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Nation's Top Energy Regulator Keeping a Close Eye on Wall Street

April 01, 2014

The Federal Energy Regulatory Commission is looking as much these days at certain financial instruments as the physical energy commodities it has traditionally regulated. The agency even struck a deal with the Commodities Futures Trading Commission to cooperate more on regulation. "We are going to see FERC stepping up its enforcement powers to be a little more feared, not only in the energy community, but in financial communities as well," says Felix Shipkevich, a principal at law firm Shipkevich.

Senators Seek Agency Disclosures on Terms of Settlements

January 08, 2014

Senators Elizabeth Warren (D-Mass.) and Tom Coburn (R-Okla.) are sponsoring the Truth in Settlements Act, a bill that would require federal agencies to disclose all terms of corporate regulatory settlements. It seeks to ensure that tax deductions and credits don't diminish the punitive nature of monetary penalties.

KPMG Settles Netherlands Charges Dating to 2000

December 31, 2013

KPMG in the Netherlands has agreed to pay €7 million ($9.6 million) to settle charges involving three former audit partners accused of helping conceal bribery payments for a former client, Ballast Nedam, more than 10 years ago. Ballast Nedam has already reached its own settlement with Dutch officials and agreed to new compliance initiatives. More inside.

Immigration Compliance Audits Hit Record-High Levels

November 19, 2013

Holding firm to its promise of cracking down on companies that employ undocumented workers, government officials are conducting record numbers of compliance audits and issuing higher fines. In October, immigration officials reached a record $34 million settlement with Infosys, a technology consulting firm. Employment lawyers say regulators show no signs of easing up. "They've had a lot of great success and made a lot of money off compliance audits," says Valentine Brown of the law firm Duane Morris.

J&J FCA Fraud Settlement Loaded With Compliance Directives

November 12, 2013

Along with the eye-popping $2.2 billion settlement that J&J struck with the government to settle charges of violating the False Claims Act, the drug company also agreed to follow several compliance directives. J&J will increase monitoring of sales representatives and adopt minimum training levels for all employees, clawbacks for executives, increased transparency on payments to physicians, and other measures. Full details inside.

SEC's New 'Fess Up' Policy Comes With Legal Consequences

September 10, 2013

For years the SEC has allowed defendants to pay a penalty to settle charges quietly and admit to nothing. Now the SEC is pressing some defendants to confess their sins and suffer the legal consequences, which could include more shareholder lawsuits, lost licenses and contracts, and nullified D&O insurance. Indeed, the new policy may "freeze a lot of companies from wanting to settle with the SEC," says Brian Dickerson, a partner with law firm Roetzel.

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.

Regulators Look to End Tax Deductions on Fines

January 23, 2013

A recent report assailed what it calls the common practice of companies lowering the fines and penalties they agree to with federal enforcement agencies by exploiting a loophole that allows them to claim a portion of them as a tax-deductible business expense. Legislative attempts to close the loophole have failed, but now the SEC and the Justice Department are writing language into settlements that specifically prohibits the practice. More details inside.

Judge Balks at SEC Settlement With IBM, Wants More Reporting

January 23, 2013

A U.S. district court judge is challenging an SEC settlement, claiming that it lets the defendant, IBM, off too easy. The move is the latest in a series of contested settlement agreements that could change the way that the SEC resolves civil cases. Judge Richard Leon says he wants IBM to submit regular reports on its compliance efforts. "This is not a rubber stamp court," he stressed. "I'm not just going to roll over like the SEC has."

CFPB Springs Into Action

August 14, 2012

After a quiet first year, the Consumer Financial Protection Bureau's latest action has surprised many not just because it targeted a law firm, but because of the tactics it used to pursue the case. The agency secured a restraining order (freezing the assets of the firm) and filed a civil enforcement action in federal court before notifying the firm. "The CFPB has definitely come out with guns blazing," says Michael Mallow, a partner with law firm Loeb & Loeb.

Lost in Translation: How Language Is Complicating Global Compliance

August 14, 2012

There's no shortage of cases where compliance problems arise out of the language barrier between headquarters and foreign subsidiaries. Yet for notoriously under-resourced compliance functions, communicating the company policies and culture in the native language of employees around the world presents challenges well beyond translating company materials. Details inside.

When to Go Public About a Data Breach

July 03, 2012

When a company learns that it may have been victimized by a data breach, two of the toughest decisions that arise are if and when to notify the public that personal information may have been compromised. Report a data breach before all the facts are in, and risk unnecessary costs and incomplete information; report too late, and the reputational and legal repercussions could be far worse. More inside.

Regulators' No Admission Settlement Policy Under Fire

May 30, 2012

The policy of the SEC and other regulators to settle cases of alleged fraud on a "neither-admit-nor-deny" basis is under increasing fire from critics who believe such settlements are too lenient. During a recent committee hearing, members of Congress assailed the policy as irresponsible, while others defended it as a practical necessity. Details inside.

