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from Financial Regulatory Forum:
New U.S. court rulings may add to costs, risks of finance industry regulatory enforcement
By Stuart Gittleman
NEW YORK, June 26 (Thomson Reuters Accelus) - Two court rulings last week may raise the enforcement burden for the financial services industry and its regulators.
A Brooklyn federal judge suggested that for regulatory targets of the Securities and Exchange Commission, forcing the agency to take them to court could end up costing less than settling before litigation is begun, depending on legal fees and other considerations, because its ability to seek compensation in court is limited.And a Supreme Court ruling may make investigating potential violations more expensive and time-consuming for prosecutors and agency lawyers as well as criminal and regulatory defense counsel and may also cut the number of jury trials.
Federal judge "reluctantly" inks SEC settlement with fund managers
In Brooklyn Judge Frederic Block approved a settlement between the SEC and Ralph Cioffi and Matthew Tannin, two former Bear Stearns hedge fund managers.
Cioffi and Tannin were previously acquitted of related criminal charges in connection with the funds' failure, which occurred the year before the bank itself collapsed.
from Financial Regulatory Forum:
Foreign bribery fines and settlements: who should get the money?
By Luke Balleny
NEW YORK, May 9 (Thomson Reuters Foundation) - ‘Share and share alike,’ some parents love to tell their offspring. But when it comes to fines or settlements from foreign bribery cases, the issue of sharing is a contentious one.
The U.S. government receives all proceeds from fines or settlements that companies pay it in connection with violations, or alleged violations, of U.S. anti-bribery laws.But would the country ever share the proceeds of such fines or settlements with governmental and non-governmental groups working in the countries where the bribery allegedly occurred?
from Financial Regulatory Forum:
Wal-Mart bribery scandal seen undermining effort to soften U.S. anti-corruption statute
By Brett Wolf
ST. LOUIS, May 2 (Thomson Reuters Accelus) - News that Wal-Mart may have tried to cover up bribes paid by its Mexico unit will make it difficult for Congress to weaken an anti-bribery statute loathed by the U.S. business community, at least in the short term, sources say.
"My conclusion is that the Wal-Mart article makes it impossible to change the Foreign Corrupt Practices Act at the moment," said Peter Henning, a professor at Wayne State University Law School.
from Alison Frankel:
With FCPA under scrutiny, will DOJ expand use of Travel Act?
If the Foreign Corrupt Practices Act is Peyton Manning, the Travel Act could turn out to be his little brother Eli.
Allow me to explain. As we all know, until the last several months, FCPA has been one of the Justice Department's Hall of Fame success stories. Prosecutors have reaped billions in settlements with corporations accused of bribing foreign officials to obtain state-sponsored contracts. The list of FCPA defendants that signed plea deals -- including Siemens and Halliburton -- is long and sobering, which means the Justice Department met the dual goals of buffing up its prosecution record and satisfying the larger U.S. policy interest in deterring overseas corruption. But of late the department's FCPA record has taken a hit (sort of like Peyton's neck) with the dismissal of the Lindsey Manufacturing and Africa sting case.
from Alison Frankel:
News Corp and the FCPA paradox
For the Justice Department's Foreign Corrupt Practices prosecutors, last week was the best of times and the worst of times. A federal judge in Houston sentenced the former CEO of the Halliburton spin-off KBR Inc. to 30 months in prison for his role in a 10-year scheme to pay $182 million in bribes to Nigerian officials in order to secure $6 billion in military oil and gas contracts. Albert Stanley's sentencing marked the end of one of the DOJ's most successful FCPA prosecutions, in which KBR agreed to pay $579 million in criminal fines and disgorged profits -- the second-highest fine in an FCPA case at the time the guilty plea and Securities and Exchange Commission settlement was announced in 2009. The KBR case is an FCPA paradigm, a classic demonstration of the law's power to expose and punish corruption that would otherwise have stayed in the shadows.
The Stanley sentencing came a day after the end of the Justice Department's biggest FCPA blunder, the so-called Africa sting charges against more than 20 defendants accused of agreeing to pay bribes to Gabon officials who supposedly controlled military contract awards. U.S. District Judge Richard Leon in Washington granted the DOJ's motion to dismiss charges against all of the defendants who hadn't pleaded guilty, after prosecutors failed to obtain any convictions in the first two Africa sting trials. Leon took the opportunity to castigate prosecutors for a "very, very aggressive conspiracy theory" that turned out to be unsupported by "the necessary evidence to sustain it." I've written about the troubling backstory of the Africa sting prosecution, in which the government set up an operation center and deployed a highly compromised informant specifically to manufacture FCPA charges, with federal agents all the while texting one another about the attention they'd get when news of the case broke.
from Financial Regulatory Forum:
U.S. anti-corruption setbacks seen having little impact on company strategies
By Brett Wolf
NEW YORK, Feb. 23 (Thomson Reuters Accelus) - The U.S. Justice Department has suffered a string of setbacks in its efforts to enforce the Foreign Corrupt Practices Act, including two this week, but it retains sufficient leverage to persuade companies to settle bribery allegations without a legal fight, sources said.
