At the end of September, following years of concerns and complaints, the SEC announced potential changes to the rules that govern its in-house administrative proceedings. Attorneys who litigate against the SEC have long felt that its procedural rules for administrative proceedings (which it refers to as the Rules of Practice) tilt the playing field in the SEC’s favor by, among other things, (1) unnecessarily compressing the timeframe in which a respondent must be ready to mount a defense, (2) inhibiting a respondent’s ability to develop his own factual record, (3) prohibiting early challenges to the legal sufficiency of the SEC’s allegations, and (4) permitting the introduction of evidence that would be inadmissible in federal court. These concerns have only grown in recent years as the SEC has chosen to funnel an increasing share of its enforcement docket away from federal courts and into these in-house tribunals. More than a year ago, the SEC’s General Counsel admitted that the rules governing in-house administrative proceedings may be out-of-date and in need of change. The SEC has explained that these proposed rule amendments “are intended to introduce additional flexibility into administrative proceedings, while still providing for the timely and efficient disposition of proceedings.” According to SEC Chair Mary Jo White, “the proposed amendments seek to modernize our rules of practice for administrative proceedings, including provisions for additional time and prescribed discovery for the parties.” While the SEC’s proposed rule amendments touch on most aspects of the administrativeproceeding process, the SEC noted that the amendments include three main changes to the Rules of Practice. First, the proposed rule amendments would change the time frame in which administrative proceedings must be completed, permitting more time for parties to prepare for the administrative hearing. Second, the proposed rule amendments would allow parties to take depositions as part of discovery. Third, the proposed rule amendments would require parties to submit and serve filings electronically. The amendments would also make changes to the time period for an administrative law judge (ALJ) to issue an opinion. Under the SEC’s current rules, an initial decision by an ALJ must be filed within either 120, 210 or 300 days from the date of service of the order instituting proceedings. Because the current rules tie the final deadline to the first step in the administrative process, the SEC observed that delays or developments that occur in the course of the administrative proceeding may give an ALJ very little time to draft and issue an initial decision. The proposed rule amendments change the moment the clock begins to tick. Under the new proposal, the countdown would begin once the post-hearing NEWS SEC Proposes Amendments to Rules for Administrative Proceedings����1 Circuit Split and New SEC Guidance Suggest Potential Ambiguity in DoddFrank Whistleblower Provisions �������������3 U.S. Chamber of Commerce Releases Recommendations on SEC Enforcement Policies ����������������������4 D.C. Circuit Limits the SEC’s Authority to Apply Dodd-Frank Remedies Retroactively��������������������������5 Supreme Court Denies Request to Review Newman Decision on Insider Trading����������������������������������������6 RECENT SEC STAFF CHANGES����������7 FCPA FOCUS �����������������������������������������8 SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 2 The SEC explicitly noted that the rules would still permit hearsay evidence, so long as the hearsay evidence is relevant, material, and reliable. or dispositive briefing has concluded. This change should lessen the chance that the ALJ must rush issuing an initial decision. Additionally, the new rules would allow the ALJ to extend the deadline for an initial decision by 30 days in appropriate circumstances. The SEC’s proposal would also effectively double the maximum length of time between the filing of an order instituting proceedings and the beginning of the administrative proceeding. This change responds to a long-standing concern among attorneys that the SEC’s rules afforded them insufficient time—only four months—to prepare for complicated cases that the SEC could have spent years building. Relatedly, the SEC is also proposing to permit parties to take a limited number of depositions, with the number depending on the details of the proceeding. Currently, depositions are forbidden unless the witness is unable to testify at the administrative proceeding. Additionally, the proposed rules would authorize the ALJ to issue subpoenas, at a party’s request, in connection with the deposition. The SEC expressed its hope that “depositions should facilitate the development of the case during the prehearing stage, which may ultimately result in more focused prehearing preparations, with issues distilled for the hearing and post-hearing briefing.” Depositions would be governed by rules generally consistent with the Federal Rules of Civil Procedure. The SEC also proposed amending its evidentiary rules, the current version of which differs in a number of important respects from the Federal Rules of Evidence. Perhaps the most important difference is that hearsay is admissible in administrative proceedings. Currently evidence may be excluded under the Rules of Practice if it is irrelevant, immaterial or unduly repetitious. The proposed rules would add “unreliable” to that list. The SEC explicitly noted that the rules would still permit hearsay evidence, so long as the hearsay evidence is relevant, material and reliable. This change, which has received relatively little attention compared to the other proposed amendments, may be quite significant. Although the SEC has expressed its