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Lawyer: Hedge Funds Must Heed Foreign Corrupt Practices Act | FINalternatives

February 7, 2012 By Leave a Comment

What is the Foreign Corrupt Practices act and why should you be concerned about it?  Matthew Reinhard of the Washington, D.C.-based law firm Miller & Chevalier, says FCPA penalties have increased “exponentially” over the past decade and could pose a significant economic risk to investment managers. Reinhard would know—he focuses his practice on white collar crime, internal investigations and complex civil litigation and has conducted internal investigations into allegations of FCPA violations. He spoke to FINalternatives’ recently about the implications of the FCPA for private equity and hedge fund managers.

via Lawyer: Hedge Funds Must Heed Foreign Corrupt Practices Act | FINalternatives.

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Judge to KPMG: Save the hard drives — and blame yourself | Thomson Reuters (Alison Frankel)

February 7, 2012 By Leave a Comment

Memo to KPMG: When a federal judge sends a strong signal that she doesn’t want to show up her magistrate judge, you should heed the warning.

In January, you may recall, U.S. District Judge Colleen McMahon of Manhattan federal court attempted to moot a hot e-discovery dispute between the audit firm KPMG and a putative class of audit associates suing KPMG for unpaid overtime. The federal magistrate overseeing discovery in the case had ordered KPMG to preserve the computer hard drives of every potential class member, including those who had left the firm. KPMG’s lawyers at Sidley Austin argued that storing the hard drives could end up costing more than the plaintiffs’ claims are worth. The Chamber of Commerce and the International Association of Defense Counsel piled on, asserting that the magistrate’s e-discovery order had the potential to fundamentally change the balance of power in class actions by making it too expensive for KPMG and other defendants in similar situations to continue litigating cases against them.

McMahon was clearly reluctant to second-guess U.S. Magistrate Judge James Cott, so in a Jan. 3 order conditionally certifying a class of audit associates, she hinted that her ruling, which focused on a classwide question of KPMG’s policy rather than individualized facts, had mooted the e-discovery flap. KPMG and the plaintiffs, represented by Outten & Golden, declined to take the hint. KPMG continued its call for McMahon to overturn the magistrate’s discovery order.

On Friday, McMahon said no — and blamed KPMG for the predicament. Significantly, the judge agreed with KPMG’s amici that “proportionality is necessarily a factor in determining a party’s preservation obligations.” She said that it doesn’t make sense for the cost of retaining e-discovery to outweigh the potential value of the information that’s being preserved. But McMahon’s 22-page opinion concluded that KPMG had been so obdurate in refusing access to the hard drives that she couldn’t conduct a proportionality analysis.

via Judge to KPMG: Save the hard drives — and blame yourself.

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When Is A Local Resource Not A Good Option For E-Discovery Services?

January 25, 2012 By Leave a Comment

It is not uncommon to read posts, tweets and emails within the litigation support industry with a firm, corporation or vendor urgently seeking “local” resources at a distant location, whether it be here in the United States or at points around the globe.  While sometimes it is simply a matter of practicality, more often than not it is a desperate attempt to satisfy a client who refuses to acknowledge the terms “travel” or “remote” as part of a polite conversation.  Why might this be?  Well, historically these terms have often resulted in unexpectedly large invoices due to high hourly fees and premium airfare requirements.

One should note that there are a number of locations in the world where there simply is not enough local demand to support a legal technology business.  Many legal systems outside of the US and UK do not have discovery and disclosure requirements, thus there a few resources to support such services.  Not only can this be noted for global finance centers such as Shanghai, Zurich and Dubai, but many regions in the United States where there is not a demand for electronic discovery services.  Some scanning and reprographics shops have taken the initiative to invest in the appropriate software, but unfortunately may not have the in-house knowledge and experience to execute the requirements of a project successfully.  This leaves critical decisions for the corporation and firm involved in a case – blindly search for an unknown vendor with unproven skills or leverage a relationship with a specialist that has a range of direct experience and experience?  At what point does cost – or perceived cost – outweigh potential risks such as spoliation?

There are, however, a growing number of options to the historical norms within the industry.   Boutique companies such as Global EDD Group are bridging the gap between organizations and their growing national and international electronic discovery needs by leveraging proven experience, low operational expenses and an extensive network of resources to offer clients legal technology services around the globe at price points typically associated with local vendors.

So, the next time you have a cross-border or geographically-dispersed matter with e-discovery requirements, take a moment to evaluate all of the options available to you and your client.  You might be very surprised at the robust options available for high quality remote/onsite services.

 

 

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Breach Response: The Legal View | Gov Info Security (Jeffrey Roman)

December 16, 2011 By Leave a Comment

As legal issues surrounding data breaches become increasingly complex, more organizations are turning to attorneys for post-breach response, says Lisa Sotto, a managing partner for New York-based law firm Hunton & Williams.

Complying with a multitude of regional and international laws when consumers’ personal information is compromised is critical. And depending on the size and reach of the organization breached, that could mean complying with dozens of mandates and regulations in various parts of the country and world.

