Category Archives: Corporate Investigations

Are U.K. Courts Pushing Back Against DOJ’s Global Reach?

by Evan Norris and Alma M. Mozetic

On July 31, 2018, the High Court of England and Wales denied the U.S. Justice Department’s request for the extradition of Stuart Scott, a British foreign exchange trader indicted in 2016 as part of the DOJ Fraud Section’s multi-year effort to investigate and prosecute foreign currency market manipulation.  The decision in Scott v. Government of the United States of America marks the second time in 2018 that DOJ has lost an extradition fight in London.  The Department has reportedly indicated that it will appeal.  If the decision stands, Scott will join a handful of U.S. court cases that have the potential to impact DOJ’s ability to reach across the globe to pursue foreign nationals for violations of the FCPA and other financial fraud statutes. Continue reading

CFTC Announces Two Significant Awards By Whistleblower Program

by Breon S. Peace, Nowell D. Bamberger, and Patrick C. Swiber

On July 12 and 16, 2018, the U.S. Commodity Futures Trading Commission (“CFTC”) announced two awards to whistleblowers, one its largest-ever award, approximately $30 million, and another its first award to a whistleblower living in a foreign country.[1]  These awards—along with recent proposed changes meant to bolster the Securities and Exchange Commission’s (“SEC” or “Commission”) own whistleblower regime—demonstrate that such programs likely will continue to be significant parts of the enforcement programs of both agencies and necessarily help shape their enforcement agendas in the coming years.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) authorized the CFTC to pay awards of between 10 and 30 percent to whistleblowers who voluntarily provide original information to the CFTC leading to the successful enforcement of an action resulting in monetary sanctions exceeding $1 million.[2]  Following the introduction of implementing rules, the CFTC’s program became effective in October 2011.  Over the next six-and-a-half years, the CFTC has paid whistleblower bounties on only four prior occasions, with awards ranging from $50,000 to $10 million.  The $30 million award announced last week, thus, reflects a significant increase.  This week’s award to a foreign whistleblower also represents another first for the CFTC’s program and reflects the global scope of the program. Continue reading

Supreme Court Rules That Costs of Internal Investigation Are Not Recoverable As Restitution under the Mandatory Victims Restitution Act of 1996

by Jessica S. Carey, Roberto Finzi, Michele Hirshman, Lorin L. Reisner, Richard C. Tarlowe, Christopher D. Frey, Nairuby L. Beckles, and David Giller

On May 29, 2018, in Lagos v. United States, the Supreme Court unanimously held that the Mandatory Victims Restitution Act of 1996 (the “MVRA”)[1] does not require a criminal defendant to pay the costs and attorneys’ fees associated with an internal investigation conducted by a corporate victim.[2] The Court left open the question of whether the MVRA extends to the costs of an internal investigation that is conducted at the government’s request or invitation. Continue reading

Banking Regulators’ Examination Authority Does Not Override Attorney-Client Privilege

by Cleary Gottlieb Steen & Hamilton LLP, Covington & Burling LLP, DavisPolk, Debevoise & Plimpton, Simpson Thacher & Bartlett LLP, Sullivan & Cromwell LLP, and Wilmer Cutler Pickering Hale and Dorr LLP

MEMORANDUM[1]

RE: Bank Regulators’ Legal Authority to Compel the Production of Material That Is Protected by Attorney-Client Privilege

I. Introduction

The attorney-client privilege (the “Privilege”) is deeply enshrined in the common law.[2] In protecting the confidentiality of communications between lawyers and their clients, the Privilege both bars the admission of such communications as evidence in legal proceedings and insulates the communications from compelled disclosure by government authorities. Accordingly, absent an explicit exception, neither courts nor government authorities may require a client or the client’s lawyer to produce or reveal privileged information. Continue reading

English High Court Considers Status of Internal Investigation Interview Notes

by Karolos Seeger, Andrew Lee, and Robin Lööf

In R (AL) v Serious Fraud Office,[1] the English High Court considered the SFO’s obligations to individuals prosecuted following the deferred prosecution agreement (“DPA”) in July 2016 with a company anonymised as “XYZ Ltd”. The Court’s decision is likely to force the SFO to adopt a much more aggressive approach in relation to company counsel’s notes of interviews conducted during a company’s internal investigation. In particular, when those interview notes are potentially relevant to the defences of individuals being prosecuted, this judgment is likely to lead to the SFO putting further pressure on companies to produce the notes, through court proceedings if necessary. We analyse these and other issues covered by the judgment below. Continue reading

Supreme Court Hears Argument to Determine Whether Mandatory Federal Restitution Statute Covers Professional Costs Incurred by Corporate Victims

by Joon H. Kim, Rahul Mukhi, Rusty Feldman, and Samantha Del Duca

On April 18, 2018, the U.S. Supreme Court heard oral argument in Lagos v. United States.[1]  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”).[2] 

The issue has been subject to a recurring circuit split and Lagos now offers the Supreme Court an opportunity to resolve the conflict.[3]  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.”[4]  Continue reading

Singapore Introduces Deferred Prosecution Agreements

by Zachary S. Brez, Brigham Q. Cannon, Mark Filip, Asheesh Goel, Cori A. Lable, Kim B. Nemirow, Abdus Samad Pardesi, Richard Sharpe, William J. Stuckwisch, Marcus Thompson, Satnam Tumani, and Jodi Wu

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[1], Brazil[2], the United Kingdom[3] and France,[4] 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

The Clash of Legal Cultures in the Brave New World of International Law Enforcement

by Peter B. Pope, Nancy C. Jacobson, and Kelly Hagedorn

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

Congress Passes CLOUD Act Governing Cross-Border Law Enforcement Access to Data

by David Bitkower and Natalie Orpett

On March 23, 2018, Congress passed the Clarifying Lawful Overseas Use of Data Act (the CLOUD Act), amending key aspects of U.S. surveillance law and providing a framework for cross-border data access for law enforcement purposes.  The Act addresses two problems that have been the subject of heated debate for the past five years.  First, by amending the Stored Communications Act, 18 U.S.C. §§ 2701 et seq. (SCA), the CLOUD Act clarifies that American law enforcement authorities can compel providers of electronic communication services — such as major email service providers and social media networks — to produce data stored outside the United States.  Second, the Act establishes new rules facilitating foreign law enforcement access to data stored inside the United States.  In short, this new legislation impacts any provider that may receive either U.S. or foreign orders to produce data in furtherance of criminal investigations. Continue reading

Recent Decision Finds Waiver Based on “Oral Downloads” to the SEC

by Brad S. Karp, Jessica S. Carey, Andrew J. Ehrlich, Roberto Finzi, Michael E. Gertzman, Michele HirshmanDaniel J. Kramer, Lorin L. Reisner, Richard A. Rosen, Audra J. Soloway, Richard C. Tarlowe, Andrew D. Reich, and Joseph Delich

A federal magistrate judge in the Southern District of Florida recently ruled that a law firm had waived work product protection over notes and memoranda of witness interviews when it provided “oral downloads” of those interviews to the Securities and Exchange Commission (“SEC”).

In a December 5, 2017 opinion, SEC Herrera, No. 17-cv-20301 (S.D. Fla. Dec. 5, 2017), Magistrate Judge Jonathan Goodman indicated that he was “not convinced” that “there is a meaningful distinction between the actual production of a witness interview note or memo and providing the same or similar information orally.”[1]

The opinion serves as an important reminder of the risks of waiver—and the need to take steps to minimize those risks—when disclosing information to a government agency. Continue reading