SEC

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

December 2, 2011 By Global EDD Group Leave a Comment

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.

Filed Under: From The News Tagged With: Act, enforcement, FCPA, foreign corrupt practices act, law, Powers, SEC

SEC Breaks Enforcement Record, Begins Tracking FCPA Separately – Corruption Currents – WSJ

November 10, 2011 By Global EDD Group Leave a Comment

The U.S. Securities and Exchange Commission filed a record of 735 enforcement actions in the last fiscal year, and broke out violations of foreign bribery law for the first time.The record number of enforcement actions, however, netted a slight decrease in disgorgement and penalties paid in the past fiscal year over the year before. In fiscal year 2011, which ended Sept. 30, the SEC collected $2.81 billion in disgorgement and penalties, down from $2.85 billion in fiscal 2010.Notably, the SEC broke out enforcement statistics for the first time for violations of the Foreign Corrupt Practices Act, which bars bribing foreign officials for business purposes. The SEC recorded 20 enforcement actions in fiscal year 2011.

via SEC Breaks Enforcement Record, Begins Tracking FCPA Separately – Corruption Currents – WSJ.

Filed Under: From The News Tagged With: Breaks, bribery law, corrupt practices act, corruption, disgorgement, enforcement, enforcement statistics, SEC, securities and exchange commission

Cybersecurity Disclosures: The SEC Wants Them and Wants Them Now

November 8, 2011 By Global EDD Group Leave a Comment

(Business Law Currents) Cyber risk poses enormous questions and the U.S. Securities and Exchange Commission wants answers. On October 13, 2011, the SEC’s Corporation Finance Division (the Division) provided guidance to public companies for disclosures on cybersecurity. While the guidelines are non-binding and the Commission itself has neither approved nor disapproved them, they guidance does paint a fuller picture of what kind of risks companies should (and need not) be disclosing.

The guidance allows that cyber risk is uncharted territory.1 “Although no existing disclosure requirement explicitly refers to cybersecurity risks and cyber incidents,” explains the Division, “a number of disclosure requirements may impose an obligation on registrants to disclose such risks and incidents. In addition, material information regarding cybersecurity risks and cyber incidents is required to be disclosed when necessary in order to make other required disclosures, in light of the circumstances under which they are made, not misleading.”2

Gauging what degree of risk rises to the level of materiality not unsurprisingly remains a judgment call. The Division suggests prior cyber incidents, their severity, their “quantitative and qualitative magnitude,” and the possible costs and consequences as factors underlying proper evaluation.3 Still, the risks should be identifiable and not descend into yet another element of boilerplate disclosure.4

The Division has proposed non-exhaustive examples of the kinds of cyber risks and incidents appropriate for disclosure. These topics include:

Discussion of aspects of the registrant’s business or operations that give rise to material cybersecurity risks and the potential costs and consequences;

To the extent the registrant outsources functions that have material cybersecurity risks, description of those functions and how the registrant addresses those risks;

Description of cyber incidents experienced by the registrant that are individually, or in the aggregate, material, including a description of the costs and other consequences;

Risks related to cyber incidents that may remain undetected for an extended period; and

Description of relevant insurance coverage.

via Cybersecurity Disclosures: The SEC Wants Them and Wants Them Now.

Filed Under: From The News Tagged With: Business, cyber risk, cyber risks, Description, disclosure requirement, disclosure requirements, guidance, SEC, securities and exchange commission, Them

Is Yet Another FCPA Sweep On the Way? – WSJ

November 3, 2011 By Global EDD Group Leave a Comment

Defense, oil services, pharmaceutical, medical device and finance. These industries have this in common: They’ve all endured broad government investigations for violations of the Foreign Corrupt Practices Act, the world’s meanest anti-bribery law.

Law Blog is wondering if their might be another sweep underway.

Why? Because Aircraft manufacturer Embraer SA said Thursday that U.S. regulators are investigating whether the company paid bribes overseas. The Brazilian company said it had hired outside counsel in response to a subpoena from the Securities and Exchange Commission.

Embraer made the disclosure in its third-quarter results, marking the first time an aerospace company has revealed itself as the target an FCPA investigation since the FBI this summer notified federal agencies that it was taking a hard look at the industry.

