave the field without a share of the penalties. A coordinated resolution is difficult to achieve in either case. In the end, the overlapping jurisdiction and regulatory competition can either lead to (1) each authority “piling on” their share of penalties or (2) a coordinated resolution that identifies the collective harm caused by the company’s misconduct, the appropriate penalties for that harm, and the fair allocation of the penalties among the interested government players. Continue reading →
On April 18, 2018, the U.S. Supreme Court heard oral argument in Lagos v. United States. On appeal from the United States Court of Appeals for the Fifth Circuit, Lagos presents the important issue of whether a corporate victim’s professional costs—such as investigatory and legal expenses—incurred as a result of a criminal defendant’s offense conduct must be reimbursed under the Mandatory Victims Restitution Act (“MVRA”).
The issue has been subject to a recurring circuit split and Lagos now offers the Supreme Court an opportunity to resolve the conflict. Moreover, as noted by the certiorari petition, the Court’s decision will necessarily have implications “every time corporations engage in internal investigations or audits at the suspicion of wrongdoing.”Continue reading →
Last week, the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) released an updated Cybersecurity Framework that revises NIST’s baseline recommendations for the design of cybersecurity risk management programs. In announcing its release, Commerce Secretary Wilbur Ross described the updated Framework as “a must do for all CEOs” and recommended that “every company” adopt the Framework as its “first line of defense.” As with the prior version, the updated NIST Framework provides a useful tool to guide and benchmark company approaches to cybersecurity risk and will impact how regulators evaluate cybersecurity programs and incident responses across sectors. Continue reading →
Over the past several years, there have been many attempts to garner greater transparency of the government’s use of nonprosecution agreements and monitorships. On three occasions the party attempting to obtain a ruling that would reign in the government’s authority over these matters has won at the district court level. In each of these instances, however, the court of appeals reversed. Continue reading →
But for other more salacious political concerns, the biggest story of the last couple weeks likely would have been Mark Zuckerberg’s testimony before Congress. Zuckerberg spent two days answering hundreds of questions from lawmakers. Much of the questioning was concerned with Facebook’s protection, or alleged lack thereof, of its users’ privacy. The testimony, however, once again raises questions about how companies that engage in repeated instances of misconduct should be sanctioned. Continue reading →
On 19 March 2018, Singapore passed legislation introducing the concept of the deferred prosecution agreement (“DPA”) to the jurisdiction for the first time. Under the new laws, corporations (but not individuals) facing prosecution for offences of corruption, money laundering or receipt of stolen property may attempt to negotiate the terms of a DPA with prosecuting authorities, under which they would avoid prosecution, in return for adherence to various conditions imposed upon them, for a set period of time.
By introducing the DPA as an enforcement tool, Singapore joins the ranks of the United States, Brazil, the United Kingdom and France, which form the vanguard of an increasingly consistent global approach to corporate criminal resolutions. Australia and Canada are also both currently evaluating whether to introduce similar legislation. Continue reading →
Defense lawyers all around the world have heard loud and clear that prosecutors and police agencies have announced a new age of international cooperation. Prosecutors from one country have been posted to the offices of another. Agents from nations around the world now sit at desks next to each other in central locations like London. Global resolutions of big cases are being announced by enforcers in multiple jurisdictions. One of the main subject-matter focuses of these joint cases has been anti-corruption – namely the Foreign Corrupt Practices Act in the United States and the Bribery Act in the United Kingdom. Continue reading →
Court Defers to the FDIC and the Bank Secrecy Act/Anti-Money Laundering Examination Manual in Rejecting a Rare Challenge by a Bank to an Agency-Imposed Cease-and-Desist Order
On March 12, in California Pacific Bank v. FDIC, the U.S. Court of Appeals for the Ninth Circuit refused to set aside a cease-and-desist order imposed by the Federal Deposit Insurance Corporation (the “FDIC”) on California Pacific Bank (“California Pacific”). The order requires the bank to comply with, and correct identified violations of, the Bank Secrecy Act (the “BSA”) by improving the bank’s BSA compliance program and Suspicious Activity Report (“SAR”) filing procedures. In reaching its decision, the court deferred to the Bank Secrecy Act/Anti-Money Laundering Examination Manual, which is published by the Federal Financial Institutions Examination Council (the “FFIEC Manual”), as a definitive statement of the regulatory requirements for satisfying BSA program obligations. This deference along with an agency-friendly standard of review confirm the broad discretion that the FDIC and other federal banking agencies have in determining violations of the BSA and requiring related remedial actions. Continue reading →
On March 5, 2018, French prosecutors published two Judicial Conventions of Public Interest (“CJIPs” or “French DPAs”) approved by the President of the High Court of Nanterre on February 23. The CJIPs, entered into between prosecutors and two sub-contractors to state-owned utility EDF, SAS Kaefer Wanner (“KW”) and SAS SET Environnement (“SET”), allege that these companies had ceded to solicitations to pay bribes to an EDF procurement manager, and that this behaviour amounted to corruption by them of an individual charged with a public service. KW and SET admitted these facts and their legal qualification, and agreed to pay financial penalties of €2,710,000 and €800,000 respectively and compensation to EDF of €30,000 each. In addition, they agreed to submit to monitoring by the French Anti-corruption Agency (“AFA”) for, respectively, 18 and 24 months.
The KW and SET CJIPs are the first to be concluded in respect of corruption offences. Helpfully, they provide (1) detail on the financial incentive of entering into a French DPA for companies with potential exposure for corruption-related offences in France, (2) clarification that co-operation and remediation can significantly reduce the financial penalty, as well as (3) the first examples of monitorships to be supervised by the AFA. However, the crucial question of how a company can qualify for a French DPA remains largely unanswered. Continue reading →
Late last week, the Department of Justice’s Criminal Division announced at an ABA white-collar conference that it has begun using the FCPA Corporate Enforcement Policy as “nonbinding guidance” in other areas of white-collar enforcement beyond the FCPA. As a result, absent aggravating factors, DOJ may more frequently decline to prosecute companies that promptly self-disclose misconduct, fully cooperate with DOJ’s investigation, remediate in a complete and timely fashion, and disgorge any ill-gotten gains. As a first example of this approach, the officials pointed to DOJ’s recent decision to decline charges against Barclays PLC, after the bank agreed to pay back $12.9 million in wrongful profits, following individual charges arising out of a foreign exchange front-running scheme. Continue reading →