Within the past few months, the Department of Justice (the “DOJ”) has released a series of memos that indicate a shift in its policy related to the treatment of agency guidance documents.  This memorandum seeks to explain this policy shift and analyze its potential impact in the area of False Claims Act (“FCA”) enforcement. Continue Reading Shift in Policy on Guidance Documents Suggests Change in DOJ Attitude Towards FCA Enforcement

The European Commission’s proposal for a Regulation on mutual recognition of asset freeze and confiscation orders (the “Proposed Regulation”),[1] introduced in December 2016, aims at improving the cross-border enforcement of asset freeze and confiscation orders within the EU.  It is part of a broader set of measures aimed at combating financial crimes, which includes a proposed Directive on countering money laundering through criminal law[2] and a proposed revised Regulation on controls on cash entering or leaving the Union.[3]

In January 2018, the Civil Liberties, Justice and Home Affairs Committee of the European Parliament (the “EP Committee”) issued a report on the Proposed Regulation, which proposes certain amendments to the Proposed Regulation aimed at taking into consideration fundamental rights guaranteed by the case law of the European courts, such as the right to property, due process, effective remedy and access to justice.  In particular, in line with requests made by several EU Member States, the EP Committee proposes to include in the Proposed Regulation a provision for the non-recognition of orders based on non-compliance with fundamental rights. Continue Reading Striking the Balance – Mutual Recognition of Freezing and Confiscation Orders Within the EU and Fundamental Rights

Internal investigations and public enforcement actions often pose legal issues involving multiple practice areas and jurisdictions.

In Italy, internal investigations may concern criminal, corporate, contract, data protection and labor law issues.

In the past, internal investigations in Italy tended to be mainly “reactive,” responding to public enforcement activities. The challenge in these investigations was balancing complying with disclosure obligations in relation to public enforcement authorities with volunteering confidential or disproportionate information. Continue Reading Internal Investigations and Public Enforcement: Italy at a Glance

On March 1, 2018, U.S. Department of Justice (“DOJ” or the “Department”) officials announced that the Criminal Division is expanding the applicability of a policy that encourages corporate self-reporting and cooperation for violations of the Foreign Corrupt Practices Act (“FCPA”) to reach other types of non-corruption criminal cases.  Speaking at the American Bar Association’s National Institute on White Collar Crime in San Diego, John Cronan, Acting Assistant Attorney General for the DOJ Criminal Division, and Benjamin Singer, Chief of the DOJ Securities and Financial Fraud Unit, told attendees that the Criminal Division will apply the FCPA Corporate Enforcement Policy (the “FCPA Enforcement Policy”) as nonbinding guidance in cases other than FCPA cases.

The FCPA Enforcement Policy, which was adopted in November 2017, provided additional guidelines regarding the credit the Department will provide to companies that self‑report FCPA violations and then cooperate with the resulting investigation – including a presumption that self-reporting companies will not be criminally charged.  Expanding use of the FCPA Enforcement Policy signals the Department’s perception of its success and a further effort by DOJ to encourage companies to self-report and cooperate.  It also provides important guidance for companies faced with a variety of different types of investigations regarding the treatment they can expect, and tools to advocate before the Department for more favorable resolutions. Continue Reading DOJ Announces Expansion of Approach Encouraging Self Reporting and Cooperation

Companies operating in Italy should take note of an important change in Italian law introducing more comprehensive regulations on whistleblowing procedures in the public and non-financial private sector. Among other relevant aspects, Law No. 179/2017, which entered into force on December 29, 2017, expands existing whistleblowing protections to the private sector, requiring companies that have adopted formal compliance programs pursuant to Legislative Decree No. 231/2001 (“Decree 231”) to also implement a formal whistleblower program.

Prior to Law No. 179/2017, only financial services and banking firms were required to implement formal whistleblower programs, pursuant to Italian legislation implementing European Directive 23/2013 (CRDIV).  In addition, Law No. 190/2012, also called the “Anticorruption Law,” provided protection against retaliation for civil servants who reported the commission of a wrongdoing.  Many companies operating in Italy have adopted formal compliance programs pursuant to Decree 231, incentivized by a provision that affords a defense against certain types of criminal offences for firms with such a program. Law No. 179/2017 requires such companies to integrate a formal whistleblower policy as part of their compliance programs. Continue Reading The New Italian Law on Whistleblowing Procedures and Its Impact on Compliance Programs

On Wednesday, the Supreme Court resolved a question that had created significant uncertainty concerning the scope of the anti-retaliation protections provided by Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).