Bureau officials emphasized the agency’s interest in possible corruption in contracts between aircraft and parts makers and state-owned airlines, according to a person familiar with the matter. Plenty of defense companies have been scrutinized, but the the focus on commercial sales is new.

Embraer supplies aircraft for the Brazilian Air Force and other armed forces, and sells commercial and executive jets. The company reported $3.8 billion in revenue for the first nine months of 2011, with commercial and executive sales accounting for about 84%.

It isn’t clear whether the SEC probe is homing in on defense or commercial sales, or both. A company spokeswoman declined to comment. An SEC spokesman declined to comment, as did a spokeswoman for the Justice Department.

via Is Yet Another FCPA Sweep On the Way? – Law Blog – WSJ.

Filed Under: From The News Tagged With: brazilian air force, bribery law, Embraer, executive jets, law, oil, pharmaceutical medical device, SEC, spokeswoman, third quarter results

Las Vegas Sands Probe: Explained – Law Blog – WSJ

October 21, 2011 By Global EDD Group Leave a Comment

Since the initial news of the U.S. government’s bribery investigation into Las Vegas Sands’ Macau operations, we’ve scarcely heard a peep about it.

The casino owner and operator disclosed in March that the U.S. Securities and Exchange Commission and the U.S. Justice Department were investigating whether LVS violated the Foreign Corrupt Practices Act, which bars bribery of foreign officials.

FCPA aficionados know that this case holds intense interest. The government, no doubt, wants to make a splash by pegging a casino, and, in the words of the Fixx, one thing leads to another. The SEC and Justice Department rarely stop with one company in any particular industry when it comes to overseas bribery. They are likely to start looking at other casinos, if they haven’t already.

So, with that windup, WSJ’s Kate O’Keeffe has a report on an internal memo from LVS general counsel Gayle Hyman that points to a possible focus of the probe.

Hyman’s memo, reviewed by the WSJ, instructs employees at Sands to retain documents regarding “transmission of anything of value” to current and former Macau government officials and their family members. The memo also names several Sands employees and contractors about whom documents must be preserved. Among those people is a prominent Macau lawyer who is a focus of a dispute between the company and its former chief executive for Macau.

The memo mirrors a subpoena sent by the SEC, a person familiar with the matter told the Journal.

via Las Vegas Sands Probe: Explained – Law Blog – WSJ.

Filed Under: From The News Tagged With: corrupt practices act, foreign corrupt practices act, las vegas sands macau, LVS, macau government, memo, news, probe, SEC, securities and exchange commission

AFP: SEC may have destroyed crucial probe data: senator

August 17, 2011 By Global EDD Group Leave a Comment

A US senator said Wednesday that the Securities and Exchange Commission may have destroyed thousands of documents related to probes into possible violations by major banks and hedge funds.

Senior Republican Senator Chuck Grassley said that “an agency whistle-blower” sent him a letter that described the SEC’s allegedly unlawful destruction of records related to more than 9,000 informal investigations.

The documents included cases arising from the 2008-2009 financial crisis, including Goldman Sachs, AIG, and the Bernard Madoff pyramid fund, according to the whistle-blower, Grassley said.

The whistle-blower, 13-year SEC lawyer Darcy Flynn, said the destroyed records related to “matters under inquiry” or MUIs — probes that precede the launch of formal investigations.

“From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” Grassley said in a statement.

“It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence.”

via AFP: SEC may have destroyed crucial probe data: senator.

Filed Under: From The News Tagged With: Bernard Madoff, chuck grassley, destruction, formal investigations, goldman sachs, LETTER, Republican, Sachs, SEC, senator chuck grassley

LulzSec hacks into Arizona police’s computers, posts confidential documents – International Business Times

June 24, 2011 By Global EDD Group Leave a Comment

Hacking group LulzSec, who declared war against Government sites, banks under operation ‘Anti-Sec’, has posted confidential documents from Arizona police.

“We are targeting AZDPS specifically because we are against SB1070 law and the racial profiling anti-immigrant police state that is Arizona,” LulzSec said in a press release. “Hackers of the world are uniting and taking direct action against our common oppressorss—the government, corporations, police, and militaries of the world.”

Spokesman Steve Harrison of the Arizona agency said the documents appeared to be authentic and said LulzSec most likely accessed them via the email accounts of eight officers, WSJ reported

via LulzSec hacks into Arizona police’s computers, posts confidential documents – International Business Times.

