Finance & Banking General Business Criminal Law

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Was that trader really 'spoofing'? Focus on the statute’s words, not the regulator’s claims

Can trading pursuant to an algorithmic program properly be found to constitute “spoofing” in violation of CEA Section 4c(a)(5)(C): What constitutes “the intent to cancel the bid or offer before execution”? ...more

FCPA Compliance Report-Episode 280-Tim Hedley and Rich Girgenti on their new book The New Era of Regulatory Enforcement

In this episode, authors Tim Hedley and Rich Girgenti discuss their new book The New Era of Regulatory Enforcement. ...more

New FinCEN Proposal Will Extend AML Rules to Currently Exempt Banks and Other Institutions

Seeking to close a perceived “gap” in regulations intended to facilitate the government’s efforts to curb money laundering and the financing of terrorism, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued on August 25, 2016 a new proposed rule that would extend Anti-Money Laundering (AML) and Customer Identification Program (CIP) requirements to banks and other institutions that are not currently required to comply with those rules. Although these institutions may already be subject to certain suspicious transaction reporting, record-keeping and other requirements, if finalized, the new rule in FinCEN’s enforcement arsenal will impose significant new compliance obligations and could have a substantial impact on previously exempt state-chartered banks and other institutions if they do not already have a robust AML program.more

Trading and Markets Enforcement Report - August 2016

The last several years have seen law enforcement and regulatory bodies sharpen their focus on trading activity in the securities and derivatives markets. This focus has coincided with the advent of new and expanded reporting, surveillance, and enforcement powers that arose from responses to the financial crisis. Prosecutors and regulators are using those powers daily to enforce both newer and longstanding restrictions on trading activity. New developments and precedents emerge nearly every day, and the key events merit full attention in the design of trading strategies, the implementation of compliance programs, and—when necessary—the development of legal defenses. The following report serves as a practical guide intended to keep asset managers, broker-dealers, and other trading firms current on important legal developments in this area. Please see full Report below for more information. more

Legal Alert: New York’s New BSA/AML Rule Imposes Monitoring, Filtering and Certification Requirements

On June 30, 2016, the New York Department of Financial Services (DFS) adopted a new anti-terrorism and anti-money laundering (AML) regulation (Final Rule) that builds on federal anti-money laundering requirements to address what the DFS called “shortcomings” in current practices “attributable to a lack of robust governance, oversight, and accountability at senior levels.” The Final Rule requires certain DFS-regulated institutions to maintain programs to monitor and filter transactions for potential Bank Secrecy Act (BSA) and AML violations, and also requires the board of directors or a senior officer to submit to the DFS an annual certification of compliance. more

Second UK Deferred Prosecution Agreement Has Implications for US Corporates

“Innocent” US parent pays £6.25 million for UK subsidiary’s secret bribery. On July 11, the UK’s Serious Fraud Office (SFO) announced that it had secured its second deferred prosecution agreement (DPA). The first DPA was secured in November 2015 when Standard Bank agreed to meet financial penalties of US$25.2 million. The second concerns an as-yet-unidentified UK company (referred to as “XYZ Limited” for purposes of the case) that secured a number of contracts in various parts of the world through bribery. The bribery was said by the judge to be “part of XYZ’s established business conduct” and that within XYZ it was “an accepted way of doing business.” The bribery took place over a period of eight years, and subterfuge and deception were employed to keep the truth secret from auditors and XYZ’s US parent.more

New SFO Bribery Case: Can’t Pay? That Might Be Okay…

The UK Serious Fraud Office has entered its second deferred prosecution agreement (DPA) with a company accused of bribery. Links to the SFO press release, and the detailed preliminary and final judgments of the court are provided here for your reference. The name of the defendant company remains embargoed apparently to protect ongoing proceedings/investigations into individuals. The company is referred to in the judgment as “XYZ”.more

The UK’s second DPA: a hopeful judgment

The approval of the Deferred Prosecution Agreement (DPA) between the Serious Fraud Office (SFO) and XYZ Limited (XYZ) by Leveson LJ on 8 July 2016 has generated much breathless commentary, not least because it is only the second DPA to be approved in the UK under the new regime for the disposal of corporate criminality introduced by the Crime and Courts Act 2013. more

¡Primera Convicción de FATCA!