Sotto, who focuses on privacy and information security, says the role of attorneys has changed significantly in recent years. After a data breach, attorneys handle many facets during the response process. “A lawyer who’s well-versed in managing data breaches knows that she or he needs to manage really much more than the straight legal compliance issues,” Sotto says in an interview with BankInfoSecurity’s Tracy Kitten

via Breach Response: The Legal View.

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BP has accused Halliburton of destroying damaging evidence relating to last year’s Gulf of Mexico oil spill | guardian.co.uk

December 6, 2011 By Leave a Comment

BP has accused Halliburton of destroying damaging evidence relating to last year’s Gulf of Mexico oil spill.

In a court filing, BP has alleged that the US oil services firm of intentionally destroying evidence about possible problems with its cement slurry poured into the deep-sea Macondo well about 100 miles (160 km) off the Louisiana coast. An oil well must be cemented properly to avoid blowouts.

Also in the documents filed in a New Orleans federal court, BP accuses Halliburton of failing to produce incriminating computer modelling evidence.

BP asked a US judge to penalise Halliburton and order a court-sponsored computer forensic team to recover the modelling results.

Halliburton has told media outlets that the accusations are untrue.

The allegations in the 310-page motion add to a showdown among BP and the contractors Halliburton and Transocean over blame in the Deepwater Horizon blast in April 2010, which killed 11 workers and led to 206m US gallons (780m litres) of crude oil escaping into the Gulf of Mexico. So far, BP, the majority owner of the Macondo well, has footed the bill for the emergency response and cleanup.

Also involved are Anadarko Petroleum and Cameron International.

via BP accuses Halliburton over Gulf of Mexico oil spill | Environment | guardian.co.uk.

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Windows 8 will be ‘largely irrelevant’ on PCs, predicts IDC – Computerworld

December 6, 2011 By Leave a Comment

Windows 8 will be “largely irrelevant” to traditional PC users, a research firm said Monday.

Microsoft faces a tough sell with the new operating system, IDC said, because Windows 8 tries to “offer the best of both worlds” with a single OS suitable for both desktops and tablets.

“Windows 8 will be largely irrelevant to the users of traditional PCs, and we expect effectively no upgrade activity from Windows 7 to Windows 8 in that form factor,” said IDC.

Al Gillen, an IDC research vice president, authored the prediction, one of 10 on a list of prognostications for 2012 that the firm released last week.

In an interview Monday, Gillen explained his dour Windows 8-on-the-desktop forecast.

“Customers will be asking ‘What value does Windows 8 bring to my desktops and laptops?’ and the only real benefit I can see is that it provides access to the Windows app store,” Gillen said.

Microsoft first confirmed in August that Windows 8 will sport a “Windows Store,” and disclosed more details about the distribution market a month later at a major developer conference. Microsoft is to reveal additional information about the store Tuesday, Dec. 6, at a San Francisco event.

Gillen said that application compatibility issues with Windows 8, and the recent push by enterprises to adopt Windows 7 will also hamper Windows 8 acceptance on PCs.

via Windows 8 will be ‘largely irrelevant’ on PCs, predicts IDC – Computerworld.

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Why FCPA Prosecution Risk Has Become Personal

November 23, 2011 By Leave a Comment

There was a time when the U.S. Department of Justice primarily focused its attention on prosecuting companies responsible for bribing foreign officials. Critics of this practice argued that the resulting fines had become just another cost of doing business. So, about eight years ago, the DoJ announced a new strategy of targeting corporate officers and directors for criminal prosecution under the Foreign Corrupt Practices Act (FCPA) in order to more significantly deter global corporations from engaging in corrupt practices.

If the number of convictions is any indication, the strategy may be paying off: since 2005, dozens of corporate executives have been convicted of violating the FCPA, paid hefty fines from their personal assets, and spent years in prison. (Of course, companies are still the subject of federal agencies’ wrath: the most recent case will result in Pfizer paying more than $60 million to settle FCPA charges, according to the Wall Street Journal.)

Last month, law firm Chadbourne & Parke released a study of the 61 FCPA prosecutions involving individual defendants over the past six years. A surprising number, 35%, of the defendants were the president, chief executive officer, or chief operating officer of their firm. In all, 53 of the individuals charged with violating the FCPA during this period were senior officers — a staggering 87% of all defendants.

These findings should be of concern to corporate executives worldwide. Though the U.K. Bribery Act — which went into effect earlier this year — has captured headlines as a force to be reckoned with, in many ways, the 33-year-old FCPA still reigns supreme in its threat to CEOs and CFOs who do business in the United States.

To understand the potential magnitude, one need look no further than the recent News of the World phone-hacking scandal that has consumed Rupert Murdoch and his News Corp. for much of the year. The gravest threat of criminal prosecution facing the Murdochs and other senior executives of News Corp. might come not from British authorities, who would directly oversee the publication, but from the FCPA.

via Why FCPA Prosecution Risk Has Become Personal.

