Federal Reserve Establishes a New Rating System for the Supervision of Large Financial Institutions
On November 2, the Board of Governors of the Federal Reserve System (the “FRB”) issued a final rule (the “Final Rule”) that establishes a new rating system for the supervision of large financial institutions (“LFIs”). The LFI rating system applies to all bank holding companies with total consolidated assets of $100 billion or more; all non-insurance, non-commercial savings and loan holding companies with total consolidated assets of $100 billion or more; and all U.S. intermediate holding companies of foreign banking organizations with total consolidated assets of $50 billion or more. The LFI rating system is designed to align with the FRB’s existing supervisory program for LFIs, enhance the clarity and consistency of supervisory assessments, and provide greater transparency regarding the consequences of a given rating. For LFIs, the new rating system replaces the RFI/C(D) rating system currently used by the FRB for holding companies of all sizes.Continue reading →
In an important speech, Deputy Assistant Attorney General Matthew Miner of the Department of Justice’s Criminal Division announced on Thursday that DOJ will “look to” the principles of the FCPA Corporate Enforcement Policy (PDF: 50.6 KB) in evaluating “other types of potential wrongdoing, not just FCPA violations” that are uncovered in connection with mergers and acquisitions. As a result, when an acquiring company identifies misconduct through pre-transaction due diligence or post-transaction integration, and then self-reports the relevant conduct, DOJ is now more likely to decline to prosecute if the company fully cooperates, remediates in a complete and timely fashion, and disgorges any ill-gotten gains. Continue reading →
On August 24, 2018, the Second Circuit handed down its long-awaited decision in United States v. Hoskins,  addressing the question of whether a non-resident foreign national can be held liable for violating the FCPA under a conspiracy theory, where the foreign national is not an officer, director, employee, shareholder or agent of a U.S. issuer or domestic concern and has not committed an act in furtherance of an FCPA violation while in the U.S. In a word, the court held that the answer is “no,” concluding that the government may not “expand the extraterritorial reach of the FCPA by recourse to the conspiracy and complicity statutes.” The court added, however, that the same foreign national could be liable as a co-conspirator if he acted as an agent of a primary violator.
While the ruling is undoubtedly an important curb on some potential sources of liability for foreign entities and individuals, the availability of agent liability may limit the practical impact of the decision for many non-resident foreign nationals. Unfortunately, the decision did not address the scope of agent liability under the FCPA, leaving that issue open. As a result, further development in this and subsequent cases — especially with respect to the meaning of “agency” under the FCPA — will necessarily be required before the full impact of the Hoskins ruling becomes clear. However, the decision is likely good news for foreign companies that enter into joint ventures with U.S. companies and some other classes of potential defendants, as it may be harder for the U.S. government to charge them with FCPA violations. Continue reading →
During a speech delivered on July 25, 2018 at the American Conference Institute 9th Global Forum on Anti-Corruption Compliance in High Risk Markets, Deputy Assistant Attorney General Matthew Miner, who oversees the U.S. Department of Justice’s (“DOJ”) Fraud Section (which includes the DOJ’s Foreign Corrupt Practices Act (“FCPA”) Unit), announced that successor companies that identify potential FCPA violations in connection with a merger or acquisition and disclose that conduct to the DOJ will be treated in conformance with the DOJ’s FCPA Corporate Enforcement Policy (the “Policy”). 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 (PDF: 51 KB) 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 (PDF: 1,743 KB) 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 →
In a significant development for companies relating to the Foreign Corrupt Practices Act (FCPA), in late November the U.S. Department of Justice (DOJ) announced a new FCPA Corporate Enforcement Policy (the Enforcement Policy).
