Embraer awarded dismissal in FCPA class action
A securities fraud class action suit brought against Embraer SA, an aerospace conglomerate has been dismissed by a New York federal judge. Following allegations of violations of the Foreign Corrupt Practices Act (FCPA) where Embraer allegedly committed fraud under disclosure obligations by disclosing only that investigations into allegations of corruption were underway, and failing to disclose to investors the scope and potential financial ramifications of any corruption, a court ruling has found that Embraer complied with its disclosure obligations. The judge found in favour of Embraer's argument that ongoing investigations by the US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) were not actionable as companies are not required to by law to disclose uncharged wrongdoing. In effect, the class action was dismissed as the faulty notion of disclosure sought by the plaintiffs would require Embraer to acknowledge guilt for alleged crimes that were still under investigation.
US imposes sanctions targeting digital currencies issued by the Venezuelan government and designates more Venezuelan officials
On March 19, 2018, President Trump issued an executive order that aims to curb sanctions circumvention by the Maduro regime in Venezuela through the use of digital currencies. This unprecedented executive order prohibits US persons from participating or being involved in transactions related to, provision of financing for, and any other dealings in, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018. Non-US persons are also subject to the same prohibitions for actions that are taken, in whole or in part, within the United States.
This new round of sanctions followed earlier sectoral sanctions that prohibit a broad range of transactions involving securities and debt issued by the Government of Venezuela. In light of its impaired access to international capital markets, the Venezuela government recently launched a state-backed cryptocurrency called the “Petro.” The new sanctions ban not only dealings in the “Petro” but also any other digital currency or token that the Venezuela government may create in the future.
On the same day, the US Department of the Treasury announced the sanctions designations of four additional current or former Venezuelan government officials, including government officials in charge of Venezuela’s national bank and treasury. According to the Treasury Department, the action was taken to highlight Venezuelan economic mismanagement and endemic corruption.
SEC announces largest ever whistleblower awards under Dodd-Frank Act
The SEC has announced its highest ever whistleblower awards under the Dodd-Frank Act, with two whistleblowers sharing a nearly $50 million award and a third receiving more than $33 million. The previous highest whistleblower award was at $30 million in 2014. Since issuing its first award in 2012, the SEC has awarded more than $262 million to 53 whistleblowers where all payments made are from an investor protection fund established by Congress, which is financed entirely through monetary sanctions paid to the SEC by securities law violators. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million. As with this case, whistleblowers can also report jointly under the program and share an award.
SEC charges former Equifax executive with insider trading
The SEC has filed criminal and civil charges against a former Equifax executive over alleged insider trading linked to the firm's 2017 data breach. Jun Ying, a former technology executive at the firm faces charges for the first time where the SEC has pursued insider trading charges against an individual accused of profiting from information about a cyberattack. The SEC's complaint alleges that Mr Ying used confidential information to determine Equifax had suffered a data breach. He then exercised all vested stock options and immediately sold the stock, receiving over $950,000 in proceeds and avoiding more than $117,000 in losses by selling the stock before Equifax's public announcement of the data breach on 7 September 2017. The SEC has stated it is seeking disgorgement of ill-gotten gains by Ying, as well as interest, penalties and injunctive relief.
US firm settles charges over bribes to Russian official
A US company has agreed to pay $2 million to settle criminal charges that it bribed a Russian official to win contracts to ship uranium to the US. The settlement by Transport Logistics International, related to allegations that it had bribed a Russian official with more than $1.7 million over the course of a decade by transferring funds into accounts of shell companies in Latvia, Cyprus and Switzerland. The DOJ has settled with a deferred prosecution agreement (DPA), charging the company with conspiracy to violate the anti-bribery provisions of the FCPA and agreeing to exchange prosecution for the company's cooperation in the investigation and information over the next three years regarding improvements to its anti-bribery policies.