Justice Department

Don't Be Fooled by the Lull in FCPA Enforcement Actions

May 14, 2013

It has been quiet on the Foreign Corrupt Practices Act front, with the Justice Department and the SEC bringing just three enforcement actions against companies so far in 2013, compared to a combined 19 last year and 48 in 2010. But don't be lulled by that eerie calm; lawyers say it won't be long before regulators are once again piling up FCPA settlements. "All signs indicate that those numbers will shoot back up," says John Davis, a partner at law firm Miller & Chevalier.
 

Lessons From SEC's First FCPA Non-Prosecution Agreement

May 07, 2013

Last month the SEC struck a deal with clothing retailer Ralph Lauren Corp. not to prosecute the company for alleged violations of the Foreign Corrupt Practices Act in exchange for the payment of fines and other concessions. Ralph Lauren Corp.'s actions—it conducted a thorough investigation and quickly self-reported the violation—provide new insights on how to win credit from government agencies when allegations of corruption arise. Full details inside.
 

Old Law Gains New Relevance on Financial Crisis Cases

February 26, 2013

The Department of Justice is dusting off an old and rarely used financial reform law—the Financial Institutions Reform Recovery and Enforcement Act—to pursue cases related to the financial crisis. By pursuing civil cases under FIRREA, the Justice Department needs only to meet the preponderance-of-evidence standard, rather than proving guilt beyond a reasonable doubt, which can be difficult in complex financial cases. More details inside.
 

Continuous Internal Control Monitoring Gets Big Backing

February 05, 2013

Last year the Justice Department lauded Morgan Stanley's internal control monitoring when it declined to prosecute the bank for the misdeeds of a managing director. More recently, the Committee of Sponsoring Organizations recommended continuous monitoring as part of a well-rounded internal control program, giving companies a reason to take another look at ongoing evaluation of controls. More inside.
 

Justice Department's Use of Deferred Prosecution Causes Backlash

January 15, 2013

Last year the Justice Department entered into 35 deferred-prosecution or non-prosecution agreements, the second most since 2010. But now some members of Congress and others are assailing the settlements—especially a recent deal with HSBC—since they let companies off the hook without criminal charges. "HSBC has quite literally purchased a get-out-of-jail-free card," wrote Sen. Charles Grassley (R-IA) in a recent letter to U.S. Attorney General Eric Holder.
 

CFPB, Justice Department Tighten Oversight of Financial Services

January 15, 2013

The Consumer Financial Protection Bureau and the Justice Department have forged an agreement to share more information and to conduct joint investigations. The deal won't comfort those who are already concerned that the CFPB's has too much power, since it could broaden the agency's scope by giving it an avenue to refer criminal charges and access to the investigative resources of the Justice Department. Details inside.
 

Marijuana Laws Spark Need to Review Employment Policies

December 04, 2012

Eighteen states have approved the use of medical marijuana so far, and now Washington and Colorado have voted to legalize the drug outright. Caught in the middle are companies that must square changing marijuana laws with their workplace policies and drug-testing practices. "There is a lot of misinformation out there, and it is incumbent upon employers to educate their workforce on what they can or cannot do," says Vance Knapp, a member of Denver-based law firm Sherman & Howard.
 

Not All Third-Party Risks Are Created Equally

October 30, 2012

Most companies group third-party risks from agents, resellers, and distributors all under the same umbrella. Yet not all third-party risks are created equally. Such business partners often have different legal exposures and corruption risk profiles, effecting the level of due diligence that a company must conduct on each. "You have to look at what the relationship is pretty carefully," says David Simon, a partner at law firm Foley & Lardner.
 

Managing Compliance Risks in the Supply Chain

October 23, 2012

Lapses in ethics and compliance by major suppliers or contract manufacturers not only cause embarrassment and anger consumers, as companies like Apple and Samsung can attest; they also create exposure to potential violations of anti-bribery and corruption laws. Increasingly, companies are improving processes and systems to manage risk in the supply chain. How? More details inside.
 

