Regulatory Enforcement

The U.S. Supreme Court will hear its second securities case of the term this week, when it considers whether companies can appeal a federal judge’s decision to send a securities fraud class action to state court if the case doesn’t fall within the Securities Litigation Uniform Standards Act—the very law meant to force most securities […]

Tyco International, one of the most high-profile offenders in the corporate corruption scandals earlier this decade, settled a four-year investigation by the Securities and Exchange Commission last week and paid a $50 million fine for allegations that the company’s former management schemed to inflate results by at least $1 billion over a six-year period. Without […]

In a move expected to ease the pressure on corporations under federal investigation to waive attorney-client privilege, the U.S. Sentencing Commission has voted to eliminate language from the Federal Sentencing Guidelines that requires corporations to waive the privilege if they want to earn credit for cooperation with investigators. The amendment was prompted by extensive criticism […]

Ask a corporate executive to define the Foreign Corrupt Practices Act, and most will state the obvious: it outlaws bribery to foreign officials when doing business overseas. In reality, thanks to some uncompromising provisions of the FCPA, mundane books-and-records mistakes are much more likely to put a company in the crosshairs of an enforcement action. […]

A unanimous U.S. Supreme Court last week slammed the door shut on state class action suits by shareholders who claim that they held on to a security—but didn’t purchase or sell it—as a result of a fraudulent statement. Plaintiffs’ lawyers had argued that the Securities Litigation Uniform Standards Act of 1998, which bars state class […]

Escalating opposition to government demands that corporations waive the attorney-client privilege or risk being labeled “uncooperative” may be starting to make headway, experts tell Compliance Week. The Securities and Exchange Commission and the Department of Justice have been roundly criticized by groups as diverse as the U.S. Chamber of Commerce, the criminal defense bar and […]

Good enterprise risk management starts with effective detection of risks and early disclosure of the material ones. But determining which risks are material and at what point disclosure is required or advisable is often a judgment call—which means that even the best ERM scheme won’t thwart litigation when a stock price tumbles and angry investors […]

A federal judge in New York recently became the first to squarely rule that the Securities and Exchange Commission cannot hold a corporate officer or director liable for assisting in securities fraud if the person didn’t have “actual knowledge” of the wrongdoing. Griesa The SEC has taken the position that individual officers and directors face […]

In a case that again shows the difficulties the Securities and Exchange Commission faces in distributing legal settlements to aggrieved shareholders, the Commission recently asked a judge to let a $250 million settlement with Qwest Communications be disbursed by a private distribution agent, rather than the Fair Fund system created by the Sarbanes-Oxley Act. The […]