Filed Under: From The News Tagged With: , , , , , , ,

Why FCPA Prosecution Risk Has Become Personal | CFO.com

November 23, 2011 By Leave a Comment

There was a time when the U.S. Department of Justice primarily focused its attention on prosecuting companies responsible for bribing foreign officials. Critics of this practice argued that the resulting fines had become just another cost of doing business. So, about eight years ago, the DoJ announced a new strategy of targeting corporate officers and directors for criminal prosecution under the Foreign Corrupt Practices Act (FCPA) in order to more significantly deter global corporations from engaging in corrupt practices.

If the number of convictions is any indication, the strategy may be paying off: since 2005, dozens of corporate executives have been convicted of violating the FCPA, paid hefty fines from their personal assets, and spent years in prison. (Of course, companies are still the subject of federal agencies’ wrath: the most recent case will result in Pfizer paying more than $60 million to settle FCPA charges, according to the Wall Street Journal.)

Last month, law firm Chadbourne & Parke released a study of the 61 FCPA prosecutions involving individual defendants over the past six years. A surprising number, 35%, of the defendants were the president, chief executive officer, or chief operating officer of their firm. In all, 53 of the individuals charged with violating the FCPA during this period were senior officers — a staggering 87% of all defendants.

These findings should be of concern to corporate executives worldwide. Though the U.K. Bribery Act — which went into effect earlier this year — has captured headlines as a force to be reckoned with, in many ways, the 33-year-old FCPA still reigns supreme in its threat to CEOs and CFOs who do business in the United States.

To understand the potential magnitude, one need look no further than the recent News of the World phone-hacking scandal that has consumed Rupert Murdoch and his News Corp. for much of the year. The gravest threat of criminal prosecution facing the Murdochs and other senior executives of News Corp. might come not from British authorities, who would directly oversee the publication, but from the FCPA.

via Why FCPA Prosecution Risk Has Become Personal.

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China: ‘Where The Bribes Are’ – WSJ

November 17, 2011 By Leave a Comment

By now, it’s well known that the energy sector has been hit hardest by FCPA prosecutions in the 34 years since the law was passed. But how hard, exactly, is that?

About $2 billion in penalties, turns out.

China poses a high corruption risk. No secret there. But did you know it also poses the broadest risk of any country?

The investigative firm James Mintz Group has a new database of every FCPA case that it says allows users to access such information in short order by clicking on an interactive map.

Corruption Current’s favorite feature is the filtering by sector. Pick your sector on the bar on the left, and you can see which countries apparently have been the most treacherous for a particular industry — energy, manufacturing, defense, etc. Consulting comes in second, with a total of about $847 million in penalties.

Patrick Kelkar, a partner at the firm who handles FCPA investigations, pointed out that China was the only country in the database — called “Where the Bribes Are” — that cut across every sector that has ever been targeted.

via China: ‘Where The Bribes Are’ – China Real Time Report – WSJ.

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E-discovery ruling in KPMG case: Brace for ‘profound’ impact? | Thomson Reuters

November 9, 2011 By Leave a Comment

For all of its zeal in squelching what it considers unfounded class actions against U.S. businesses, the Chamber of Commerce rarely strays from appellate courts to venture into the weeds of a federal district court discovery dispute. But Monday, the Chamber filed an amicus brief in an uncertified wage-and-hour class action against the accounting firm KPMG, warning that if U.S. District Judge Colleen McMahon of Manhattan federal court adopts the order of a magistrate judge, the ruling will set “a dangerous precedent” that will be of “profound significance to businesses in America.” Piling on in their own Nov. 8 amicus brief, the Washington Legal Foundation and the International Association of Defense Counsel assert that the magistrate’s ruling could fundamentally distort class-action litigation by potentially making it cheaper to settle a case than to comply with discovery orders.

So what is this supposedly devastating, albeit preliminary, ruling? On Oct. 11, U.S. Magistrate Judge James Cott issued an order resolving a dispute between KPMG and Outten & Golden, the law firm representing two proposed classes of entry-level auditors who claim the accounting firm owes them overtime wages. The fight involved the computer hard drives of potential class members: KPMG and class counsel agreed that the plaintiffs could use sampling software to limit the electronic information KPMG would have to preserve, but they couldn’t agree on the sampling criteria or the number of computer hard drives to include in the sample. KPMG’s lawyers at Sidley Austin moved for an order limiting the sample size to 100 randomly selected hard drives.

Instead, Cott ruled that KPMG has to preserve the hard drive of every potential class member. “Prudence favors retaining all relevant materials,” Cott wrote, pointing to the seminal e-discovery ruling, Zubulake v. UBS Warburg. The magistrate judge reasoned that because McMahon, the district judge, hasn’t yet ruled on class certification in the KPMG audit associate case, every entry-level auditor in the opt-in action is a potential “key player” under Zubulake, whether in the Manhattan class action or in another case that could be filed depending on how McMahon ultimately defines the class.

“These audit associates are, at the very least, key players in any one of many potential actions that could result if the motion to certify is denied,” Cott wrote. “With so many unknowns involved at this stage in the litigation, permitting KPMG to destroy the hard drives is simply not appropriate at this time.”

via E-discovery ruling in KPMG case: Brace for ‘profound’ impact?.

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