News & Analysis as of

Due Diligence and The Holy Grail — Red Flags

Compliance professionals love to bandy about the term “red flag.” It is a term with infinite meanings depending on the context. A red flag in a money-laundering context is different than a red flag in a corruption context....more

Higher FCPA risks for mergers and acquisitions? Opinion Release 14-02 and your growing business – three steps

The Department of Justice has announced that it would take “no action” against a multinational corporation in connection with its acquisition of a foreign corporation with significant record-keeping deficiencies and a history...more

Broker-Dealers Ignoring Red Flags Lead to SEC Releases and Enforcement Action

In October 2014, the SEC’s Division of Trading & Markets issued FAQs to remind broker-dealers of their obligation to conduct a reasonable inquiry when selling securities in an unregistered transaction in reliance on Section...more

What Does It Take to Make the SEC Happy? SEC Criticism of Broker-Dealers’ Due Diligence for Sales of Unregistered Securities...

To ensure that broker-dealers (BDs) do not inadvertently facilitate an unlawful distribution of securities, the Securities and Exchange Commission has long required BDs to conduct a “reasonable inquiry” into the circumstances...more

Beyond the Checklist: Seven Keys to Effective Trade Due Diligence

Anti-corruption due diligence can be vexing even in the best of conditions; it is often made more complicated by time and business pressures that arise in the context of a merger or acquisition or an urgent sales opportunity....more

Inside M&A - Fall 2014

Managing Compliance Risks in M&A Transactions - Buyers can acquire unintended and potentially very damaging liabilities together with target business or assets. Analyzing the financial situation of a target company,...more

SEC Charges E*Trade Subs: When Is the Due Diligence Sufficient?

Having the correct compliance procedures in place can often be critical. The SEC and the DOJ have repeatedly emphasized this in FCPA cases. Conducting due diligence can be equally critical. For gatekeepers such as lawyers,...more

Potential Impact of New SEC Rules on Cell Tower Securitizations

On August 27, 2014, the Securities and Exchange Commission (the “SEC”) adopted two final rules implementing new regulations affecting asset-backed securities (“ABS”). The first set of rules, referred to in this memorandum as...more

Angels in Limbo: Congress and SEC Consider Regulatory Changes with Potential for Profound Effects on Start-Up Investments

Three events occurred during 2013 that have the potential to significantly affect angel investment around the country: (1) the Securities and Exchange Commission (“SEC”) lifted the prohibition on general solicitation for...more

Orrick's Financial Industry Week in Review

Council of EU Presidency Compromise Proposal on Benchmark Regulation - On September 10, the Presidency of the Council of the EU published its first compromise proposal (dated September 9, 2014) relating to the European...more

Does Your Company’s “Inadequate Compliance Program” Violate Securities Laws?

In a recent matter before the SEC, settlement of an FCPA claim with Smith & Wesson has raised some worrisome new issues for compliance officers. This settlement is noteworthy for two reasons: 1. Small and mid-sized...more

SEC Adopts Final Rules Relating to NRSROs and Third-Party Due Diligence Reports

On August 27, 2014, the SEC adopted a number of new rules and amendments designed to improve the quality of credit ratings and increase credit rating agency accountability in accordance with the Dodd-Frank Act. The...more

New Rules for Third-Party Due Diligence Reports for Asset-Backed Securities

On August 27, 2014, the Securities and Exchange Commission (the “SEC”) adopted final rules (the “Final Rules”) implementing, among other things, provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of...more

Buying an FCPA Violation Mergers and Acquisition Risks [Video]

FCPA risks are significant when companies acquire other companies. The Justice Department and the SEC have imposed "successor" liability on companies for past bribery violations committed by an acquired company. Pre-closing...more

SEC Adopts Rules For Credit Rating Agencies

At an open meeting this morning, the SEC adopted, by a vote of three to two, rule amendments and new rules to implement provisions of Dodd-Frank applicable to credit rating agencies registered as nationally recognized...more

The Value of Due Diligence Certifications

As companies wrestle with designing and implementing due diligence screening and monitoring programs, several organizations have been pushing the value of certifications....more

FinCEN Proposes to Expand Financial Institution Customer Due Diligence Requirements

The proposal would require financial institutions to identify beneficial owners of legal entities and codify existing customer due diligence guidance....more

SEC “Likes” Social Media for Investment Advisers

The SEC staff views social media as a useful tool that helps consumers conduct their own due diligence on investment advisers. In a recent Investment Management Guidance Update, the staff stated that, under certain...more

"SEC Issues New FAQs on Municipal Advisor Rule"

On May 19, 2014, the SEC issued an updated set of FAQs on the rule defining and requiring municipal advisors to register with the SEC (the Rule). The updated FAQs provide clarification on several important issues for certain...more

SEC Issues Updated Guidance on Conflict Minerals Just in Time for May 31 Deadline

The Securities and Exchange Commission (SEC) recently updated its answers to frequently asked questions from registered companies to provide additional guidance on disclosure requirements under its conflict minerals rule. The...more

More Due Diligence For Investments In Private Funds

The SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a January 28, 2014 Risk Alert summarizing current practices and trends in how investment advisers conduct due diligence on private funds they recommend...more

Congressional Leaders Tell Mary Jo White To Implement Conflict Minerals Rules Now

In a letter to the SEC Chair, Mary Jo White, Senator Edward J. Markey and a group of other Member of Congress urged the financial oversight agency to implement the rule requiring due diligence and reporting requirements on...more

US Court of Appeals for the District of Columbia Circuit Partially Invalidates Conflict Minerals Rule

On April 14, the US Court of Appeals for the District of Columbia Circuit issued an opinion in the lawsuit challenging the Securities and Exchange Commission’s conflict minerals rule which reversed, in part, the prior...more

SEC Charges Adviser, Others In Fee Splitting Scheme

A registered investment adviser and its principals were named as Respondents in a proceeding that centers on allegations of undisclosed revenue sharing arrangements, conflict of interest, violations of the custody rule and...more

Circuit Court Largely Rejects Challenges To SEC Conflict Mineral Rules

The SEC largely prevailed in the D.C. Circuit Court of Appeals in a suit changing the Rules promulgated by the agency under Dodd-Frank regarding conflict minerals. National Association of Manufacturers v. SEC, No.. 13-5252...more

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