Policy Communication in a YouTube World

September 25, 2012

Written policies are essential, but they are only effective if individuals are aware of them and understand what is expected. In the latest installment of our GRC Illustrated series we look at the evolution of policy management and how technology is changing the way companies communicate their policies and measure the effectiveness of that effort.
 

Elements of Effective Compliance

September 25, 2012

There's no shortage of guidance from regulators around the world on what a good compliance program should entail. Directives, such as the U.S. Sentencing Guidelines, are becoming more common and can pull companies in different directions. Understanding and effectively applying their shared concepts can help compliance officers meet, or even exceed, the expectations set by government entities across the globe.
 

Anti-Bribery Enforcement on the Rise

September 18, 2012

Tougher enforcement of anti-bribery laws around the world has resulted in more companies facing prosecutions, according to a new report. Globally, there were 144 new open cases related to bribery of foreign officials in 2011. "They're still not enforcing enough, but there is progress," says Gillian Dell, program manager of global outreach at corruption watchdog Transparency International, which conducted the study.
 

The New Whistleblower Threat: Other Companies

September 05, 2012

Stuck in a bribery investigation? Here's one way to avoid the hammer: turn state's evidence and tell the feds about misconduct somewhere else. Some compliance officers are uneasy about the development. "Are corporate whistleblowers raising their concerns in good faith, or is it just a way to tarnish another company's reputation?" asks Stacey Babson-Smith, chief ethics and compliance officer for Terex Corp.
 

Court Expands Scope of False Claims Act Liability

August 28, 2012

A recent appeals court decision could substantially expand the scope of liability under the False Claims Act when bidding on government contracts. At issue is whether submitting an unrealistically low bid simply to win a government contract can indeed be a violation of the FCA, if the contractor then pushes the price back up through change orders or other revisions.
 

Why the Government Didn't Sack Goldman

August 21, 2012

The Justice Department said earlier this month that it would pursue no criminal charges against banking behemoth Goldman Sachs related to the financial crisis—dismaying to the Occupy Wall Street crowd, but not surprising to those who know the practicalities of prosecuting corporations. "The odds of indicting Goldman Sachs were pretty slim to none," says Stephen Plotnick of law firm Carter Ledyard & Milburn. More inside.
 

UTC Criminal Charges Highlight Need for Export Controls

August 07, 2012

The federal government is keeping a watchful eye on exports, wary of any shipment of sensitive technology to foreign powers like China and Russia, and it's coming down hard on companies that don't comply, as United Technologies Corp. recently found out. The defense contractor's consent agreement with the government conveys best practices in compliance with export control laws. Details inside.
 

Compliance Rescues Morgan Stanley From FCPA Prosecution

May 08, 2012

Morgan Stanley was exonerated from Foreign Corrupt Practices Act violations last month, despite a guilty plea by one of its top executives. The Justice Department and the SEC are citing the bank's strong compliance program for why it declined to pursue charges. "Corporate America has been sent a clear message that those who try will be rewarded," says Roy Snell, CEO of the Society of Corporate Compliance and Ethics.
 

How BizJet Convinced the Justice Department to Go Easy

March 27, 2012

After aviation maintenance company BizJet uncovered potential Foreign Corrupt Practices Act violations, the company reacted swiftly, launching an internal investigation and notifying the Justice Department. The actions earned the company goodwill for "extraordinary cooperation," and a 30 percent reduction in its FCPA fines. More details inside.
 

More FCPA Defendants Opting for Trials Over Settlements

January 10, 2012

Defendants in Foreign Corrupt Practices Act cases are increasingly opting to fight the Department of Justice in court rather than agreeing to prepackaged settlements, and more of them are winning. "For so many years, FCPA enforcement rarely saw the inside of a courtroom. Thankfully, that is beginning to change," says Mike Koehler, a law professor at Butler University.
 

