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Daily Report: Broad Powers Seen for Obama in Cyberstrike – NYTimes.com

A secret legal review on the use of America’s growing arsenal of cyberweapons has concluded that President Obama has the broad power to order a pre-emptive strike if the United States detects credible evidence of a major digital attack looming from abroad, according to officials involved in the review, report David E. Sanger and Thom Shanker in Monday’s New York Times.

That decision is among several reached in recent months as the administration moves, in the next few weeks, to approve the nation’s first rules for how the military can defend, or retaliate, against a major cyberattack. New policies will also govern how the intelligence agencies can carry out searches of faraway computer networks for signs of potential attacks on the United States and, if the president approves, attack adversaries by injecting them with destructive code — even if there is no declared war.

The rules will be highly classified, just as those governing drone strikes have been closely held. John O. Brennan, Mr. Obama’s chief counterterrorism adviser and his nominee to run the Central Intelligence Agency, played a central role in developing the administration’s policies regarding both drones and cyberwarfare, the two newest and most politically sensitive weapons in the American arsenal.

via Daily Report: Broad Powers Seen for Obama in Cyberstrike – NYTimes.com.

SEC’s Sought-After Powers May Not Affect FCPA – Corruption Currents – WSJ

New powers sought by the Securities and Exchange Commission seem likely to have a limited effect on the agency’s enforcement of the Foreign Corrupt Practices Act.

As the Wall Street Journal reported Wednesday, SEC Chairman Mary Schapiro is seeking to impose much larger penalties on financial firms and individuals that commit fraud, after U.S. District Judge Jed S. Rakoff spurned a $285 million settlement between the SEC and Citigroup. That pact addressed civil-fraud charges that the New York company failed to disclose to investors its role in selecting investments in a $1 billion mortgage-bond deal that it was simultaneously betting would fail.

In a letter sent to senators late Monday, Schapiro asked Congress to pursue legislation that changes the legal formulas used by the agency to calculate penalties. Her proposals would allow the SEC to impose fines up to nine times greater than the maximum currently allowed by U.S. law. But the new formula wouldn’t apply to the primary tool used by the SEC in FCPA enforcement: disgorgement of profits.

Under the Securities Exchange Act of 1934, the SEC is authorized to pursue ill-gotten gains obtained through violation of federal securities law, a penalty called disgorgement. Disgorgement is a so-called “equitable remedy,” meaning the SEC is only allowed to recover the approximate amount earned from the crimes. Disgorgement is not intended to be punitive, but acts as a deterrent to illegal profit (See here for a good explanation).

The SEC has increasingly relied on disgorgement in its ramped-up enforcement of the FCPA. In April, Johnson & Johnson disgorged $48.6 million in profits including  prejudgment interest to settle allegations that it violated the FCPA. The drug maker also paid a $21.4 million criminal penalty to the Department of Justice as part of a coordinated settlement.

While the SEC can and does levy civil fines for FCPA violations, it usually chooses disgorgement from its toolbox of civil penalties. Danforth Newcomb, counsel at Shearman & Sterling LLP, said that reliance stemmed, in part, from increased coordination with the Justice Department and foreign law enforcement authorities on FCPA settlement proceedings.

via SEC’s Sought-After Powers May Not Affect FCPA – Corruption Currents – WSJ.

F.B.I. Giving Agents New Powers in Revised Manual – NYTimes.com

The Federal Bureau of Investigation is giving significant new powers to its roughly 14,000 agents, allowing them more leeway to search databases, go through household trash or use surveillance teams to scrutinize the lives of people who have attracted their attention.

The F.B.I. soon plans to issue a new edition of its manual, called the Domestic Investigations and Operations Guide, according to an official who has worked on the draft document and several others who have been briefed on its contents. The new rules add to several measures taken over the past decade to give agents more latitude as they search for signs of criminal or terrorist activity.

The F.B.I. recently briefed several privacy advocates about the coming changes. Among them, Michael German, a former F.B.I. agent who is now a lawyer for the American Civil Liberties Union, argued that it was unwise to further ease restrictions on agents’ power to use potentially intrusive techniques, especially if they lacked a firm reason to suspect someone of wrongdoing.

“Claiming additional authorities to investigate people only further raises the potential for abuse,” Mr. German said, pointing to complaints about the bureau’s surveillance of domestic political advocacy groups and mosques and to an inspector general’s findings in 2007 that the F.B.I. had frequently misused “national security letters,” which allow agents to obtain information like phone records without a court order.

via F.B.I. Giving Agents New Powers in Revised Manual – NYTimes.com.