Category Archives: Deterrence

Second Circuit Reinstates FIFA Bribery Convictions, Reviving Honest Services Fraud Prosecutions for Foreign Commercial Bribery

by David A. Last, Rahul Mukhi, Victor L. Hou, Lisa Vicens, Matthew M. Yelovich, and Sarah Pyun

From left to right: David A. Last, Rahul Mukhi, Victor L. Hou, Lisa Vicens, Matthew M. Yelovich, and Sarah Pyun (photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)

In a significant decision with broad implications for companies and individuals operating internationally, the U.S. Court of Appeals for the Second Circuit has reversed the acquittal of a former media executive and a sports marketing company in the long-running FIFA bribery investigation.[1] The ruling reinstates jury convictions for honest services wire fraud and money laundering conspiracy, holding that the federal honest services fraud statute, 18 U.S.C. § 1346, can apply to foreign commercial bribery schemes.[2]

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European Union, United Kingdom Competition and Markets Authority Impose More Than €549 Million in Fines on Major Car Manufacturers for 15-Year Cartel Involving Vehicle Recycling

by Jonathan J. Rusch

Photo courtesy of the author

On April 1, the European Commission (EC) and the United Kingdom Competition and Markets Authority (CMA) simultaneously announced that they had imposed fines collectively totaling more than €549 million against a total of 17 leading car manufacturers and two trade groups, the European Automobiles Manufacturers’ Association (ACEA) and the Society of Motor Manufacturers & Traders (SMMT), for conducting a more than 15-year cartel pertaining to “end-of-life” vehicle recycling.[1]

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DOJ Continues to Modernize its Criminal Antitrust Enforcement Strategy

by Richard A. Powers

(Photo courtesy of the author)

Over the past few years, the Justice Department has been hard at work on a comprehensive update to the way it detects, investigates, and prosecutes price-fixing cartels. Several recent announcements, including at last week’s ABA White Collar Conference, preview the DOJ Antitrust Division’s next steps in this generational shift—the goals of which are to refine disclosure incentives, promote individual accountability, and obtain trial convictions.

First, on March 7, 2024, Deputy Attorney General Lisa Monaco announced the DOJ is kicking off a 90-day whistleblower “policy sprint”; the finish line is a new program to complement existing regulators’ programs, rewarding qualifying whistleblowers for bringing non-public, previously unknown misconduct to the DOJ’s attention. The Antitrust Division has long sought to encourage individual self-reporting as a complement to its corporate VSD policy, so expect that this initiative will aim to improve that incentive structure. Next, the DOJ updated the Justice Manual to incorporate the M&A safe harbor policy that it announced last fall. Notably for antitrust practitioners, the JM updates included changes to the Antitrust Division’s leniency policy that provide much-needed clarification on how companies that detect potential collusion at an M&A target can avoid inheriting those liabilities by promptly reporting to DOJ. Third, senior Antitrust Division officials continue to emphasize that they are focused on developing investigations through affirmative investigative techniques, such as wiretaps and whistleblowers.

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Paying Criminal Whistleblowers: DOJ Announces A Program to Pay For Tips, and the SFO Is Considering Doing So Too

by Joshua A. Naftalis, Matt Getz, and Tracey Dovaston

From left to right: Joshua A. Naftalis, Matt Getz, and Tracey Dovaston. (Photos courtesy of Pallas Partners LLP).

In the past two weeks, the U.S. Department of Justice (DOJ) and the U.K. Serious Fraud Office (SFO) each made announcements about paying financial bounties to whistleblowers. On March 7, 2024, U.S. Deputy Attorney General Lisa Monaco announced a new DOJ whistleblower program that will compensate individual whistleblowers for reporting corporate or financial misconduct previously unknown to DOJ. This announcement followed a February 13, 2024 speech by SFO Director Nick Ephgrave, who said that he supported the idea of paying whistleblowers.

