United States

Subscribe to United States

On May 29, 2018, the U.S. Supreme Court issued an unanimous opinion in Lagos v. United States. Lagos presented the issue of whether costs incurred during and as a result of a corporate victim’s investigation (rather than a governmental investigation) must be reimbursed by a criminal defendant under the Mandatory Victims Restitution Act (“MVRA”). Resolving a circuit split, the Court narrowly held that restitution under the MVRA “does not cover the costs of a private investigation” commenced by a corporate victim on its own initiative and not at the Government’s invitation or request.

The Court’s decision is notable for rejecting the Government’s broad interpretation of the MVRA and for recognizing the “practical fact” that such a broad interpretation would invite “significant administrative burdens.” But the opinion is also notable for what it does not decide. The Court’s opinion expressly leaves unaddressed the question of whether professional costs incurred during a private investigation performed at the Government’s request would be covered by the MVRA.

Please click here to read the full alert memorandum.

On June 4, 2018, the U.S. Department of Justice announced that Société Générale S.A. (“Société Générale”) and its wholly-owned subsidiary, SGA Société Générale Acceptance, N.V. (“SGA”), have agreed to pay over $1 billion in total penalties to U.S. and French authorities in connection with bribe payments to Libyan officials and manipulation of the London Interbank Offered Rate (“LIBOR”). SGA pled guilty on June 5 to conspiracy to violate the U.S. Foreign Corrupt Practices Act’s (“FCPA”) anti-bribery provisions. Société Générale entered into a three-year deferred prosecution agreement relating to charges of conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to transmit false commodities reports. As the first coordinated resolution by U.S. and French authorities of a foreign bribery case, the case highlights the increasing potential legal exposure for multinationals based on violations of the FCPA and anticorruption laws in other jurisdictions. The resolution signals that French authorities will actively exercise the authority they derive from the “Sapin II” anticorruption law, as also demonstrated by the recent bribery charges in France against former Havas chairman Vincent Bolloré. The resolution also underscores the potential benefits of cooperation, remediation and joint resolutions with multiple authorities.

Please click here to read the full alert memorandum.

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

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

On January 12, 2018, the Supreme Court granted a writ of certiorari in Raymond J. Lucia Cos., Inc. v. SEC, No. 17 130,[1] a case raising a key constitutional issue relating to the manner in which the U.S. Securities and Exchange Commission’s (SEC or Commission) appoints its administrative law judges (ALJs).  The Court will decide “[w]hether administrative law judges of the [SEC] are Officers of the United States within the meaning of the Appointments Clause.”  The answer to this question matters because if SEC ALJs are “officers,” then they should have been appointed by the Commission itself instead of hired through traditional government channels—and the Commission only exercised its ALJ appointment authority in late-2017.  Although the question is limited to SEC ALJs, any decision could also impact ALJs at other agencies government-wide. Continue Reading Supreme Court Grants Certiorari on the Constitutionality of SEC ALJ Appointments– What This Means for the Securities Industry

More than six months have passed since the Supreme Court held, in Kokesh v. SEC, 137 S. Ct. 1635 (2017), that the Securities and Exchange Commission’s (SEC or Commission) disgorgement power constitutes a penalty subject to a five-year statute of limitations.  As expected, the Supreme Court’s holding on the penal nature of SEC disgorgement has spurred  defendants to seek to broaden its application to other contexts.  Most fundamentally, this includes whether the SEC has the statutory authority to seek disgorgement at all.  To date, courts have mostly turned aside these challenges.  At the same time, however, litigants have grown more creative in their attacks, evidenced by a class action suit seeking reimbursement of nearly $15 billion from the SEC of certain historical disgorgement payments.[1]

Below, we look back at how the lower courts have handled post-Kokesh challenges to the SEC’s disgorgement power and other so-called equitable remedies to date.  Continue Reading Kokesh v. SEC: Half a Year On

This past year, which marked the 40th anniversary of the Foreign Corrupt Practices Act, saw significant anti-corruption developments in the United States and abroad, capped by the announcement of a new FCPA corporate enforcement policy by the U.S. Department of Justice.  As the year began with a new administration, however, there was initially some uncertainty as to how much the new administration would prioritize FCPA enforcement.   Perhaps wanting to put this concern to rest, President Trump’s appointees quickly emphasized that FCPA enforcement was “as alive as ever”  with Attorney General Jeff Sessions promising that the DOJ would “continue to strongly enforce the FCPA and other anti-corruption laws.”   While there were fewer total FCPA corporate resolutions in 2017 than in 2016, the DOJ concluded two of the largest global settlements in FCPA history this year.  The DOJ also demonstrated a continued and expanded focus on anti-corruption compliance, aided by its issuance in February of new guidance on how the DOJ would evaluate the effectiveness of compliance programs.

This memo examines some of these key FCPA developments in greater detail and provides our analysis of what their impact may be in 2018.

Click here, to continue reading.

In a significant development for companies relating to the Foreign Corrupt Practices Act (FCPA), in late November the U.S. Department of Justice (DOJ) announced a new FCPA Corporate Enforcement Policy (the Enforcement Policy).[1]

The Enforcement Policy is designed to encourage companies to voluntarily disclose misconduct by providing greater transparency concerning the amount of credit the DOJ will give to companies that self-report, fully cooperate and appropriately remediate misconduct.  Notably, in announcing the Enforcement Policy, the DOJ highlighted the continued critical role that anti-corruption compliance programs play in its evaluation of eligibility under the Enforcement Policy. Continue Reading The New DOJ FCPA Corporate Enforcement Policy Highlights the Continued Importance of Anti-Corruption Compliance

On November 29, 2017, the U.S. Department of Justice (“DOJ” or the “Department”) announced a new FCPA Corporate Enforcement Policy (the “Enforcement Policy”) applicable to investigations of companies under the Foreign Corrupt Practices Act (“FCPA”). The Enforcement Policy builds on the FCPA Pilot Program (the “Pilot Program”) that has been in effect since April 2016, and provides additional transparency regarding the credit the Department will provide to companies that self-report FCPA violations and then cooperate with the resulting investigation. By and large, the new policy, which is now part of the U.S. Attorney’s Manual (“USAM”), makes key provisions of the Pilot Program permanent, and significantly, it also promises additionalbenefits to companies that qualify. The Enforcement Policy signals a further effort by DOJ to encourage companies to self-report and cooperate, although the policy also leaves the Department with considerable leeway in assessing key threshold questions for eligibility even for companies that do self-report.

Click here, to continue reading.

On November 15, 2017, the Securities and Exchange Commission Division of Enforcement released its annual report detailing its priorities for the coming year and evaluating enforcement actions that occurred during Fiscal Year (“FY”) 2017. The Report captures the SEC during a period of transition—Chairman Jay Clayton assumed the helm of the Commission in May 20172 and Stephanie Avakian and Steven Peikin were named co-directors of the Enforcement Division soon thereafter.3 The Report provides insight into changes in the SEC’s approach to enforcement actions and a glimpse into its priorities for the coming year. The following summarizes key shifts from FY 2016, outlines the Enforcement Division’s current priorities, and, in view of its stated focus on the conduct of investment professionals and protection of retail investors, provides guidance to the investment management industry as it gears up for the coming year.

Click here, to continue reading.