OCC’s New and Revised Sections of Policies and Procedures Manual Relating to Enforcement Actions Suggest Continued Heightened Interest in Actions Against Individuals
Historically, the Office of the Comptroller of the Currency (the “OCC”) has applied a single set of internal policies and procedures to enforcement actions brought against individuals (institution-affiliated parties (“IAPs”)) and institutions (national banks, federal savings associations, and federal branches and agencies of foreign banks (collectively, “banks”)). On November 13, the OCC issued a new section to its Policies and Procedures Manual (“PPM”) specific to enforcement actions against IAPs (the “IAP PPM”) and simultaneously updated the existing sections for Bank Enforcement Actions and Related Matters (the “Bank PPM”)and for Civil Money Penalties (“CMPs”) (the “CMP PPM”). The new IAP PPM generally breaks no new ground, and most changes to the Bank PPM and CMP PPM align those two sections with, and reflect the issuance of, the IAP PPM. There are, however, several notable additions and modifications to the new and revised sections that serve to improve the clarity and transparency of the OCC’s enforcement action process.
Beyond those distinctions, the issuance of a standalone IAP PPM suggests a continued, if not increased, focus by the OCC on actions against IAPs going forward, and is consistent with the broader theme, evidenced over the last several years, of regulatory and law enforcement focus on holding individuals accountable in cases of financial institution wrongdoing. The new OCC IAP PPM suggests a continual focus on holding individuals accountable for corporate misconduct in the financial industry. Continue reading →
On September 25, 2018, Deputy Attorney General Rod Rosenstein announced the rollout of the “Justice Manual” – a revised and renamed version of the U.S. Attorneys’ Manual, a long-used reference for Department of Justice (DOJ) policies and procedures. The most significant changes appear to be confined to anticipated codifications of well-publicized new policies (although one such policy was, puzzlingly, omitted). But some other changes have not been previously addressed by Department leadership, and may provide insight into the Department’s mindset in light of recent events.
The recent rollout was the culmination of a yearlong review and overhaul of the Manual, the first in more than 20 years. This initiative to streamline DOJ policies and revamp the U.S. Attorneys’ Manual was announced by Deputy AG Rosenstein last October in a speech at NYU. Rosenstein explained in his initial announcement that the project would work to identify redundancies, clarify ambiguities, eliminate surplus language, and update the Manual to reflect current law and DOJ practice, including through the incorporation of outstanding policy memoranda. According to DOJ’s recent announcement, the name change from “U.S. Attorneys’ Manual” to “Justice Manual” not only reflects this significant undertaking by DOJ employees, but also emphasizes the applicability of the Manual to the entire Department, beyond the U.S. Attorneys’ Offices.Continue reading →
This post reviews the New York State Office of the Attorney General’s (the “OAG”) Virtual Markets Integrity Initiative Report (the “Report”), which was published on September 18, 2018. The publication of the OAG’s 42-page Report brings to a close its six-month fact-finding inquiry of several virtual currency platforms. The OAG sent out detailed letters and questionnaires to a number of virtual currency platforms seeking information from the platforms across a wide-range of issues, including trading operations, fees charged to customers, the existence of robust policies and procedures, and the use of risk controls. Continue reading →
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 →
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. 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. 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 →
Last week, the White House, reacting to the Supreme Court’s June 21, 2018 decision in Lucia v. SEC, issued an Executive Orderexempting Administrative Law Judges, or ALJs, from the competitive civil service. This post considers what the order might mean for the Securities and Exchange Commission and other agencies that use ALJs to adjudicate enforcement cases. Lucia held that the SEC’s ALJs are “officers” subject to the Constitution’s Appointments Clause, which means they have to be appointed by (as relevant here) the head of the agency – that is, the SEC’s Commissioners. Previously ALJs were hired through an examination-based process handled by the Office of Personnel Management, or OPM (effectively the human resources department of the federal government). OPM typically presented an agency with a list of eligible candidates ranked on the basis of the examination, among other things, and the agency selected an ALJ from among the top three candidates on the list. Continue reading →
In R (AL) v Serious Fraud Office, 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 →
Last week, the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) released an updated Cybersecurity Framework (PDF: 1,038 KB) 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 →
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 →
by Omar Qureshi, Iskander Fernandez, and Amy Wilkinson
Last month saw the first contested prosecution of a corporation for failure to prevent bribery under section 7 of the U.K. Bribery Act 2010 (the “Bribery Act”), providing the first insights into how such a case may be argued and determined. The defendant company Skansen Interiors Limited (“SIL”) was found guilty of failing to prevent bribery by one of its employees, who paid £10,000 (and offered, and tried to secure payment of a further £29,000) to another in order to secure two contracts for SIL. The individuals involved had already pleaded guilty to substantive bribery offences.
A jury found SIL did not have adequate procedures designed to prevent bribery. While the judge did not give her views on what may constitute adequate procedures and why SIL’s fell short, the jury’s verdict indicates that even small companies may need to have documented and targeted procedures in place, specifically addressing bribery prevention, if they are to succeed in proving an adequate procedures defence. Continue reading →