On March 14, 2018, U.S. Commodity Futures Trading Commission (“CFTC”) Chairman J. Christopher Giancarlo gave a speech at the Futures Industry Association (“FIA”) annual meeting in Boca Raton, Florida, in which he reviewed the CFTC’s activities during the past year and provided a preview of CFTC priorities for the coming year.[1]  Among the issues addressed in Chairman Giancarlo’s speech were the CFTC’s successes and priorities in enforcement, including in particular initiatives in the area of anti-spoofing and virtual currencies. Continue Reading Recent CFTC Enforcement Actions: Spoofing and Virtual Currency Task Forces

In an indictment unsealed on March 23, 2018, the Department of Justice (DOJ) brought criminal charges against nine Iranian nationals affiliated with the Mabna Institute in Iran, alleging computer intrusion, fraud, and aggravated identity theft.[1]  Prosecutors charged the defendants with conspiring to steal a massive amount of intellectual property from universities, private companies, and government institutions worldwide, obtaining more than 31 terabytes of data.  The defendants allegedly acted on behalf of the Islamic Revolutionary Guard Corps (IRGC), which is an arm of the Iranian government whose responsibilities include foreign operations and intelligence gathering.  In addition to the announced charges, the nine defendants and the Mabna Institute were also designated for sanctions by the Treasury Department, Office of Foreign Asset Control, pursuant to Executive Order 13694 “Blocking the Property of certain Persons Engaging in Significant Malicious Cyber-Enabled Activities.”[2] Continue Reading Department of Justice Indicts Iranian Hackers, Revealing Significant Data Breach and Targeting of Intellectual Property of Private Companies and Educational Institutions

Earlier this month, partners Jennifer Kennedy Park and Kimberly Spoerri participated in a panel co-hosted by The Conference Board and Cleary Gottlieb to discuss the board’s oversight role in issues related to sexual harassment.

Moderator Doug Chia, executive director of The Conference Board, Jen and Kim discussed relevant legal regulations and frameworks and the risks of non-compliance, as well as the policies, procedures and best practices boards and senior management can employ to mitigate risks.  They discussed the responsibility the board has in setting company culture through tone at the top, and how the failure by the board and senior management to be proactive in this area can affect compliance and oversight throughout a company.  The discussion also included ways the board can tangibly address these issues.  Continue Reading Cleary Partners Participate in Panel Discussion on Board Oversight of Sexual Harassment

Within the past few months, the Department of Justice (the “DOJ”) has released a series of memos that indicate a shift in its policy related to the treatment of agency guidance documents.  This memorandum seeks to explain this policy shift and analyze its potential impact in the area of False Claims Act (“FCA”) enforcement. Continue Reading Shift in Policy on Guidance Documents Suggests Change in DOJ Attitude Towards FCA Enforcement

The European Commission’s proposal for a Regulation on mutual recognition of asset freeze and confiscation orders (the “Proposed Regulation”),[1] introduced in December 2016, aims at improving the cross-border enforcement of asset freeze and confiscation orders within the EU.  It is part of a broader set of measures aimed at combating financial crimes, which includes a proposed Directive on countering money laundering through criminal law[2] and a proposed revised Regulation on controls on cash entering or leaving the Union.[3]

In January 2018, the Civil Liberties, Justice and Home Affairs Committee of the European Parliament (the “EP Committee”) issued a report on the Proposed Regulation, which proposes certain amendments to the Proposed Regulation aimed at taking into consideration fundamental rights guaranteed by the case law of the European courts, such as the right to property, due process, effective remedy and access to justice.  In particular, in line with requests made by several EU Member States, the EP Committee proposes to include in the Proposed Regulation a provision for the non-recognition of orders based on non-compliance with fundamental rights. Continue Reading Striking the Balance – Mutual Recognition of Freezing and Confiscation Orders Within the EU and Fundamental Rights

Internal investigations and public enforcement actions often pose legal issues involving multiple practice areas and jurisdictions.