view that hearsay will still be admissible, that often may be in tension with the rule’s proposal to exclude “unreliable” evidence. Hearsay, as a general matter, is inherently unreliable. Because the SEC’s intent and the proposal’s text may be inconsistent, interested parties should watch for changes in the final rule. Along with these major proposed changes, the SEC’s proposed rule amendments also clarify the ability of the Enforcement Division to withhold or redact certain documents obtained in connection with the investigation before the documents are turned over. Under the proposed rule amendments, the Division could redact sensitive personal information (such as Social Security numbers) and may withhold or redact documents that reflect settlement negotiations with other persons. Additionally, the SEC has proposed amendments intended to clarify when and how potential defenses must be presented in briefs, and the level of detail required when filing a petition to review an ALJ’s decision. The proposed rules would require a party’s answer to include any theory for the avoidance of liability or remedies, even if it may not technically be viewed as an affirmative defense. The petition for review, in contrast, would no longer need to include every specific factual finding or conclusion of law being challenged. The proposed rule amendment would require only a summary statement of the issues presented for review, and if an issue is not explicitly addressed, the new rules would not consider it to be automatically waived. Related changes to the rules concerning briefs filed with the SEC have also been proposed. The SEC may be hoping that changing some of the SEC rules will relieve the pressure that district courts have been applying in cases that challenge the constitutionality of many aspects of the SEC’s administrative proceedings. But the proposed rule changes do not address two main objections to the procedures governing administrative proceedings. First, the amendments do not address the manner in which the ALJs are appointed. Some have suggested that the apparent ease with which the SEC can modify its own regulations for ALJ proceedings again raises the question, already asked by some federal courts, of why the SEC SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 3 The Second and Fifth Circuits have split over whether the two provisions create ambiguity sufficient to permit a court to defer to 2011 SEC rules interpreting the DoddFrank whistleblower law. has not also altered the manner in which ALJs are appointed to indisputably ensure that appointments are consistent with the Constitution’s Appointments Clause. Indeed, the additional authority the proposed rule amendments would give to ALJs may undercut the SEC’s assertion that ALJs are “mere employees.” The second main objection to administrative proceedings not addressed by the proposed rule amendments concern the Commission’s review of ALJ decisions. The proposed rules do not address concerns about whether the Commission, which must authorize the filing of an administrative action in the first instance, may fairly review the same matter when an ALJ’s decision is appealed to it. Even though the SEC’s proposed rule amendments do not address all objections to the current process, it seems clear the proposed changes are designed to try to show that the SEC is responsive to complaints about its administrative proceedings. Although the SEC may hope that the proposed rule amendments will lessen the likelihood that the courts will intervene, it remains to be seen whether the proposed changes prove to be viewed as too little, too late. Circuit Split and New SEC Guidance Suggest Potential Ambiguity in Dodd-Frank Whistleblower Provisions Despite the SEC’s August 4, 2015 interpretive release intended to clarify the issue, there is still a great deal of uncertainly over whether the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) whistleblower-protection provisions cover employees who report violations of the securities laws internally but do not bring them to the SEC. The Dodd-Frank Act defines a whistleblower as “any individual who provides … information relating to a violation of the securities laws to the Commission.” However, another provision of the law prohibits employers from retaliating against a whistleblower who makes certain internal disclosures required by, or protected under, Sarbanes-Oxley, including internal complaints regarding auditing and accounting issues. The Second and Fifth Circuits have split over whether the two provisions create ambiguity sufficient to permit a court to defer to 2011 SEC rules interpreting the Dodd-Frank whistleblower law. In 2013, the Fifth Circuit held that the whistleblower definition was not ambiguous and dismissed the retaliation claim of an employee who reported a potential Foreign Corrupt Practices Act (FCPA) violation to his supervisor and a company ombudsperson, but not the SEC. More recently, in June 2015, the Second Circuit went in the opposite direction, holding that the two provisions do create ambiguity with regard to the definition of a whistleblower. As a result, the Second Circuit deferred to the SEC’s 2011 interpretive rules, specifically Rule 21F-2, which included two definitions of a whistleblower. The first, which applies to the whistleblower award provisions, requires an employee to report information to the SEC. The second definition, which applies to the retaliation provisions, add to the whistleblower category those employees who make certain internal disclosures covered by Sarbanes-Oxley. After the Second Circuit’s decision, the SEC released additional guidance. However, the new guidance concerns not the potential ambiguity in Dodd-Frank suggested by the circuit split