In Digital Realty Trust, Inc. v. Somers, the U.S. Supreme Court unanimously rejected the expansive interpretation of Dodd-Frank’s anti-retaliatory protections established by relevant Securities and Exchange Commission (“SEC”) regulations and previously accepted by the Second and Ninth Circuits. In so doing, the Court held that employees who report potential securities law violations internally but not to the SEC fall outside the definition of a “whistleblower” under Dodd-Frank and accordingly do not benefit from its anti-retaliation protections. Instead, the Court held that the plain text and purpose of Dodd-Frank make clear that its anti-retaliatory protections – and not just Dodd-Frank’s whistleblower bounty incentives – apply only to whistleblowers who report securities law violations to the SEC.

The decision provides an additional incentive for whistleblowers to report to the SEC, and limits some remedies that might otherwise be available to whistleblowers who face retaliation. However, the decision should not generally cause companies to change their whistleblower policies and practices.

Please click here to read the full alert memorandum.

The U.S. Securities and Exchange Commission (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) released its 2018 National Exam Program Examination Priorities.  The 2018 priorities highlight areas of emphasis for OCIE, including cryptocurrencies, cybersecurity, anti-money laundering, and issues affecting retail investors (especially seniors and those saving for retirement).  While the core areas of focus and many of the priorities for 2018 are similar to those from 2017, there is a clear shift in emphasis that we attribute to the change in leadership at the SEC.  Some specific changes also likely stem from OCIE’s 2017 examination findings, recent market developments, and trends in enforcement.  Continue Reading Lessons for Broker-Dealers and Investment Advisers from the SEC Office of Compliance Inspections and Examinations 2018 Priorities

Investigations into potential violations of U.S. and non-U.S. securities laws are often resolved by a settlement requiring the business to make one or more large settlement payments.  We have seen settlements paid to the DOJ, the SEC, other U.S. and non-U.S. regulators, and private plaintiffs.  An important question is whether the payment will be deductible for tax purposes.  Since 1969, the U.S. tax law has denied a deduction for “any fine or similar penalty paid to a government for the violation of any law.”[i]  This limitation was significantly changed by the U.S. tax reform law enacted in December of 2017 (known as the Tax Cuts & Jobs Act or “TCJA”).  These changes, which had been proposed in Congress over 30 times since 2003 but not enacted until now, respond in part to disputes the IRS has had with taxpayers in the past.  Continue Reading Settlement Payments Under the New Tax Reform Law

2017 was a year of transition and change in the world of cross-border investigations. In the U.S., the first year of the Trump administration brought questions about enforcement priorities and approach. In the U.K., the debate continued over whether lawyers’ work in furtherance of internal investigations enjoys privilege protection. Globally, new enforcement authorities stepped forward, while companies worked to incorporate new guidance and enforcement priorities into their corporate compliance programs.

Looking back, we focus on five key themes from 2017:

a) corporate resolutions;
b) developments in legal privilege;
c) corporate responsibility;
d) cross-border inter-agency cooperation; and
e) cross-border data transfers.

We also look to the future to address what we consider to be some of the key characteristics of the current cross-border investigations landscape that may influence significant developments in this field in 2018.

Please click here to read the full alert memorandum.

On January 31, 2018, the U.S. Court of Appeals for the D.C. Circuit upheld a federal statute curbing the President’s power to fire the director of the Consumer Financial Protection Bureau (“CFPB”), a financial regulator with the mandate to enforce federal consumer protection laws.[1]  In a 7-3 en banc decision, the Court held that it is constitutional for the CFPB director to be appointed to a five-year term, removable by the President only for “inefficiency, neglect of duty, or malfeasance in office.”[2]  At the same time, however, the Court affirmed the vacature of a $109 million sanction levied by former CFPB director Richard Cordray against PHH Corporation (“PHH”), a large mortgage lender.[3]

As a result of the Court’s decision, the enforcement action will be remanded back to the CFPB, now under the leadership of Trump Administration-appointee Mick Mulvaney.  The remand comes at a time of substantial uncertainty as to the CFPB’s enforcement prerogatives.  In a leaked email to the entire CFPB staff on January 23, 2018, Mulvaney indicated that the CFPB would no longer “push the envelope” when it comes to enforcing consumer protection laws, and would instead be reviewing “everything that [it] do[es], from investigations to lawsuits and everything in between.”[4]  Indeed, the CFPB has since issued several Requests for Information to encourage public comment as it reviews its policies and processes related to enforcement and civil investigative demands.[5]  Continue Reading D.C. Circuit Rules CFPB’s Structure Constitutional but Vacates $109 Million Enforcement Award