El 9 de Mayo del 2016, el Departamento de Justicia (DOJ) anunció su primera convicción usando FATCA. Parece ser el principio de procesos penales por el DOJ contra violaciones aparentes o presuntas de los requisitos de reportaje de FATCA. El caso "Mulholland" representa la primera vez que el Gobierno ha presentado cargos criminales en base a supuestas violaciones de FATCA. Mulholland es un ciudadano con doble nacionalidad (EE.UU. y Canadá) que fue procesado y se declaró culpable, que secretamente era dueño de una casa de bolsa (broker-dealer) “offshore”, y una IMC (“Investment Management Company o Empresa de Gestión de Inversiones”) en Panamá y Belice. Por favor vea el artículo completo a continuación para obtener más información.more

The European, Middle Eastern and African Investigations Review 2016: United Kingdom: handling internal investigations

With so much potentially at stake, the initial steps and strategic decisions taken in any company investigation are critical to setting the tone for a focused, credible and effective inquiry. This is paramount not only for the purposes of getting to the bottom of what has happened and responding appropriately, but also for limiting a company’s potential exposure and preparing it to engage with the relevant authorities. While every investigation is different, there are a number of key considerations that are common to all and that, if tackled appropriately, can ensure that a company is set on the right course from the outset. These include (i) setting the scope and terms of an investigation; (ii) securing and reviewing evidence; (iii) dealing with issues of legal privilege, data protection and banking confidentiality; (iv) assessing the nature of the company’s risk; (v) dealing with employment issues; (vi) conducting interviews; (vii) assessing jurisdictional reach; and (viii) preparing the investigation report. In providing an overview of these, this chapter aims to give companies and their lawyers practical guidance on how to approach what are often fast-moving and complex investigations. Originally published in The European, Middle Eastern and African Investigations Review - 2016. Please see full Chapter below for more information.more

How Reporting a Crime May Subject You to Sanctions

You are a creditor and your loan is secured by personal property, let’s say equipment. The borrower recently filed for bankruptcy protection. You receive a phone call from a friend advising you that someone has a moving truck outside the borrower’s business location and it looks like they are stealing equipment. You don’t know who is moving the equipment — but you do know it’s without your permission and in violation of the security agreement. more

UK Bribery Act – 5 lessons in 5 years: No. 5 – What does the future hold?

UK Prosecutor sees Bribery Act offence as a template for fighting other forms of financial crime. The Serious Fraud Office would like to extend the strict liability "failure to prevent bribery" offence that is currently encapsulated in Section 7 of the Bribery Act. Its thinking is that this will make its job as a prosecutor much easier when it comes to taking criminal enforcement action against companies. At a time when the United States are shifting towards a greater focus on individuals (as set out in the Yates Memo) why is the UK seeking to move in the opposite direction? And more importantly, to what end?more

U.S. Targets Private Equity Funds for FCPA Scrutiny

The private equity industry is facing increased scrutiny by the U.S. Government for potential violations of the Foreign Corrupt Practices Act (“FCPA”). The Securities and Exchange Commission (“SEC”) has created a new private fund unit and publicly asserted that it is more closely examining the operations of private equity funds and their portfolio companies. As with all SEC units, the private fund unit works in conjunction with the U.S. Department of Justice (“DOJ”) criminal and civil fraud divisions. This increased attention will lead to more investigations, and has enhanced the need for robust FCPA compliance by private equity funds.more

This Week In Securities Litigation

Merrill Lynch was at the center of actions brought by the SEC and FINRA this week. One action charged the firm with violations of the customer protection rule tied to using customer cash and failing to protect their securities. The settlement included admissions. An action against the individual alleged to have been involved in the violations of the customer protection rule will be set for hearing.more

This Week In Securities Litigation

Insider trading was a key focus this week. Two actions were brought based on information secured from the FDA and CMS by former employees who were employed by and investment adviser. Another case centered on tips by a corporate insider to college friends regading two transactions, one of which dates back to 2007.more

Recreational Cannabis — Section 280E and Tax Efficient Structuring

Recreational cannabis businesses operate in a world of conflicting state and federal laws. Several states have legalized recreational cannabis, yet, under federal law, cannabis remains an illegal Schedule I drug under the Controlled Substances Act (CSA). The CSA created five classifications of controlled substances. These classifications range from Schedule I to Schedule V, with varying qualifications for a substance to be included in each. The criteria for a Schedule I controlled substance includes a high potential for abuse, a lack of currently accepted medical use, and a lack of accepted safety for use under medical supervision. Controlled substances in Schedules II through V generally have a lower potential for abuse and/or some degree of currently accepted medical use. On April 4, 2016, the Department of Health and Human Services, the Drug Enforcement Administration (DEA), and the Office of National Drug Control Policy issued a letter indicating the DEA intends to reconsider the classification of cannabis in the first half of 2016. It is unclear if the DEA will continue to classify cannabis as a Schedule I drug, reclassify it to a different schedule, or remove it from the five schedules of controlled substances. Legalization at the state level does not protect recreational cannabis businesses from federal prosecution. The federal government continues its war on drugs and drug trafficking. This war currently includes cannabis. Cannabis businesses need cannabis to be removed from the schedules of controlled substances in order to eliminate the threat of federal prosecution.more