How Individuals Can Win Non-Prosecution Agreements With the SEC

April 10, 2012

The SEC announced a landmark non-prosecution agreement last month, declining to prosecute a person (rather than a corporation) after he provided significant assistance during an investigation. The agency also issued guidance on how to win such credit. But rather than give executives a pathway to their own personal NPA, the guidelines illustrate just how difficult it will be to earn such a pass. More details inside.

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.

Big Compliance Burdens Coming for Mortgage Industry

February 28, 2012

The mortgage industry faces a host of new compliance challenges thanks to the $25 billion settlement reached with state and federal regulators this month, and expect no easy path to success. "Very little of this is able to be dealt with through automation," says Robert Bostrom of the law firm SNR Denton. "The whole point of this is to require human contact." Full details inside.

Dealing With JV Compliance Takes Varsity Skills

February 22, 2012

A recent Justice Department FCPA settlement against a participant in an energy joint venture in Nigeria is yet another reminder of how challenging ethics and compliance can be in such arrangements. "The average JV hasn't been around a long time. It probably doesn't have a compliance officer; it doesn't have a lot of processes," says lawyer Jeff Kaplan. A close look at how to establish strong conduct at "JVs" is inside.

If the SEC Forces Companies to Admit Guilt ...

February 14, 2012

The SEC has been under pressure for a while to change its policy of allowing defendants to settle charges without admitting guilt, and now a court could force its hand on the issue. A policy change would have dire consequences for companies, since it would set up a difficult decision to admit guilt or to fight lengthy court battles with the SEC. More details inside.

FTC Scrutinizing Information-Sharing Agreements

February 14, 2012

A recent FTC enforcement action against three businesses for collusion via an industry trade association is sounding alarm bells, since the practice is so common. A consent decree with one of the businesses even overturns established safe-harbor practices. "This should be of interest to any company involved in competitor information exchanges," says Kathryn Fenton of law firm Jones Day.

2012 Will Be Another Busy Year in Regulation and Compliance

January 03, 2012

Amid holiday cheers and winter chills, legal experts say 2012 will be yet another busy year in regulation. Inside, we take a look at what's next for the SEC's Office of the Whistleblower, rulemaking under the Dodd-Frank Act, insider trading enforcement, and more.

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.

SEC Settlement Gives Insight on Internal Control Requirements

November 08, 2011

A settlement between stock exchange Direct Edge and the Securities and Exchange Commission reveals some of the SEC's latest thinking on proper internal controls. The agency accused the company of failing to invest adequately in its systems and processes, and of lacking proper backup and failover systems. As part of the settlement, Direct Edge agreed to hire a chief compliance officer who reports directly to the CEO.

'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.

FTC Accuses Companies of 'Unreasonable' Data Security Programs

May 04, 2011

The Federal Trade Commission has charged two companies with failing to keep their customers' data secure. Among the charges are that the firms did not implement reasonable data security procedures and that they failed to follow their own data security policies.

Google Settles Landmark Data Privacy Case

April 26, 2011

In a first-of-its-kind settlement, Google has agreed to establish a comprehensive privacy program after running afoul of safe-harbor rules that govern the collection and use of consumer information. "This is the most far-reaching, broadest FTC action on privacy to date," says Sharon Goott Nissim, consumer privacy counsel at the Electronic Privacy Information Center.

Compliance Officer Pays $15,000 in SEC Settlement

April 07, 2011

The SEC has charged three former brokerage executives, including the former chief compliance officer, with failure to keep customer information confidential. This is the first time the SEC has brought financial penalties against individuals on the basis of its "safeguard rule." The CCO agreed to pay $15,000 without admitting or denying guilt.

Class-Action Settlements Down, but Not for Long

March 22, 2011

The number of settlements of class-action securities cases declined to a 10-year low in 2010. But corporate counsels may have little to celebrate. The dollar figure of those settlements was on the rise, and attorneys say the decline in cases won't last. "We're going to see an uptick in settlements," predicts Brian Pastuszenski of Goodwin Procter.

Beazer CEO Returns $6.5M to Settle SEC Clawback Suit

March 04, 2011

Ian McCarthy, the chief executive officer of Atlanta-based homebuilder Beazer Homes, will pay back $6.5 million in bonus pay and stock profits to settle an SEC complaint brought against him under the clawback provision of the Sarbanes-Oxley Act. It is the latest settlement against an executive who wasn't charged in the fraud that prompted the clawback.

Takeaway From Facebook Settlement: More Complaints, Scrutiny

February 09, 2011

American Medical Response reached a settlement with the National Labor Relations Board over a case that involved an employee who was fired for comments made on Facebook. Now many companies are reviewing their blogging and Internet policies and could see more scrutiny of policies that limit employee use of social media.

False Claims Act Settlements Serve as Reminder on Pricing

September 09, 2010

Recent settlements of allegations brought under the False Claims Act of defective pricing serve as a reminder to companies doing business with the government to tighten up their procedures around pricing.Cisco Systems and Westcon Group North America agreed to pay $48 million to settle claims they made misrepresentations to the...

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