"I think companies should be emboldened, but I doubt they will," said Mike Koehler, an assistant professor of business law at Butler University. "After all, to challenge the Justice Department and to put it to its burden of proof requires a company to be criminally indicted." Indictment would not only open up a long legal battle, it would also threaten a company's reputation. "So long as alternative resolutions vehicles like non-prosecution agreements or deferred prosecution agreements are offered, companies will continue to agree to these resolutions regardless of whether the law or facts support a clear FCPA violation," Koehler said.
from Alison Frankel:
Lawyers for latest acquitted FCPA defendants: DOJ ‘overreaching’
When Michael Madigan of Orrick, Herrington & Sutcliffe delivered a closing statement two weeks ago in the criminal trial of his client Greg Godsey, he told the federal jury in Washington, D.C., that the government had "danced with the devil." In 2007, Madigan said, the Justice Department set up a "little nest out in Manassas, Virginia," with the express intention of putting together Foreign Corrupt Practices Act cases. But when the FBI first tried to use an informant who appeared right after the Manassas base was established, it couldn't make out any traditional cases based on his evidence. So according to Madigan, the Justice Department instead engineered a 2009 sting involving alleged bribes to the defense minister of Gabon in exchange for military supply contracts. That operation netted Justice 22 FCPA defendants and countless headlines touting its get-tough policy on foreign corruption.
On Monday, two of the Gabon sting defendants -- including Madigan's client -- were acquitted by the jury. (Jurors said they were deadlocked on charges against three other defendants, but U.S. District Judge Richard Leon ordered them to keep deliberating.) Monday's repudiation of the Justice Department's case came a month after Leon entered an acquittal for a sixth defendant in the Gabon sting case, and two weeks after a federal judge in Texas dismissed an FCPA case against a former employee of an ABB Group subsidiary, who was accused of bribing a Mexican official. The Texas judge wouldn't even let the government's case go to a jury. The four recent acquittals extend a string of setbacks for the Justice Department in FCPA prosecutions, including a July mistrial in a previous Gabon sting trial against four different defendants, as well as the December dismissal of the Department's case against Lindsey Manufacturing on prosecutorial misconduct grounds.
from Alison Frankel:
What FCPA defendants can learn from blockbuster Lindsey win
In the run-up to the first trial of a corporation charged with violating the Foreign Corrupt Practices Act, Lindsey Manufacturing and its lead counsel, Jan Handzlik, put up as vigorous a defense as you can imagine. Handzlik (then at GreenbergTraurig and now at Venable) worked with Janet Levine of Crowell & Moring (counsel for Steve Lee, Lindsey's former CFO) to challenge the government's conduct, its evidence, even its interpretation of the FCPA's language. It was to no avail. In May, after a five-week trial and seven hours of deliberation, a Los Angeles federal jury convicted Lindsey Manufacturing, chairman and CEO Keith Lindsey, and CFO Lee on all counts. For Handzlik and Levine, who were convinced the prosecution's allegations that their clients funneled bribes to officials of a Mexican state-owned electric company were meritless, the conviction was devastating.
So you can image their joy Thursday, when U.S. District Judge A. Howard Matz in Los Angeles vacated the convictions and threw out the indictment against their clients. Matz dismissed the government's case with prejudice, which means that unless the U.S. Court of Appeals for the Ninth Circuit overturns his ruling, the Lindsey defendants cannot be recharged.
from Financial Regulatory Forum:
ANALYSIS-Companies could get caught in Asia as corruption rules tighten
By Rachel Armstrong
SINGAPORE, Jan 20 (Reuters) - Multinational firms trying to get a bigger piece of the Asia growth story face a rising risk of becoming embroiled in corruption scandals unless they enforce stricter compliance norms and new regulations.
The region may have moved centre stage in many companies' growth strategies as developed economies struggle but firms are also scrutinising investment projects even more and stepping up due diligence before jumping into new joint ventures and M&A.
