• June 9, 2016—the New York State Court of Appeals rejected the expansion of the common interest rule in Ambac Assurance v. Countrywide: The Court held that the common interest exception to the attorney-client privilege is limited to situations where shared information relates to the parties’ legal interest in pending or threatened litigation. The Court overturned the lower court’s decision, which had expanded the common interest rule to include shared information in merger situations. We reported on the oral argument before the Court of Appeals in our June 6, 2016 Newsletter under “NY Court Reviews Expansion of Common Interest Rule.”
  • Circuits continue to reject challenges to the constitutionality of SEC “in-house” administrative proceedings:
    • On June 21, 2016, the Eleventh Circuit reversed two separate Northern District of Georgia cases, Hill v. SEC and Gray Financial Group, Inc. v. SEC, respectively, which had been consolidated on appeal, and ruled that, before plaintiffs can bring a constitutional challenge to the SEC’s administrative proceedings in the courts, they must first exhaust their remedies before the SEC. The decision reversed an injunction granted by a Northern District of Georgia judge, saying that the judge “erred in exercising jurisdiction.” In addition, on June 1, 2016, the Second Circuit affirmed the S.D.N.Y. in Tilton v. SEC and dismissed Tilton’s lawsuit on lack of jurisdiction and exhaustion of remedies grounds, holding that she must first complete SEC administrative proceedings before seeking redress in the courts. We last discussed the TiltonHill and Gray Financial cases in our October 2015 newsletter under “ ‘Wherefore Art Thou, Due Process?’ Part III.”
    • On June 25, 2016, the Supreme Court denied cert in Pierce v. SEC, another case challenging the constitutionality of SEC administrative proceedings. This follows the Court’s denial of cert in Bebo v. SEC in March 2016.
  • June 9, 2016—SEC announced that it had awarded $17 million under its Whistleblower Program: The SEC said that the whistleblower award was being made to a former company employee “whose detailed tip substantially advanced the agency’s investigation and ultimate enforcement action.” The award is the second largest since the inception of the SEC’s Whistleblower Program in 2011 (the first being an award of $30 million in 2014) and brings the total amount paid out under the program to $85 million to 32 whistleblowers. Follow-up to the story in our May 6, 2016 newsletter under “Still Whistling While You Work—Whistleblower Programs Update.”

Briefly Noted

  • June 17, 2016—an ex-Warner Chilcott executive was acquitted by a jury of charges that he participated in a scheme to bribe doctors in violation of the Anti-Kickback statute: After less than a day of deliberations, the Wall Street Journal reported that a federal jury in Boston acquitted the former executive of the single charge that he violated the Anti-Kickback statute by participating in a “sweeping” scheme to bribe doctors with pricey meals, travel and speaking fees in order to induce them into writing Warner Chilcott prescriptions.


  • May 26, 2016—The International Organization for Standardization (ISO) announced that it is close to finalizing ISO 37001, which would establish an international standard for “anti-bribery management systems”: The ISO, a voluntary international standard-setting body composed of representatives from various national standards organizations, said that ISO 37001 was developed to help companies establish, operate, and improve their anti-bribery compliance program by outlining the anticorruption controls considered to be “international good practice[s]” for preventing, detecting, deterring, and remediating corruption risks.
  • April 18, 2016—the Department of Health and Human Services adopted new guidelines for holding individuals accountable for healthcare fraud by excluding them from federal programs such as Medicare: Such “debarments,” in effect, will keep affected individuals from working in the healthcare industry. The new guidelines use a risk continuum and four major categories to evaluate individuals: (1) nature and circumstances of the conduct (conduct is considered high-risk if it has the potential to harm someone, causes a financial loss to a federal program, occurs as part of a pattern of wrongdoing, is continual or repeated, occurs over a long period of time, or carries a criminal sanction); (2) leadership role (if an individual led or planned the wrongdoing, or if someone with managerial control of an entity led it, this indicates higher risk); (3) history of prior fraudulent conduct; and (4) conduct during an investigation. Higher-risk conduct includes if a person took steps to obstruct or impede wrongdoing or failed to comply with a subpoena. The policy also says that the absence of a compliance program incorporating the U.S. Sentencing Commission Guidelines’ seven elements of an effective compliance program indicates higher risk.

Talks about town:

  • On June 23, 2016, Assistant Attorney General Leslie R. Caldwell spoke at the International AntiCounterfeiting Coalition Inc. and Underwriters Laboratories Latin America Regional Brand Protection Summit in Miami, Florida.
  • On June 6, 2016, Assistant Attorney General Caldwell spoke at the CCIPS-CSIS Cybercrime Symposium 2016: Cooperation and Electronic Evidence Gathering Across Borders in Washington, D.C.
  • On May 12, 2016, Assistant Attorney General Caldwell spoke at the Securities Enforcement Forum West Conference in San Francisco.