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White-Collar and Regulatory Enforcement: What Mattered in 2023 and What to Expect in 2024

by John F. Savarese, Ralph M. Levene, Wayne M. Carlin, David B. Anders, Sarah K. Eddy, Randall W. Jackson, and Kevin S. Schwartz

Top left to right: John F. Savarese, Ralph M. Levene, Wayne M. Carlin, and David B. Anders.
Bottom left to right: Sarah K. Eddy, Randall W. Jackson, and Kevin S. Schwartz. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

This past year was yet another notable and intensely active one across the entire range of white-collar criminal and regulatory enforcement areas. We heard continued tough talk from law enforcement authorities, especially concerning the government’s desire to bring more enforcement actions against individuals and on the need to keep ramping up corporate fines and penalties. The government largely lived up to its talking points about increasing the numbers of individual prosecutions and proceedings, particularly with respect to senior executives in the cryptoasset industry. But there were some notable stumbles. The most striking example of this was DOJ’s failure to secure convictions in cases where it attempted to extend criminal antitrust enforcement in unprecedented areas, such as no-poach employment agreements and against certain vertical arrangements—neither of which has historically been viewed as involving per se violations of the federal antitrust laws. And, as in years past, many state attorneys general remained active throughout 2023, using broad state consumer-protection statutes to bring blockbuster cases across a wide array of industries, from ridesharing and vaping to opioids and consumer technology offerings.

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SDNY Whistleblower Pilot Program Incentivizes Self-Disclosure and Cooperation

by Helen V. Cantwell, Andrew J. Ceresney, Andrew M. Levine, David A. O’Neil, Winston M. Paes, Jane Shvets, Bruce E. Yannett, Douglas S. Zolkind, Erich O. Grosz, and Rebecca Maria Urquiola

Top left to right: Helen V. Cantwell, Andrew J. Ceresney, Andrew M. Levine, David A. O’Neil, and Winston M. Paes.
Bottom left to right: Jane Shvets, Bruce E. Yannett, Douglas S. Zolkind, Erich O. Grosz, and Rebecca Maria Urquiola. (Photos courtesy of Debevoise & Plimpton LLP)

On Wednesday, January 10, 2024, the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) launched the SDNY Whistleblower Pilot Program (the “Program”).[1] The Program seeks to incentivize individuals to report criminal wrongdoing—including corporate control failures, state and local bribery, and fraudulent dealings involving public funds—before SDNY learns of the conduct and to fully cooperate with any resulting investigations and prosecutions. U.S. Attorney Damian Williams encouraged individuals “to come clean, cooperate, and get on the right side of the law,” cautioning “[c]all us before we call you.”[2]

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Recent Developments in Switzerland’s Anti-Corruption and Anti-Money Laundering Regime

by Jonathan Rusch

Photo courtesy of the author

For some time, Switzerland has generally ranked highly in perceptual surveys of corruption.[1] But while some may believe that “generally speaking, Switzerland has a comprehensive anti-corruption and anti-money laundering regulatory regime”[2], that regime has not kept pace with a number of other countries. Indeed, a 2021 report by the Council of Europe’s Group of States against Corruption (GRECO) stated that since the 2017 GRECO report on Switzerland, Switzerland had satisfactorily addressed only five out of the twelve recommendations contained in a 2017 GRECO report.[3]

Since then, however, Switzerland has moved forward on several fronts to bolster its anti-corruption and anti-money laundering (AML) regime. Three recent developments indicate that progress. First, on August 30, the Swiss Federal Council (the governing body of the Swiss government[4]) launched the consultation procedure on a bill to strengthen the country’s AML framework, including the introduction of a beneficial ownership registry.[5] Second, on September 28, the Swiss Attorney General filed an indictment against former Uzbek government official and prolific bribe-taker Gulnara Karimova and a co-conspirator for participation in a criminal organization, money laundering, and related charges.[6] Third, on December 6, the Swiss Attorney General filed an indictment against a leading global commodities trading company, Trafigura Beheer BV (Trafigura), and three individuals for bribery in connection with Trafigura’s activities in the Angolan petroleum industry.[7] This post will summarize and comment on these developments.