UK Bribery Act – 5 lessons in 5 years: No 2 – Unheard Voices

The corporate bribery offence has brought in a new age of enforcement, but at what cost to individuals who may be implicated? In the last few weeks of 2015, the enforcement landscape for corporate entities carrying on business in the United Kingdom changed forever. On 30 November 2015, Sir Brian Leveson approved the UK's first Deferred Prosecution Agreement ("DPA") between the Serious Fraud Office ("SFO") and Standard Bank plc ("Standard Bank"). The DPA suspended an indictment against Standard Bank alleging failure to prevent bribery contrary to the Bribery Act 2010 (the "Bribery Act"). Just days later, on 18 December 2015, Sweett Group plc ("Sweett Group") pleaded guilty to a charge of failing to prevent an act of bribery intended to secure and retain a contract, contrary to the Bribery Act.more

This Week In Securities Litigation

The elements of an insider trading claim continued to be a key focus this week. The first circuit, following prior circuit precedent, held that a personal benefit based on a long term friendship and a steak dinner was sufficient, noting that its standard varied from Newman and perhaps Salaman.more

USDOJ Beefs Up FCPA Efforts

In April, the Fraud Section of the United States Department of Justice announced several measures designed to enhance its effort to discover and prosecute violations of the Foreign Corrupt Practices Act (FCPA). See, 15 U.S.C. §§ 78dd-1, et. seq. In sum, the FCPA makes it illegal for companies and their supervisors to influence anyone with any personal payment or reward. more

DOJ Declines Prosecution in Two FCPA Cases, SEC Executes NPAs

The DOJ declined prosecution in two self-reported potential FCPA actions while the SEC entered into non-prosecution agreements with each issuer. One matter involved Akamai Technologies, Inc. while the other centered on Nortek, Inc.more

California Man Pleads Guilty to Criminal Charges Relating to HAMP Modification Scheme

On May 4, 2016, the United States Attorney for the Southern District of New York and the Special Inspector General of the Troubled Asset Relief Program (SIGTARP) announced that a California man was found guilty of de?fraudin?g over 30,000 homeowners out of $31 million through a large mortgage modification scheme.?more

Panama Papers: Prosecutors Launch Investigations

When a scandal hits the media like the Panama Papers leak of 11.5 million confidential legal records, we all know what to expect. Criminal investigations, regulatory responses, and of course, congressional hearings of some sort so that everyone gets a piece of the scandal pie.more

Private Equity and the Och-Ziff Enforcement Action

Since 2010, the Justice Department and the SEC have been “investigating” a number of private equity and hedge funds for FCPA violations. The launch of the inquiries was a big deal with lots of fanfare and focus on private equity corruption risks. In time, nothing happened.more

Dorsey Anti-Corruption Digest - April 2016

Welcome to Dorsey & Whitney’s monthly Anti-Corruption Digest. In this digest, we draw together news of enforcement activity throughout the world and aim to reduce your information overload. Our London, Minneapolis, New York and Washington DC offices edit the digest and select the most important material so that you can use this digest as a single source of information. Please see full Newsletter below for more information.more

A transatlantic consideration of recent developments in corporate self-reporting

More carrot, less stick? On 5 April 2016, the Fraud Section of the US Department of Justice’s (DOJ) Criminal Division issued an Enforcement Plan and Guidance (the DOJ Guidance), setting out the steps that it is taking to intensify Foreign Corrupt Practices Act (FCPA) enforcement. Of these steps, one in particular has prompted discussion within the criminal defence community: the establishment of a one year pilot programme that rewards companies for voluntary disclosure and cooperation, including the provision of up to a 50% reduction in the amount of any fine imposed and, in certain circumstances, the declination of a prosecution (the Pilot Programme). Originally published in Practical Law Business Crime and Investigations - 19 April 2016.more

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