Tag Archives: John F. Savarese

Former Federal Prosecutors React to Sam Bankman-Fried’s Arrest

The NYU School of Law Program on Corporate Compliance and Enforcement (PCCE) is following the collapse of FTX and the civil and criminal enforcement actions arising from FTX’s and its founder’s alleged misconduct. In this post, several former federal prosecutors offer their initial reactions to the arrest of Sam Bankman-Fried (SBF) and the criminal case brought by the U.S. Attorney’s Office for the Southern District of New York (SDNY).

The photo shows the headshots of the authors of the post

From Left to Right: John Savarese, David Anders, Seetha Ramachandran, Jaimie Nawaday, and Eugene Ingoglia

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DOJ Clarifies and Refines Its Policies for Corporate Criminal Enforcement

Editor’s Note: On September 15, 2022, the Program on Corporate Compliance and Enforcement (PCCE) at New York University School of Law hosted Deputy Attorney General Lisa O. Monaco while she delivered a speech detailing significant changes to the Department of Justice’s corporate prosecution policies. The speech and accompanying policy memo are available here. Over the coming days and weeks, PCCE will be publishing reactions to the new DOJ policies by practitioners, scholars, and compliance officers.

by John F. Savarese, Ralph M. Levene, David B. Anders, and Daniel H. Rosenblum

In an important policy speech late last week, Deputy Attorney General Lisa Monaco acknowledged “the data showing [an] overall decline in corporate criminal prosecutions over the last decade.” The interesting question prompted by that data, of course, is the one no one seems to know the answer to: Is this decline in corporate prosecutions the result of efforts by well-managed companies to respond to the oft-repeated admonition to set the right tone at the top and invest extensively in compliance programs, training and personnel such that the number of corporate prosecutions actually should be coming down? Or is it because there is some lack of adequate prosecutorial effort or some other obstacle standing in the way of achieving the right level of corporate prosecutions? In the absence of any hard empirical data on that crucial question, DAG Monaco opted for the latter explanation, thus repeating the common DOJ mantra that it “need[s] to do more and move faster.”

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Second Circuit Reverses LIBOR Convictions

by John F. Savarese, David B. Anders, Sarah K. Eddy, and Remy Grosbard

In a careful but blunt opinion (PDF: 3.3 MB) yesterday, the Second Circuit reversed the convictions of two Deutsche Bank derivatives traders charged with wire fraud for manipulating LIBOR. The decision underscores that not all conduct deemed unfair is criminal, and represents the latest blow to a theory of criminal liability that DOJ has invoked to extract billions of dollars in penalties from financial institutions—all before the theory’s viability could be tested in the courts.

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Cybersecurity Oversight and Defense – A Board and Management Imperative

by John F. Savarese, Sarah K. Eddy, Sabastian V. Niles, and Jeohn Salone Favors

This past weekend, criminal ransomware cyberattacks drove the shutdown of one of America’s largest pipelines for refined gasoline, diesel fuel, and jet fuel as a precautionary means of containing the impact of the breach, highlighting the vulnerability of the nation’s energy infrastructure. Recent reports indicate that more than two dozen other company victims across a range of industries were targeted by these ransomware attacks, with worse damage blocked thanks to close and rapid coordination between federal authorities and private sector partners to identify and swiftly shut down servers being used in the attack. Earlier this month, a California- based regional hospital operator had to take healthcare IT systems offline following a cyberattack, significantly disrupting care, forcing medical personnel to use back-up paper records and raising concerns about vulnerabilities in the healthcare system as the nation continues to battle the Covid-19 pandemic.

