On March 5, 2021, the Securities and Exchange Commission (“SEC”) filed a lawsuit in federal court against AT&T, Inc. (“AT&T”) for violating Regulation FD, and also charged three of AT&T’s Investor Relations executives with aiding and abetting this violation.[1] Reg FD (which stands for “Fair Disclosure”) prohibits companies from selectively disclosing material nonpublic information to certain categories of individuals, including analysts and investors, and is intended to promote full and fair disclosure of such information in order to ensure that all investors have equal access to potential market-moving information.[2]
Continue Reading SEC Brings Rare Litigated Enforcement Action for Violation of Regulation FD
Colombian Corporate Regulatory Authority Expands Application of Compliance and Transparency Program Guidelines
The Colombian Corporations Commission (La Superintendencia de Sociedades) (“Superintendencia”) has issued Resolution 100-006261, which requires the overwhelming majority of companies that are supervised by the Superintendencia and engage in international transactions to adopt and implement a compliance program – called a Business Transparency and Ethics program – by April 30, 2021. The program must be designed to prevent and detect violations of anti-bribery laws, in accordance with 2016 guidance.
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Priorities, Trends and Developments in Enforcement and Compliance
The tumultuous events of 2020, including the ongoing pandemic and the election of a new U.S. President, will have direct and lasting impacts on white-collar and regulatory enforcement in the years to come. As we enter 2021, we anticipate that white-collar and regulatory enforcement will be more active under the Biden administration, as policy priorities shift toward financial and corporate fraud, as well as ESG issues, environmental and social justice, more generally. At the same time, we expect the already-visible pandemic and recession-related enforcement trends to continue, with a sustained focus on financial statement and accounting fraud. Finally, we expect that the increased reliance on whistleblowers will continue (and potentially grow) in 2021.
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SEC Brings Enforcement Action Against Global Brokerage Company, Finding False and Misleading Statements In Connection With Non-GAAP Financial Measures
On September 30, 2020, amidst a blizzard of cases filed at the end of the Securities and Exchange Commission’s fiscal year, the SEC announced a settlement with BGC Partners, Inc. (“BGC”) involving allegedly misleading disclosures concerning how it calculated a key non-GAAP financial measure (“NGFM”).[1] This settlement is the latest in a string of enforcement actions relating to what the SEC views as improper uses of NGFMs. In advance of year-end reporting, this action is a useful reminder to companies to carefully consider the SEC guidance and recent enforcement actions related to NGFMs. At least 95% of all Fortune 500 companies publish NGFMs, and the SEC has indicated that it will be reviewing NGFMs with particular scrutiny this year-end in light of the challenges of reporting on performance during the COVID-19 pandemic.
Continue Reading SEC Brings Enforcement Action Against Global Brokerage Company, Finding False and Misleading Statements In Connection With Non-GAAP Financial Measures
DOJ Updates Guidance Regarding Corporate Compliance Programs
On June 1, 2020, the Criminal Division of the U.S. Department of Justice (the “Department”) released revisions to its guidance regarding the Evaluation of Corporate Compliance Programs, which the Department uses in assessing the “adequacy and effectiveness” of a company’s compliance program in connection with any decision to charge or resolve a criminal investigation, including
Law Enforcement Priorities and Practicalities During the COVID-19 Pandemic
As the COVID-19 pandemic continues to rapidly unfold, with breathtaking effects on everyday life barely imaginable just weeks ago, enforcement agencies have responded with pronouncements prioritizing investigations into COVID-19-related frauds and have proceeded with some significant non-COVID-19 law enforcement actions likely planned before the full impact of the pandemic could have been predicted. At the same time, enforcement agencies are having to respond to the same practical challenges and constraints that the rest of society and other large organizations around the world face. They, like the rest of us, are facing severe travel restrictions, learning to work remotely, and dealing with colleagues and family members who are sick from the virus. Over the coming weeks and months, enforcement agencies will be managing the COVID-19-focused enforcement priorities and moving forward with their existing matters, while they deal with the practical realities and uncertainties presented by the pandemic.
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Supreme Court Upholds Dual-Sovereignty Doctrine Allowing Parallel Criminal Prosecutions At Home and Abroad
On June 17, 2019, in a decision interpreting the Fifth Amendment’s Double Jeopardy Clause, the United States Supreme Court in Gamble v. United States upheld the doctrine of dual-sovereignty.[1] In doing so, the Court confirmed that one sovereign may prosecute a defendant under its laws even if another sovereign has already prosecuted the defendant for the same conduct, notwithstanding the Fifth Amendment’s prohibition against multiple prosecutions for the “same offence.”[2] While Gamble does not represent a shift in the law, the Court’s opinion has implications for companies facing parallel investigations by the Department of Justice (“DOJ”) and other prosecutors, whether state or foreign authorities.
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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.
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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