but the ambiguity in another of the SEC’s 2011 rules, 21F-9. Rule 21F-9 states, “[t]o be considered a whistleblower … you must submit your information about a possible securities law violation [online, by mail, or by fax].” Read alone, this rule could be understood to suggest that a whistleblower is only one who submits some information to the SEC. The SEC’s new interpretive release clarifies that 21F-9 applies only to the first whistleblower SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 4 The CCMC also recommends that the SEC create procedures for defendants to challenge choice of forum determinations and to incorporate due process protections into administrative proceedings. definition under Rule 21F-2 and has no bearing on whether an employee would be considered a whistleblower for purposes of the whistleblower retaliation provisions. Thus, while the recent interpretive release does not address the circuit split over whether there is ambiguity in the statutory definition of a whistleblower, it does shed light on the tight rope that the SEC and plaintiffs must walk to extend Dodd-Frank’s whistleblower protection to employees who do not file a report with the SEC. Nonetheless, employers must be aware of the possibility that Dodd-Frank’s anti-retaliation provisions may be in play the moment an employee raises issues within the company, especially, at this time, employers located within the Second Circuit. U.S. Chamber of Commerce Releases Recommendations on SEC Enforcement Policies On July 15, 2015, the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) released a report containing recommendations to the SEC. The report, “Examining U.S. Securities and Exchange Commission Enforcement: Recommendations on Current Processes and Practices,” was described as an effort to streamline the SEC’s enforcement practices and ensure standardized, efficient and clear guidelines for market participants subject to the SEC’s regulatory oversight. In crafting this report, the CCMC surveyed more than 75 executives of public companies on their experiences with non-public SEC investigations and supplemented these surveys with interviews of legal professionals, including former SEC Division of Enforcement staff members. The CCMC has stated repeatedly, both in the report and in press statements, that its report is not meant to “call for changes that would either weaken enforcement or erect process barriers that would impede vigorous action by the SEC,” but rather to make recommendations that would maintain rigorous enforcement by the SEC, while creating transparency and predictability for market participants. Some of the CCMC’s recommendations, specifically on forum selection and resource conservation, expand on the Division of Enforcement’s May 8, 2015 written guidelines for enforcement actions, previously reported in SEC Enforcement Quarterly 2nd Quarter 2015. The CCMC’s recommendations are broken down by topic, several of which are analyzed below: ■ Choice of Forum Decision: Several report recommendations encourage consistency in the choice of forum—either civil action or administrative proceeding—for enforcement actions. The report documents the expansive use of administrative proceedings since the 1990s and notes that administrative proceedings often disadvantage defendants, as administrative proceedings lack the due process rights ensured by civil actions and provide defendants with little opportunity for adequate discovery to support their defenses. Accordingly, the CCMC recommends that the SEC adopt policies for making a choice of forum decision based on objective principles of investor protection, promotion of capital formation and fair markets. The CCMC also recommends that the SEC create procedures for defendants to challenge choice of forum determinations and to incorporate due process protections into administrative proceedings. ■ The Wells Process: The CCMC’s report notes a troubling change in the Wells Notice review process gleaned from interviews with legal professionals: because of a shift from hard-copy to electronic documentation for submissions in response to a Wells Notice, individual Commissioners are possibly not aware that pre-Wells or white paper submissions exist when reviewing enforcement action memoranda. The report suggests that the Division of Enforcement should adopt uniform policies that all Wells submission materials should be provided to Commissioners along with enforcement action memoranda. Additionally, in the interest of transparency in the Wells process, the report recommends that the Division of Enforcement should provide its investigative files to allow SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 5 To clarify this ambiguity, the CCMC report proposes that the SEC reexamine its Revised Admissions Policy on a regular basis and supplement this policy with codified guidance containing meaningful standards on when admissions will be required. defense counsel to provide a meaningful response to a Wells Notice. Furthermore, the report encourages the Division of Enforcement to grant parties who have made a Wells submission advance notice that an enforcement action has been filed. ■ Policy on Admissions: The report notes current ambiguity on whether the SEC will continue to settle cases on a “neither admit nor deny” basis, in light of the reversal of Judge Rakoff’s denial of the SEC’s proposed settlement in the Southern District of New York Citigroup case. To clarify this ambiguity, the CCMC report proposes that the SEC reexamine its Revised Admissions Policy on a regular basis and supplement this policy with codified guidance containing meaningful standards on when admissions will be required. This guidance should also clearly address how requiring admissions