On June 13, 2018, in its latest decision in a long-running litigation, the U.S. District Court for the District of Columbia considered the applicability of certain exemptions under the Freedom of Information Act (“FOIA”) to documents sought by journalists relating to the actions of the independent compliance monitor that Siemens AG was required to retain under the terms of its 2008 plea agreement for violations of the Foreign Corrupt Practices Act (the “FCPA”).  Broadly speaking, although the court concluded that portions of the documents that related to Siemens’ business operations and the DOJ’s analysis of the monitor’s activities were exempted from disclosure, the court also required the DOJ to produce other portions of those materials and to reevaluate, based on the court’s decision, whether additional materials had to be disclosed.  The decision, and the lengthy litigation over the application of FOIA to these materials, highlight the complexity of identifying the boundaries of the FOIA protection applicable to the typically sensitive and confidential information companies provide to compliance monitors and the risk that such information later will have to be disclosed once it is in the hands of the government. 
Continue Reading Recent District Court Decision on Applicability of FOIA to Siemens FCPA Monitorship Documents Provides Guidance on Scope of Possible Disclosures

Last week, the Supreme Court ruled in Lucia v. SEC that SEC Administrative Law Judges are “officers” for the purposes of the Constitution’s Appointments Clause.  Not only does the decision require the rehearing of the petitioner’s case, but it leaves unanswered questions for the SEC and other agencies moving forward.  Indeed, another trip up to

On June 1, 2018, the U.S. Securities and Exchange Commission (“SEC”) issued a press release announcing settlements for $75,000 each with 13 private fund advisors for violating their disclosure obligations under Rule 204(b)-1 under the Investment Advisers Act of 1940.  Rule 204(b)-1, adopted to increase transparency in the U.S. financial system and identify risks to financial stability, implemented provisions of Title IV of the Dodd-Frank Act and requires that SEC-registered investment advisers with at least $150 million in private fund assets under management file Form PF with the SEC.
Continue Reading SEC Settles With Private Funds For Rule 204(b)-1 Disclosure Violations

One year ago, the U.S. Supreme Court ruled in Kokesh v. SEC[1] that the U.S. Securities and Exchange Commission’s disgorgement remedy constitutes a “penalty,” and is therefore subject to the five-year statute of limitations in 28 U.S.C. § 2462. As a result, the SEC can no longer seek disgorgement of ill-gotten gains older than five years. The SEC’s Enforcement Division has traditionally relied heavily on the agency’s virtually unfettered disgorgement power in its settled and litigated cases. As expected, Kokesh has forced the division to trim its disgorgement demands in certain cases and to abandon it outright in others. To date, however, the most dire predictions of Kokesh’s impact — that it would lead to the wholesale elimination of the SEC’s disgorgement power and place strict limitations upon other types of so-called “equitable” remedies — have not come to pass. That said, many of the issues commentators raised in the immediate aftermath of Kokesh have not yet percolated up through the appellate courts, and significant uncertainty concerning its full impact remains. What is clear, however, is that, absent congressional intervention, the SEC will face challenges in obtaining the full measure of ill-gotten gains in long-running, resource-intensive investigations.
Continue Reading Kokesh and Its Impact on SEC Enforcement, a Year Later

On May 30, 2018, the Federal Reserve Board approved a 373-page notice of proposed rulemaking that represents a first step toward simplifying and clarifying the Volcker Rule.

The other four agencies responsible for implementation are expected to approve the notice in the coming days. The linked alert memorandum provides a brief summary of our headline

Earlier this week, CFTC Chairman J. Christopher Giancarlo announced the signing of a Memorandum of Understanding (MOU) intended to enable greater enforcement coordination and information sharing between the CFTC and state securities agencies.  The MOU formalizes a process for exchange of information and coordination between the CFTC, which has jurisdiction over the commodities and swaps markets, and state securities regulators and enforcers.  It continues the trend of increasing prominence of the CFTC’s enforcement division, and further reinforces connections with state authorities to promote cross-jurisdictional cooperation and coordinated enforcement action.  While the impact of the MOU remains to be seen, it is hoped that it will facilitate more coordinated and efficient enforcement proceedings in cases involving the CFTC.  At the same time, the provisions for information sharing reinforce the prudence of assuming that enforcement authorities speak to each other.  Therefore, companies facing possible investigations should ensure information provided to all relevant authorities is accurate and complete, and in appropriate cases may consider actively involving state securities agencies early on in order to potentially facilitate a later joint resolution.
Continue Reading CFTC Chairman Announces Formal Cooperation Agreement With State Securities Agencies

On May 9, Deputy Attorney General Rod J. Rosenstein provided remarks at the American Conference Institute’s 20th Anniversary New York Conference on the Foreign Corrupt Practices Act and announced a new policy designed to promote coordination and limit the imposition of multiple penalties on a company for the same conduct, which he referred to as

The 2018 Consolidated Appropriations Act, which was signed by President Donald Trump on March 23, 2018, included a little-debated provision that revised portions of the 1986 Stored Communications Act (“SCA”) to permit the government to access through the use of a warrant or subpoena stored communications held abroad by providers of electronic communications services that

This year’s annual meeting of China’s legislature, the National People’s Congress (“NPC”), brought forth a series of consequential changes that continue to push forward President Xi Jinping’s anti-corruption campaign while consolidating the President’s power through new party appointments and the elimination of the two-term limit, and streamlining government bureaucracies through the restructuring of several government agencies.  Among the key changes was the creation of a new anti-corruption “super” agency, vested with broad powers to investigate and recommend for prosecution prosecute public-sector corruption throughout the country.
Continue Reading China’s New Anti-Corruption Authority And Related Developments

Joon Kim, former Acting U.S. Attorney for the Southern District of New York, has rejoined the firm’s New York office as a partner in the enforcement and litigation group.

From March 2017 to January 2018, Joon served as the Acting U.S. Attorney for the Southern District of New York. As the most senior federal law enforcement officer in the district, he oversaw all criminal and civil litigation conducted on behalf of the United States and supervised the work of approximately 220 Assistant U.S. Attorneys handling a wide range of cases, including securities fraud, cybercrime, domestic and foreign corruption, money laundering, tax litigation, terrorism, racketeering, and Bank Secrecy Act and sanctions violations, as well as civil rights, civil enforcement, and environmental matters. Before becoming Acting U.S. Attorney, he served for four years in various leadership positions in the office, including as the Deputy U.S. Attorney, Chief of the Criminal Division, and Chief Counsel to the U.S. Attorney.
Continue Reading Joon Kim Returns to Cleary Gottlieb