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White-Collar and Regulatory Enforcement: What Mattered in 2020 and What to Expect in 2021

by John F. Savarese, Ralph M. Levene, Wayne M. Carlin, David B. Anders, Sarah K. Eddy, Lauren M. Kofke, Carol Miller, and Tamara Livshiz

As we write this memorandum, a new administration is forming in Washington, with new leadership teams being nominated at DOJ, SEC, CFTC and other regulatory and law-enforcement agencies — thus prompting the question of what these changes may portend for white-collar and regulatory enforcement priorities, trends and policies. Having watched many administrations come and go over the years, our sense is that, in this area at least, continuity tends to prevail over disruption. That said, we can offer the following educated guesses on what to expect going forward:

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Government Wins Significant Spoofing Conviction

by John F. Savarese, David B. Anders, and Louis J. Barash

Late last week, the government won a jury verdict in a major “spoofing” trial. United States v. Vorley, No. 18 CR 00035 (N.D. Ill. Sept. 25, 2020). The jury found that Vorley and his co-defendant violated the federal mail fraud statute by placing orders that they did not intend to execute, in the hope that such orders would move the market and enable them to execute other profitable orders. Continue reading →

Supreme Court Limits SEC Disgorgement Remedy

by John F. Savarese, Wayne M. Carlin, and David B. Anders

In an 8-1 decision issued yesterday in Liu v. SEC (PDF: 193.50 KB), the Supreme Court upheld the SEC’s authority to obtain disgorgement from securities law violators, but also indicated some limitations on the scope of the remedy. Some observers had raised questions about the continued viability of the disgorgement remedy after the Court’s 2017 decision in Kokesh v. SEC (PDF: 2112 KB). Today’s decision makes clear that SEC disgorgement is alive and well. Nevertheless, in light of some comments in today’s opinion, the SEC will likely need to rein in some of its prior practices.

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Remaining Attuned to Internal Whistleblower Reports

by John F. Savarese, Ralph M. Levene, and Wayne M. Carlin

The SEC’s whistleblower program has long been a centerpiece of its enforcement efforts. Over the past seven weeks alone, the Commission has announced eight whistleblower awards totaling more than $56 million, including a single award on April 16 of $27 million, the largest of the year and the sixth largest award overall since the inception of the program. Because the coronavirus pandemic has understandably dominated the news over that same period, this striking accumulation of whistleblower awards has received little press attention. But we think these recent awards provide a telling and significant reminder of the critical importance, even in the current challenging environment, of keeping employee hotlines open and of responding to internal compliance reports promptly and effectively.
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White Collar and Regulatory Enforcement in the Era of COVID-19

by John F. Savarese, Ralph M. Levene, Wayne M. Carlin, and David B. Anders

When we issued our memorandum (PDF: 231KB) on “what to expect in 2020” concerning white collar and regulatory enforcement developments, we certainly did not expect that just two months later, 41 states would effectively be locked down due to the coronavirus pandemic, many courts would be closed, and governments would be intensely focused on adopting measures responsive to the global health crisis. What we’re now seeing in the white collar/regulatory world is that, instead of pushing forward at their usual pace, prosecutors and regulators are adjusting to a new reality in which live testimony is impractical, courts are on pause and most everyone is working from home. It is impossible to predict when the normal cadence of such investigations will resume, but inquiries of all kinds will undoubtedly return to their normal pace and intensity when the crisis abates. Continue reading →

Controlling Material, Non-Public Information During the Coronavirus Pandemic

by John F. Savarese, Wayne M. Carlin, and David B. Anders

In an unusual statement issued earlier this week, the Co-Directors of the SEC’s
Division of Enforcement, Stephanie Avakian and Steven Peikin, reminded market
participants of the critical importance of maintaining proper control over the
dissemination of material, non-public information, adhering to the restrictions
imposed by Regulation FD on selective disclosures, and assuring compliance with
policies and procedures designed to prevent insider trading and other conduct that
would undermine market integrity. They stressed in particular that, as companies and
markets cope with the outbreak of COVID-19 and the continuing coronavirus
pandemic, corporate insiders are likely learning new material, non-public information
“that may hold an even greater value than under normal circumstances.”
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