would play into settlement negotiations. ■ Streamlining the Investigative Process: The report documents the extensive time and money spent by public corporations that are the subject of an investigation on responding to nonpublic document requests. Often, these formal and informal investigations last for years, with the report noting that a plurality of companies surveyed responded that their investigations were still ongoing. Public corporations can also spend millions of dollars responding to investigation requests, regardless of whether the investigation is formal or informal. Furthermore, for informal investigations, the Division of Enforcement sometimes never notifies the subject of the investigation that the investigation is dormant or closed. Accordingly, the CCMC report recommends several policy changes to streamline this process. These include advance notification for document requests to allow public companies to issue preservation measures, advance notification of the scope of an inquiry, and a more robust conversation between Enforcement Division staff and defense counsel on document production to ensure that the Division’s need for relevant information is balanced by the prohibitive cost of document production. The report also focuses on concrete suggestions to make the investigative process clearer for those under investigation. The CCMC recommends that all departing SEC staff should be required to prepare a summary memorandum for successor staff members, to prevent those under investigation from being forced to respond to duplicative requests. When investigations are closed, a written notification should be sent to those under investigation and a sound decision to end an investigation should result in credit to the staff comparable to the credit received for investigations that end in a formal enforcement action. For those facing an SEC Enforcement Division investigation, the CCMC report provides both insight into the development of SEC enforcement policy and extensive documentation on the ways that current SEC enforcement policies are affecting public companies. D.C. Circuit Limits the SEC’s Authority to Apply Dodd-Frank Remedies Retroactively In a July 2015 ruling, the D.C. Circuit placed limitations on the retroactivity of certain provisions of Dodd-Frank. In Koch v. SEC, the court found that some SEC sanctions imposed on an individual were impermissibly retroactive and ordered them to be vacated. This month, the SEC announced that it would consider vacating analogous remedies imposed in prior enforcement actions. The D.C. Circuit’s decision could also affect future enforcement actions under Dodd-Frank. The Koch case concerned remedies the SEC may seek under the securities laws against an individual engaged in market manipulation. Prior to the passage of Dodd-Frank in 2010, the SEC could bar such persons from associating with certain people in the securities industry, including brokers, dealers and investment advisers. Dodd-Frank expanded the SEC’s authority to enable it to bar one’s association with municipal advisors and rating SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 6 In October, the SEC announced that it will consider petitions to vacate similar orders barring association with municipal advisors or rating organizations for others who believe that all of their relevant conduct occurred prior to July 22, 2010, the effective date of Dodd-Frank. organizations. However, the provision granting this expansion contained no mention of retroactive application. The proceedings in Koch began before an SEC administrative law judge (ALJ) after the SEC charged Donald Koch with “marking the close,” a tactic of buying or selling stock as the trading day ends to artificially inflate the stock’s price. According to the SEC, in the wake of the 2008 market crash, Koch marked the close for three small bank stocks in 2009. Following a hearing, the ALJ found that Koch illegally marked the close on two separate days in 2009 and ordered a collateral bar for Koch. In imposing the sanction, the ALJ noted that the conduct predated the effective date of Dodd-Frank and declined to “impose the new sanctions retroactively.” Koch appealed the outcome to the Commission. The Commission upheld the ALJ’s findings that Koch marked the close. However, the Commission expanded the collateral bar, concluding that a full bar under Dodd-Frank was not impermissibly retroactive because the decision was based on the present assessment of whether the remedy was necessary and appropriate to protect investors and markets from the risk of future misconduct. Koch then petitioned the D.C. Circuit for review claiming, among other things, that the Commission’s order barring him from associating with municipal advisors and rating organizations was impermissibly retroactive. In its decision, the D.C. Circuit noted that, at the time Koch marked the close in 2009, the SEC could not bar him from associating with municipal advisors or rating organizations. The court found that applying these sanctions from Dodd-Frank to Koch attached new legal consequences to his acts by adding to the list of persons with whom Koch may not associate. While upholding the order to prevent association with the other categories of persons, the court held that the SEC could not bar Koch from associating with municipal advisors and rating organizations. Last month, the SEC announced it would not seek further review of the D.C. Circuit’s ruling. Nonetheless, the D.C. Circuit allowed some aspects of Dodd-Frank relevant to Koch’s case to be applied retroactively. Prior to Dodd-Frank, the SEC was required to initiate “follow-on proceedings” for each separate industry from which the SEC wished to bar association. Under Dodd-Frank, the SEC