Tag Archives: Matthew C. Solomon

U.S. District Court Tosses FIFA Bribery Convictions, Finding Honest Services Statute Does Not Reach Foreign Commercial Bribery

 by Victor L. Hou, Joon H. Kim, Jonathan S. Kolodner, Rahul Mukhi, Hannah Rogge, Lisa Vicens, David A. Last, Matthew C. Solomon, and Jennifer Kennedy Park.

Photos of the authors

Top left to right: Victor L. Hou, Joon H. Kim, Jonathan S. Kolodner, Rahul Mukhi, and Hannah Rogge.
Bottom left to right: Lisa Vicens, David A. Last, Matthew C. Solomon, and Jennifer Kennedy Park.
(Photos courtesy of Cleary Gottlieb Steen & Hamilton LLP).

On September 1, 2023, U.S. District Judge Pamela K. Chen of the Eastern District of New York granted a judgment of acquittal in the latest FIFA bribery prosecution, holding that the federal honest services statute, 18 U.S.C. § 1346, does not cover foreign commercial bribery in light of recent Supreme Court precedent.

The decision comes after a jury convicted two defendants of honest services wire fraud and money laundering arising from the U.S. Department of Justice (“DOJ”)’s multi-year pursuit of alleged corruption in FIFA and the international soccer media industry.  Judge Chen based her ruling on the Supreme Court’s recent decisions in Ciminelli v. United States and Percoco v. United States, which cabined the reach of honest services mail and wire fraud in domestic corruption prosecutions.  Applying the principles articulated by these two decisions—which were issued by the Supreme Court two months after the verdict in the latest FIFA trial—Judge Chen held that honest services did not cover the foreign commercial bribery that was the object of the charged conspiracy.  The DOJ may appeal, and U.S. prosecutors may still reach similar conduct under different federal statutes, like the Foreign Corrupt Practices Act (“FCPA”), the federal programs bribery statute, anti-money laundering laws, and the Travel Act, albeit with some limitations.  However, the decision continues a trend of U.S. courts rejecting an overly broad reading of federal fraud and corruption statutes. 

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Accelerated Pace and Increased Regulatory Expectations in Enforcement and Compliance Investigations

by Joon H. Kim, Lisa Vicens, Matthew C. Solomon, Samuel Levander, and Andres Felipe Saenz

Photos of the authors

From left to right: Joon H. Kim, Lisa Vicens, Matthew C. Solomon, Samuel Levander, and Andres Felipe Saenz

The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) ramped up their enforcement efforts in 2022, often in highly coordinated actions, including with other regulatory agencies such as the Commodity Futures Trading Commission (CFTC), Department of the Treasury’s Office of Foreign Assets Control (OFAC) and Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The DOJ also announced major policy changes regarding corporate criminal enforcement and took steps to convey its seriousness in pursuing actions against individual wrongdoers, recidivists and companies that fail to maintain effective compliance programs. The SEC was particularly active, setting its record for civil penalties and continuing its enforcement focus on insider trading, digital assets and Environment, Social and Governance (ESG) disclosures.

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Priorities, Trends and Developments in Enforcement and Compliance

by Joon H. Kim, Matthew C. Solomon, Victor L. Hou, Lisa Vicens, and Samuel Levander

2021 was a year of transition for white-collar criminal and regulatory enforcement. As courthouses reopened and trials resumed, newly-installed heads of law enforcement authorities looked to reset priorities and ramp up enforcement in the first year of the Biden administration. Policy priorities shifted toward enforcement against sophisticated financial institutions, corporates and their executives, in contrast to the previous administration’s focus on retail investors and schemes with identifiable victims. While the shift at the SEC was more immediately visible with major new enforcement priorities, investigations and resolutions, the DOJ adopted policies and announced new initiatives that will likely only find expression in 2022.

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Headwinds and Shifting Priorities: Beyond the Numbers in the SEC Enforcement Division’s 2019 Annual Report

by Robin M. Bergen, Matthew C. Solomon, Alex Janghorbani, Jenny Paul and Samuel H. Chang

On November 6, 2019, the SEC’s Division of Enforcement released its annual report (the “Report”) describing its enforcement actions from fiscal year 2019.[1] Like prior reports, the Report quantifies the Division’s activities in a number of ways and discusses priority areas going forward. The Report also brings front-and-center certain challenges the Division has faced—including difficulties navigating recent Supreme Court decisions that call into question the constitutionality of the SEC’s administrative proceedings and the agency’s ability to obtain disgorgement, as well as the impact of the government shut-down and general resource constraints.

Notwithstanding these challenges, the Report somewhat surprisingly cites a 7% increase from last year in so-called “standalone” enforcement actions[2]—the true metric of the Division’s enforcement footprint because they exclude actions such as issuer delistings that entail little to no investigation. Although the Division brought cases in some areas where it had not been active for some time (including the first standalone Regulation FD case since 2013) and several of the settlements highlighted in the Report plainly resulted from substantial investigations, it is difficult to draw definitive conclusions regarding regulatory intensity from numbers alone in light of the Division’s ongoing initiatives and shifting enforcement priorities. To take one example, actions against investment advisers and investment companies in FY 2019 nearly doubled from the year before, but this increase was largely attributable to 95 settlements that resulted from self-reports in the SEC’s Share Class Selection Disclosure initiative. Continue reading →

Supreme Court Grants Certiorari on the Constitutionality of SEC ALJ Appointments– What This Means for the Securities Industry

by Matthew C. Solomon, Alexander Janghorbani, and Richard R. Cipolla

On January 12, 2018, the Supreme Court granted a writ of certiorari in Raymond J. Lucia Cos., Inc. v. SEC, No. 17 130,[1] a case raising a key constitutional issue relating to the manner in which the U.S. Securities and Exchange Commission’s (SEC or Commission) appoints its administrative law judges (ALJs).  The Court will decide “[w]hether administrative law judges of the [SEC] are Officers of the United States within the meaning of the Appointments Clause.”  The answer to this question matters because if SEC ALJs are “officers,” then they should have been appointed by the Commission itself instead of hired through traditional government channels—and the Commission only exercised its ALJ appointment authority in late-2017.  Although the question is limited to SEC ALJs, any decision could also impact ALJs at other agencies government-wide.

At this point, both the petitioner and the Solicitor General (SG) actually agree that ALJs are officers.  In its response to the cert petition raising this issue in Lucia, the SG, in an about-face, had abandoned the SEC’s long-held defense of the manner in which it appoints its ALJs.  Up until now, in an attempt to fend off an asserted constitutional defect in their AJL’s method of appointment, the SEC has argued (with SG approval) that ALJs are “mere employees” of the SEC, and not “officers.”  The day after the SG dropped this position—and with no warning in its briefing—the Commission took the step to appoint the current ALJs.[2]   Continue reading →