SciClone Raises Standards, and Eyebrows, With FCPA Deal

November 29, 2011

SciClone Pharmaceuticals, a middle-weight drug development business with only 260 employees, struck a memorable blow for corporate compliance this month: The company agreed to profound changes in its anti-corruption program solely to settle a shareholder lawsuit. "I'm not aware of any other case, certainly in the FCPA area, where this sort of result has occurred," says Lucinda Low of the law firm Steptoe & Johnson.
 

'Price Reduction Clauses' Raise False Claims Act Perils

October 18, 2011

A $200 million False Claims Act settlement Oracle reached with the federal government is yet another reminder of compliance perils when selling complex products to Uncle Sam. At issue is the price-reduction clause, which requires contractors to offer the lowest price given to other comparable customers. In industries where pricing isn't always transparent, compliance is no easy task.
 

Don't Enter Into Prosecution Agreements Lightly

September 27, 2011

Companies may view deferred-prosecution and non-prosecution agreements as a common vehicle to put government investigations behind them, but several recent DPAs and NPAs—with a slew of restrictions and obligations attached—are reminders that such deals aren't easy. The key to success: a speedy internal investigation. "You have to get ahead of it," says Brian Baldrate of the law firm Gibson Dunn.
 

Justice Department Targets Foreign Documents in Antitrust Probe

May 17, 2011

Defense attorneys are lashing out over an aggressive new tactic by the Justice Department to retrieve foreign documents by subpoenaing them from law firms that are involved in parallel civil lawsuits—which critics say is an over-reach of the department's subpoena power. The matter has split federal courts and is nearly certain to head to the U.S. Supreme Court. Details inside.
 

Mendelsohn Takes His Leave

April 15, 2010

I could be cute and say, “Farewell, Mark Mendelsohn, we hardly knew ye!” but that would not be accurate. For most corporate compliance officers at U.S. corporations, Mark Mendelsohn has loomed large in their lives at least figuratively, and often personally, for years. No longer.Mendelsohn, of course, was the Justice...
 

The Regulator Dilemma: No Right Answer

March 29, 2010

I hosted another of our Compliance Week editorial roundtables last week, this time co-hosted by Deloitte and looking particularly at compliance challenges in the pharmaceutical sector. At first I wasn’t sure how the discussion might unfold; Compliance Week normally doesn’t delve too deeply into any single industry’s compliance regime, because...
 

Judge Uncorks True Feelings About Compliance Monitors

March 22, 2010

God, I love it when a federal judge goes off-script. Most events in federal court are terribly dull, the carefully scripted culmination of legal briefs fired back and forth among various parties for years. But once in a great while, a judge goes a little nuts—as happened last week with...
 

Power Grab

February 08, 2010

Chief compliance officers may want to re-read that old copy of The Prince and go for the office power grab in 2010. Apparently all the cool kids in corporate governance support you already.Within the last several months, we’ve seen numerous signs—regulatory settlements, best practices guides, proposed revisions to the U.S....
 

Securities Regulation Institute, Concluded

January 28, 2010

Last week I filed a dispatch from the Securities Regulation Institute’s annual conference out in San Diego, focusing on the first day’s agenda of SEC policy and risk management challenges. Before I forget, let’s circle back to review the main points of Day 2: enforcement.The stars of the day were...
 

Just in From the Revolving Door File...

January 16, 2010

You may have missed it among the orgy of SEC enforcement news this week, but over at the U.S. attorney’s office in Manhattan, the lead prosecutor of the Galleon Group insider-trading case is quitting—to start his own practice in white-collar defense.Joshua Klein, an assistant attorney in the Southern District of...
 

Compliance Tips From People Who Know

September 15, 2009

Any compliance officers looking for ammunition to take into budget planning meetings for 2010, I have some for you—not that the news is exactly what corporations want to hear.I’ve been attending the Society for Corporate Compliance and Ethics’ annual conference for the last two days, and this morning attendees heard...
 

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