On August 26, 2019, New York Governor Andrew Cuomo signed into law legislation extending the statute of limitations for claims brought under the Martin Act from three to six years. The statute reverses a New York Court of Appeals decision holding that Martin Act claims must be brought within three years.
Continue Reading New York States Extends the Statute of Limitations for Claims Brought Under Martin Act to Six Years
Supreme Court Rules in Favor of Longer Time Limits for Non-intervened FCA Actions
On May 13, 2019, the Supreme Court issued its opinion in Cochise Consultancy, Inc. v. United States ex rel. Hunt with respect to the applicable statute of limitations in a FCA action in which the Government has declined to intervene. The FCA sets forth two limitation periods applicable to FCA actions and provides that an action must be brought within the longer of either (i) within 6 years after the date on which the violation occurred; or (ii) within three years of the date when facts material to the right of action are known or reasonably should have been known by a relevant official of the United States. In no event may an action be brought more than 10 years after the date on which the violation was committed. The issues in Cochise Consultancy were whether the second, alternative, limitations period applies to an action in which the government has intervened and whether, if so, the relevant official includes the private relator. These issues are important because, if the longer period applies, a relator can bring an action long after (and more than 3 years after) she learned of the FCA violation.
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DOJ Issues Guidance on Cooperation In False Claims Act Investigations
On May 7, 2019, the Department of Justice issued formal guidance to DOJ’s False Claims Act litigators on the circumstances in which DOJ will grant credit for cooperation during FCA investigations.
The guidance explains the factors that DOJ considers in determining whether to award cooperation credit in FCA investigations and the types of credit available.
SDNY Judge Finds Government “Outsourcing” of Investigation to External Counsel Runs Afoul of Fifth Amendment
On May 2, 2019, the United States District Court for the Southern District of New York issued an important decision delineating the boundaries between conducting a proper internal investigation and acting as an arm of the government.
For the government, the consequences of “outsourcing” an investigation to a company and its counsel could be exclusion
DOJ Guidance on Corporate Compliance Programs: A Checklist for Directors
As discussed in our most recent blog post, on April 30, 2019, the Criminal Division of the U.S. Department of Justice (“DOJ” or “the Department”) announced updated guidance for the Criminal Division’s Evaluation of Corporate Compliance Programs (“the Guidance”). The Guidance is relevant to the exercise of prosecutorial discretion in conducting an investigation of a corporation, determining whether to bring charges, negotiating plea or other agreements, applying sentencing guidelines and appointing monitors.[1] The Guidance focuses on familiar factors: the adoption of a well-designed compliance program that addresses the greatest compliance risks to the company, the effective implementation of the company’s compliance policies and procedures, and the adequacy of the compliance program at the time of any misconduct and the response to that misconduct. The Guidance makes clear that there is no one-size-fits-all compliance program and that primary responsibility for the compliance program will lie with senior and middle management and those in control functions.
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DOJ Updates Guidance for Evaluating Corporate Compliance Programs
On April 30, 2019, the Criminal Division of the U.S. Department of Justice announced updated guidance for the Criminal Division’s Evaluation of Corporate Compliance Programs (“the Guidance”) in charging and resolving criminal cases. This memorandum highlights key updates and discusses the themes present across versions of the Guidance. Overall, this newest version places greater emphasis
New Scrutiny for NDAs in Sexual Harassment Matters
Legal and regulatory scrutiny regarding the use of non-disclosure agreements by companies to resolve allegations of sexual harassment and misconduct continues to increase in the wake of the #MeToo movement. Such scrutiny featured prominently this month in two high-profile sexual harassment matters: the Wynn Resorts investigation and the various legal proceedings following the allegations against Harvey Weinstein. Both in-house and outside counsel for companies with senior executives facing such allegations should take note of these developments, as they call into question whether the use of NDAs could in certain circumstances amount to investigatory obstruction or a violation of ethical obligations.
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Senator Warren Proposes Bill to Hold Corporate Executives Criminally Accountable for Negligent Conduct
On April 3, 2019, Senator (and Democratic Presidential contender) Elizabeth Warren announced proposed legislation—dubbed the “Corporate Executive Accountability Act”—that would effect a dramatic change in white collar criminal law by permitting prosecution of corporate executives for negligent conduct. Under traditional criminal law principles, defendants must typically have at least knowledge with respect to the conduct that constitutes the crime. However, under Senator Warren’s proposed law, executives of large companies could be criminally prosecuted (and fined and/or jailed if convicted) if they are found to have acted negligently in failing to prevent criminal acts committed by the companies they supervise. The bill is unlikely to be enacted, but it nonetheless represents a significant policy indication from a Presidential candidate.
Continue Reading Senator Warren Proposes Bill to Hold Corporate Executives Criminally Accountable for Negligent Conduct
CFTC Issues First Whistleblower Award Originating From Both a Related Action and a Company Outsider
On March 4, 2019, the Commodity Futures Trading Commission (“CFTC”) announced a whistleblower award of over $2 million to an individual—unaffiliated with the company the CFTC charged—for providing expert analysis in conjunction with a related action instituted by another federal regulator. While the Securities and Exchange Commission, which possesses a similar whistleblower award regime,[1] has previously issued awards to multiple claimants for both related actions[2] and to company outsiders,[3] this is the first such award to be granted by the CFTC in either respect.
The award demonstrates the CFTC’s continued commitment to the Whistleblower Program, and to using all available means in conducting enforcement actions. This award also reflects both the CFTC’s willingness to collaborate with other federal regulators and to rely on external sources of expert data analysis and likely reflects the CFTC’s continued expansion of its Whistleblower Program, both in terms of sources of information and awards granted.
Continue Reading CFTC Issues First Whistleblower Award Originating From Both a Related Action and a Company Outsider
DOJ Issues Twelfth Declination Letter Under FCPA Cooperation Policy
On February 15, 2019, the Securities and Exchange Commission (the “SEC”) announced that it had settled—on a no-admit, no-deny basis—with Cognizant Technology Solutions Corporation (“Cognizant”) for alleged violations of the Foreign Corrupt Practices Act (the “FCPA”) involving Cognizant’s former president and chief legal officer.[1] The same day, the Department of Justice (the “DOJ”) indicted the two former executives and the SEC filed a civil complaint seeking permanent injunctions, monetary penalties, and officer-and-director bars against them. The DOJ declined to prosecute Cognizant.[2] The DOJ’s declination was in part based on the fact that Cognizant quickly and voluntarily self-reported the conduct, and, as a result of that self-report, the DOJ was able to identify culpable individuals. This settlement reflects the DOJ demonstrating its continued commitment to its FCPA Corporate Enforcement Policy, under which the DOJ has committed to extending significant cooperation credit, up to and including declinations, to companies that provide meaningful assistance to further DOJ investigations. The resolution also reflects the DOJ’s “anti-piling on” policy in action, as the DOJ declination recognized the “adequacy of remedies such as civil or regulatory enforcement actions,” namely Cognizant’s resolution with the SEC, as a factor in declining to prosecute.[3]
Continue Reading DOJ Issues Twelfth Declination Letter Under FCPA Cooperation Policy