In Italy, internal investigations may concern criminal, corporate, contract, data protection and labor law issues.

In the past, internal investigations in Italy tended to be mainly “reactive,” responding to public enforcement activities. The challenge in these investigations was balancing complying with disclosure obligations in relation to public enforcement authorities with volunteering confidential or disproportionate information. Continue Reading Internal Investigations and Public Enforcement: Italy at a Glance

On March 1, 2018, U.S. Department of Justice (“DOJ” or the “Department”) officials announced that the Criminal Division is expanding the applicability of a policy that encourages corporate self-reporting and cooperation for violations of the Foreign Corrupt Practices Act (“FCPA”) to reach other types of non-corruption criminal cases.  Speaking at the American Bar Association’s National Institute on White Collar Crime in San Diego, John Cronan, Acting Assistant Attorney General for the DOJ Criminal Division, and Benjamin Singer, Chief of the DOJ Securities and Financial Fraud Unit, told attendees that the Criminal Division will apply the FCPA Corporate Enforcement Policy (the “FCPA Enforcement Policy”) as nonbinding guidance in cases other than FCPA cases.

The FCPA Enforcement Policy, which was adopted in November 2017, provided additional guidelines regarding the credit the Department will provide to companies that self‑report FCPA violations and then cooperate with the resulting investigation – including a presumption that self-reporting companies will not be criminally charged.  Expanding use of the FCPA Enforcement Policy signals the Department’s perception of its success and a further effort by DOJ to encourage companies to self-report and cooperate.  It also provides important guidance for companies faced with a variety of different types of investigations regarding the treatment they can expect, and tools to advocate before the Department for more favorable resolutions. Continue Reading DOJ Announces Expansion of Approach Encouraging Self Reporting and Cooperation

Companies operating in Italy should take note of an important change in Italian law introducing more comprehensive regulations on whistleblowing procedures in the public and non-financial private sector. Among other relevant aspects, Law No. 179/2017, which entered into force on December 29, 2017, expands existing whistleblowing protections to the private sector, requiring companies that have adopted formal compliance programs pursuant to Legislative Decree No. 231/2001 (“Decree 231”) to also implement a formal whistleblower program.

Prior to Law No. 179/2017, only financial services and banking firms were required to implement formal whistleblower programs, pursuant to Italian legislation implementing European Directive 23/2013 (CRDIV).  In addition, Law No. 190/2012, also called the “Anticorruption Law,” provided protection against retaliation for civil servants who reported the commission of a wrongdoing.  Many companies operating in Italy have adopted formal compliance programs pursuant to Decree 231, incentivized by a provision that affords a defense against certain types of criminal offences for firms with such a program. Law No. 179/2017 requires such companies to integrate a formal whistleblower policy as part of their compliance programs. Continue Reading The New Italian Law on Whistleblowing Procedures and Its Impact on Compliance Programs

On Wednesday, the Supreme Court resolved a question that had created significant uncertainty concerning the scope of the anti-retaliation protections provided by Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).

In Digital Realty Trust, Inc. v. Somers, the U.S. Supreme Court unanimously rejected the expansive interpretation of Dodd-Frank’s anti-retaliatory protections established by relevant Securities and Exchange Commission (“SEC”) regulations and previously accepted by the Second and Ninth Circuits. In so doing, the Court held that employees who report potential securities law violations internally but not to the SEC fall outside the definition of a “whistleblower” under Dodd-Frank and accordingly do not benefit from its anti-retaliation protections. Instead, the Court held that the plain text and purpose of Dodd-Frank make clear that its anti-retaliatory protections – and not just Dodd-Frank’s whistleblower bounty incentives – apply only to whistleblowers who report securities law violations to the SEC.

The decision provides an additional incentive for whistleblowers to report to the SEC, and limits some remedies that might otherwise be available to whistleblowers who face retaliation. However, the decision should not generally cause companies to change their whistleblower policies and practices.

Please click here to read the full alert memorandum.

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