The Enforcement Policy is designed to encourage companies to voluntarily disclose misconduct by providing greater transparency concerning the amount of credit the DOJ will give to companies that self-report, fully cooperate and appropriately remediate misconduct. Notably, in announcing the Enforcement Policy, the DOJ highlighted the continued critical role that anti-corruption compliance programs play in its evaluation of eligibility under the Enforcement Policy. Continue reading →
On November 29, 2017, Deputy Attorney General Rod J. Rosenstein announced that the US Department of Justice (DOJ) has implemented a permanent, revised version of the Foreign Corrupt Practices Act (FCPA) Pilot Program. The Pilot Program — which was launched as a one-year trial in April 2016 by then-Assistant Attorney General for the Criminal Division (and now Latham partner) Leslie Caldwell — was extended indefinitely in April 2017 to allow DOJ to evaluate the program’s efficacy. Rosenstein announced that the enhanced policy — now called the FCPA Corporate Enforcement Policy (PDF: 51 KB) (FCPA Policy) — will be incorporated into the United States Attorneys’ Manual (USAM). Like its predecessor, the FCPA Policy aims to encourage companies to make timely and voluntary disclosures of wrongdoing under the FCPA, while providing additional concrete incentives rewarding corporations for cooperation.
This policy announcement is likely the first of several DOJ policy changes and/or enhancements under the new administration. As detailed in Latham’s October 2017 Client Alert (PDF: 93.58 KB), Rosenstein recently announced that DOJ was reviewing a wide range of existing corporate enforcement policies, including the Pilot Program, DOJ’s policy on “Individual Accountability for Corporate Wrongdoing” (the Yates Memo), and other DOJ policies and memoranda — with the intention of ultimately incorporating the revised policies into the USAM. Continue reading →
The following is the second post in a series of three on recent SEC enforcement. The full report can be accessed here. A note of caution to the readers: the SEC does not share enforcement data. All three posts are based on a database of SEC enforcement actions I have put together along with several research assistants, covering the period between 2007 and 2017. The data was collected by hand, and reviewed at least once. Entries were compared with SEC releases and reports, but the chance of error remains.
I. Enforcement Against Entities
The first post observed that enforcement against individual defendants remained largely unchanged in the second half of the 2017 fiscal year. Enforcement against entities, on the other hand, has changed quite substantially. Fewer entities were targeted in actions brought in the second half of FY 2017: 34% of defendants (165 of 488) in standalone actions in the second half were entities, compared with 47% (201 of 427) in the first half of the year. Continue reading →
In December 2016 the French government finally passed the so-called “Loi Sapin II” in order to bolster its ability to penalize overseas bribery. Its unstated but clear goal was to achieve some degree of parity with US efforts in this area, which had led to a number of highly publicized cases where well-known French companies had paid fines totaling well over $2 billion to the US treasury to resolve criminal matters that could well have been resolved in France. A key provision of the new law is a procedure that permits a negotiated outcome, similar in concept to a US Deferred Prosecution Agreement (“DPA”), that avoids a criminal conviction. On November 14, 2017, the first such agreement was announced by the National Financial Prosecutor of France. While many details of the deal will not be known until the release of the court’s opinion approving it, which may be available as early as the end of November, the fact of the outcome and its known parameters are very significant. Continue reading →
Good afternoon, and thank you for inviting me to speak today. Before I begin, let me give the required disclaimer that the views I express here today are my own and do not necessarily represent the views of the Commission or its staff.
I am honored to be here to mark with you the 40th anniversary of the enactment of the Foreign Corrupt Practices Act (FCPA) and the 20th year of the OECD anti-bribery convention. I want to thank New York University’s Program on Corporate Compliance and Enforcement for hosting this event. Programs like this one provide important forums for dialogue on critical enforcement issues, and I am pleased that this gathering has assembled so many familiar and distinguished practitioners in FCPA enforcement, our colleagues in domestic and international law enforcement, and academics who are interested in this space. Collaboration and coordination is integral to the Division of Enforcement’s efforts to combat bribery through the enforcement of the FCPA, and the OECD has played a pivotal role in fostering global efforts against bribery and corruption.