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On October 16, 2018, the Securities and Exchange Commission released a Report of Investigation that cautioned public companies to consider cyber threats when designing and implementing internal accounting controls.  The report was based on an investigation of nine victims of email cyber-fraud schemes for potentially failing to have adequate internal accounting controls, in violation of the Securities Exchange Act of 1934.  The report highlights the need for companies to reassess their controls in light of the current cybersecurity risk environment.  By describing the remedial steps taken by the investigated companies, it further provides guidance about the key areas that companies should consider when assessing their own policies and procedures.
Continue Reading SEC Investigative Report Urges Public Companies to Guard Against Cyber Threats When Implementing Internal Accounting Controls

On Friday, October 12, 2018, during remarks at the NYU School of Law Program on Corporate Compliance and Enforcement Conference on Achieving Effective Compliance, Assistant Attorney General Brian A. Benczkowski of the Department of Justice announced new guidance, issued on October 11, relating to the imposition and selection of corporate compliance monitors in Criminal Division …

Last month, Guatemalan President Jimmy Morales effectively shut down the operation of the UN-operated International Commission against Impunity in Guatemala (called by its Spanish initials, “CICIG”) by declining to renew its mandate past its September 2019 expiration date and by barring the head of CICIG, Iván Velásquez, from re-entering the country.  CICIG, a uniquely independent organ of the United Nations (“U.N.”), was created in 2007 to support and assist Guatemalan institutions in identifying, investigating, and prosecuting public corruption.  Over the past decade, it has investigated nearly 200 public officials, and its efforts led to the prosecution and ultimate resignation of former Guatemalan President, Otto Pérez Molina.[1] 
Continue Reading Anti-Corruption in Guatemala: A Critical Moment for CICIG

On September 27, 2018, in remarks delivered at the 5th Annual Global Investigations Review New York Live Event, Deputy Assistant Attorney General Matthew S. Miner reported on the accomplishments of the Department of Justice (“DOJ”) over the course of the last twelve months.  Importantly, he also discussed recent changes to the DOJ’s policies on prosecution of business organizations and how those changes have been implemented.[1]  Miner highlighted the DOJ’s efforts to incentivize and provide guidance to companies to self-report, cooperate and remediate corporate misconduct while underscoring the importance of robust compliance programs to detect and prevent wrongdoing and to obtain full credit in resolving investigations by the DOJ.
Continue Reading DOJ Remarks Highlight Changes to White Collar Policy

On September 26, 2018, a federal court in the District of Massachusetts found that virtual currencies are a commodity under the Commodity Exchange Act, 7 U.S.C. § 1 et seq, (“CEA”). This marks the second time that a court has accepted the Commodity Futures Trading Commission’s (“CFTC”) position and upheld the agency’s authority to regulate unleveraged and unmargined spot transactions in virtual currency under the agency’s anti-fraud and manipulation enforcement authority.  Most notably, however, the reasoning behind its decision potentially expands the scope of the CFTC’s oversight of the market.
Continue Reading Second District Court Determines Virtual Currencies Are Commodities

On July 31, 2018, in response to a review of the Bribery Act 2010 (the “Bribery Act”) conducted by the UK Government, the Law Society, the City of London Law Society and the Fraud Lawyers Association published a joint response (the “Joint Response”) to the UK Government’s call for evidence on the enforcement and effectiveness of the legislation.[1]
Continue Reading Law Society, CLLS and Fraud Lawyers Association Respond to UK Government Review of the Bribery Act

Over the past year, the U.S. Securities and Exchange Commission (“SEC”) has increasingly scrutinized initial coin offerings (“ICO”) and certain digital assets.  On September 20, 2018, the SEC’s Enforcement Division co-Director, Stephanie Avakian, gave a speech in which she addressed the Division’s approach to dealing with these new forms of tradeable assets.  This speech came only days after the SEC settled its first case charging an unregistered broker-dealer for facilitating the sale of digital tokens from several ICOs since the 2017 DAO Report.  In her speech, Avakian provided three key insights into the Division’s enforcement strategy.
Continue Reading SEC Enforcement Division Co-Director Provides Insight Into Commission’s Approach to ICOs and Cryptocurrencies

On September 14, 2018, a federal judge in the Southern District of New York certified as a class action a securities fraud suit against hedge fund Och-Ziff Capital Management Group LLC (“Och-Ziff”) and two of its executives.[1]  Shortly after the decision certifying the class, the parties informed the court that they had reached an agreement in principle to settle the case, which had gone forward on the basis of allegations that Och-Ziff had failed to make adequate disclosures related to its knowledge of the investigation.
Continue Reading Certification of Securities Class Action Against Och-Ziff Relating to FCPA Violations Highlights Potential Collateral Consequences of FCPA Investigations

On Tuesday, September 11, 2018, Judge Raymond J. Dearie of the Eastern District of New York issued a decision holding that Initial Coin Offerings (“ICO”) may qualify as securities offerings and therefore be subject to the criminal federal securities laws.  This ruling came as two U.S. regulators—the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”)—announced separate actions under securities laws against companies engaged in the cryptocurrency marketplace, including the sale of digital tokens.  As the popularity of cryptocurrencies grows and businesses and entrepreneurs increasingly turn to ICOs to raise capital, these developments may serve as guideposts for how cryptocurrencies and ICOs will be viewed by courts and federal regulators in cases to follow.
Continue Reading Federal Court, SEC, and FINRA Scrutinize Cryptocurrencies and ICOs