Filed Under: From The News, Tech Bytes Tagged With: Business, confidential documents, government corporations, Hacking, hacking group, militaries of the world, SEC, steve harrison, Times, war

Is Goldman the Next to Get Into FCPA Trouble? – Law Blog – WSJ

June 10, 2011 By Global EDD Group Leave a Comment

It’s a you-got-your-chocolate-in-my-peanut-butter moment.

Two of the hottest things going, stepped-up regulation of banks and enforcement of foreign bribery laws, are on a possible collision course, according to this WSJ story out Thursday.

That’s right, U.S. securities regulators are examining whether Goldman Sachs and other financial firms might have violated bribery laws in dealings with Libya’s sovereign-wealth fund, according to people familiar with the matter. SEC lawyers are reviewing documents that detail the firms’ relationships with the Libyan Investment Authority controlled by Col. Moammar Gadhafi, these people said.

Among other things, SEC officials are interested in a $50 million fee Goldman initially agreed to pay the Libyan sovereign-wealth fund as part of a proposal by the bank to help the fund recoup losses, according to these people.

The Libyan Investment Authority would have passed on the $50 million payment to an outside adviser, The Wall Street Journal reported last month. But that outside adviser, Palladyne International Asset Management, was run at the time by the son-in-law of the head of Libya’s state-owned oil company.

The $50 million payment was never made, because discussions between Goldman and the sovereign-wealth fund stalled before violence erupted in Libya in February, according to people familiar with the matter.

But the fact the payment wasn’t made doesn’t necessarily exempt it from trouble under the Foreign Corrupt Practices Act.

via Is Goldman the Next to Get Into FCPA Trouble? – Law Blog – WSJ.

Filed Under: From The News Tagged With: corrupt practices act, goldman sachs, international asset management, matter, moammar gadhafi, moment, payment, SEC, sec officials, trouble

SEC’s FCPA Chief Leaves For Simpson Thacher – Corruption Currents – WSJ

June 2, 2011 By Global EDD Group Leave a Comment

Cheryl Scarboro, who leads the Securities and Exchange Commission’s anti-foreign bribery unit, is leaving the agency for Simpson Thacher & Bartlett LLP, the law firm announced Wednesday.

After 19 years with the SEC, she will join the firm’s government and internal investigation’s practice, it said in the statement. Scarboro led the SEC investigation of Siemens AG, which ended with an $800 million settlement with U.S. regulators, the largest in the history of the Foreign Corrupt Practices Act, which prohibits bribery of foreign officials for business purposes.

She contributed to the rapid rise of enforcing the FCPA, and has worked closely with the Justice Department in doing so, the WSJ Law blog said.

Scarboro also handled or supervised the first-ever use of a deferred-prosecution agreement by the SEC in the Tenaris case, led the civil action for FCPA violations by 15 companies and three individuals in the United Nations oil-for-food kickback scandal in Iraq, and several high-profile insider trading cases, the SEC said in an emailed statement.

via SEC’s FCPA Chief Leaves For Simpson Thacher – Corruption Currents – WSJ.

Filed Under: From The News Tagged With: agency, Bartlett, corrupt practices act, deferred prosecution agreement, firm, insider trading cases, law, SEC, securities and exchange commission, simpson thacher

SEC staff’s ‘revolving door’ prompts concerns about agency’s independence – The Washington Post

May 13, 2011 By Global EDD Group Leave a Comment

From Capitol Hill to academia and the SEC inspector general’s office, observers of the agency have voiced concern that the revolving door can make the SEC a more docile protector of the public interest.

A study to be released Friday by the Project on Government Oversight (POGO), based on hundreds of SEC documents obtained through the Freedom of Information Act, sheds new light on the relationship between the regulators and the regulated.

Over the past five years, 219 former SEC employees filed disclosures with the SEC saying that they planned to represent clients or employers in dealings with the agency, POGO found.

Many of those former SEC employees were appearing before the agency on multiple matters; altogether, they filed almost 800 disclosure statements, the private watchdog group reported.

via SEC staff’s ‘revolving door’ prompts concerns about agency’s independence – The Washington Post.

Filed Under: From The News Tagged With: concern, disclosure statements, freedom of information act, inspector, office, project on government oversight, SEC, sec employees, Washington, watchdog group