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Hackers Turned Whistleblowers: SEC Cybersecurity Rules Weaponized Over Ransom Threat

by Andrew J. Ceresney, Charu A. Chandrasekhar, Luke Dembosky, Avi Gesser, Matthew E. Kaplan, Erez Liebermann, Benjamin R. Pedersen, Steven J. Slutzky, Jonathan R. Tuttle, Matt Kelly, and Kelly Donoghue

Top left to right: Andrew J. Ceresney, Charu A. Chandrasekhar, Luke Dembosky, Avi Gesser, Matthew E. Kaplan, and Erez Liebermann
Bottom left to right: Benjamin R. Pedersen, Steven J. Slutzky, Jonathan R. Tuttle, Matt Kelly, and Kelly Donoghue (Photos courtesy of Debevoise & Plimpton LLP)

On November 7, 2023, the profilic ransomware group AlphV (a/k/a “BlackCat”) reportedly breached software company MeridianLink’s information systems, exfiltrated data and demanded payment in exchange for not publicly releasing the stolen data. While this type of cybersecurity incident has become increasingly common, the threat actor’s next move was less predictable. AlphV filed a whistleblower tip with the U.S. Securities and Exchange Commission (the “SEC”) against its victim for failing to publicly disclose the cybersecurity incident. AlphV wrote in its complaint[1]:

We want to bring to your attention a concerning issue regarding MeridianLink’s compliance with the recently adopted cybersecurity incident disclosure rules. It has come to our attention that MeridianLink, in light of a significant breach compromising customer data and operational information, has failed to file the requisite disclosure under Item 1.05 of Form 8-K within the stipulated four business days, as mandated by the new SEC rules.

As we have previously reported, the SEC adopted final rules mandating disclosure of cybersecurity risk, strategy and governance, as well as material cybersecurity incidents. This includes new Item 1.05 of Form 8-K, which, beginning December 18, will require registrants to disclose certain information about a material cybersecurity incident within four business days of determining that a cybersecurity incident it has experienced is material. Though AlphV jumped the gun on the applicability of new Item 1.05, its familiarity with, and exploitation of their target’s public disclosure obligations is a further escalation in a steadily increasing trend of pressure tactics by leading ransom groups.

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Remarks of Enforcement Director Ian McGinley at the New York University School of Law Program on Corporate Compliance and Enforcement: “The Right Touch: Updated Guidance on Penalties, Monitors, and Admissions”

Editor’s Note: On October 17, 2023, the NYU Law Program on Corporate Compliance and Enforcement (PCCE) hosted Ian McGinley, the Director of Enforcement for the Commodity Futures Trading Commission (CFTC) to announce updated enforcement guidance to CFTC staff on penalties, monitors, and admissions. Director McGinley’s remarks were followed by a fireside chat and moderated Q&A with questions from the audience, and later by a moderated panel of former CFTC enforcement directors and senior enforcement counsel. The updated staff guidance is available here.

by Ian McGinley

Photos of the authors Thank you for that introduction, Professor Arlen. It is an honor to make this announcement as part of NYU’s Program on Corporate Compliance and Enforcement, one of the marquee programs in the world on these topics. I’m also delighted to be back at NYU Law School, my alma mater. As a student, I frequently attended the incredible events in Lipton Hall, often sitting in the back row. So, it’s quite a thrill to move from the nosebleeds to the podium.

Since I joined the CFTC as the Director of Enforcement, I’ve had the pleasure of getting to know a group of people whose reputation preceded it. From outside the CFTC, my observation had always been that the Division—under the leadership of numerous former Directors that are here tonight—worked aggressively to protect the public and ensure the integrity of markets.

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Seven Steps to Mitigate Hazing Risks

by Helen V. Cantwell, Mary Beth Hogan, Arian June, Daniel Alford, Omid Golmohammadi, and Michael Compton McGregor

Top left to right: Helen V. Cantwell, Mary Beth Hogan, and Arian June. Bottom right to left: Daniel Alford, Omid Golmohammadi, and Michael Compton McGregor. (Photos courtesy of Debevoise & Plimpton LLP)

Hazing and abuse in athletics at academic institutions have reached a boiling point recently, with high-profile allegations levied at top universities. These incidents are not only painful for those students personally affected, but they can also result in intense media coverage, reputational harm, and legal actions.

As recent events have shown, it is imperative for academic institutions to have a plan for both preventing and addressing hazing. The best approach is to be proactive, as no institution is above scrutiny and most, if not all, institutions have room for improvement. In order to help mitigate potential legal, financial and reputational risks, administrators and board trustees at these institutions should consider taking the following steps:

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