may bar one’s association with all industries in one proceeding. Despite questions regarding the use of the new procedures to impose sanctions on Koch, the D.C. Circuit found that this change in procedure did not give rise to retroactivity concerns. Following the Koch decision, two SEC Commissioners, Daniel Gallagher and Michael Piwowar, called for the SEC to “take appropriate action to address all impermissibly retroactive collateral bars that have been misapplied since the enactment of Dodd-Frank.” In October, the SEC announced that it will consider petitions to vacate similar orders barring association with municipal advisors or rating organizations for others who believe that all of their relevant conduct occurred prior to July 22, 2010, the effective date of Dodd-Frank. The Koch decision also raises potential doubts about other Dodd-Frank enforcement provisions, including some of the mandates of the Consumer Financial Protection Bureau (CFPB). While some of the CFPB’s powers were transferred to it from other agencies, some were conferred through Dodd-Frank, including the power to sanction persons or entities that engage in unfair, deceptive, or abusive acts or practices. The analysis of the D.C. Circuit in Koch may be persuasive as to whether these provisions should apply retroactively to reach conduct that occurred prior to 2010. Supreme Court Denies Request to Review Newman Decision on Insider Trading On October 9, 2015, the U.S. Supreme Court denied the Justice Department’s petition for certiorari in United States v. Newman, the Second Circuit decision that has had far-ranging implications for cases alleging insider trading. As discussed in a previous edition of the SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 7 SEC Enforcement Quarterly, in Newman, the Second Circuit held that to sustain a conviction for insider trading based on tipping “the Government must prove … that the tippee knew the insider disclosed confidential information and that he did so in exchange for a personal benefit.” Where a tipper makes a gift of confidential information, the Second Circuit required that the Government offer “proof of a meaningfully close personal relationship that generates an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature.” The Justice Department had sought Supreme Court review of the Second Circuit’s decision, arguing that the Second Circuit standard created “an obvious roadmap for unscrupulous insiders and tippees.” The Supreme Court denied the petition without any commentary. The Newman decision may increase the burden on the government in future insider trading cases to define the personal benefit received by the insider—an element that until Newman often proved to be no more than a formality. In addition to its effect on the Justice Department’s criminal prosecutions of insider trading, the Newman decision may have consequences for how the SEC pursues insider trading cases. RECENT SEC STAFF CHANGES ■ On July 2, 2015, the SEC announced that Public Company Accounting Oversight Board (PCAOB) member Lewis H. Ferguson was reappointed for a second term on the Board. The PCAOB provides oversight of the audits of financial statements of public companies and broker-dealers. Mr. Ferguson’s new term runs until October 2019. He was first appointed to the Board in January 2011. ■ On July 17, 2015, the SEC announced the promotion of Michele Anderson to the position of Associate Director in the agency’s Division of Corporation Finance. Ms. Anderson served as the Chief of the Division’s Office of Mergers and Acquisitions since 2008. She will now oversee the work of the Division’s Office of Mergers and Acquisitions and its Office of International Corporate Finance. ■ On July 29, 2015, the SEC announced that Daniel M. Hawke, the chief of the Division of Enforcement’s Market Abuse Unit is leaving the SEC. Mr. Hawke headed the Market Abuse Unit since its inception in January 2010. The unit, comprised of more than 60 attorneys and industry specialists in eight SEC offices, focuses on hard-to-detect insider trading activity, market structure violations, market manipulation and other trading abuses. ■ On August 18, 2015, the SEC named Shamoil T. Shipchandler as the Regional Director of its Fort Worth Regional Office. Mr. Shipchandler will oversee the Fort Worth office’s enforcement and examination activities in Texas, Oklahoma and Arkansas, as well as the office’s enforcement activities in Kansas. Mr. Shipchandler succeeds David Woodcock, who departed the SEC in June. ■ On August, 19, 2015, the SEC named Shelly Luisi as an Associate Director in the Division of Corporation Finance. Ms. Luisi was a Senior Associate Chief Accountant in the SEC’s Office of the Chief Accountant, where she co-led the staff responsible for the agency’s accounting communications and accounting standard-setter oversight functions. In her new role, she will oversee the work of the Disclosure Standards Office, established in 2013 to conduct research and assess the Division of Corporation Finance program to selectively review public-company filings. ■ On September 8, 2015, the SEC named Smeeta Ramarathnam as Deputy Director in the Office of Credit Ratings. Ms. Ramarathnam will oversee various office activities, including SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 8 examinations and monitoring of nationally recognized statistical rating organizations, rulemaking and related initiatives. ■ On September 10, 2015, the SEC announced that Robert Cohen and Joseph Sansone were named co-chiefs of the Division of Enforcement’s Market Abuse Unit. ■ On September 22, 2015, the SEC announced that Lara Shalov Mehraban has been named Associate Regional Director for Enforcement in the agency’s New York Regional Office. ■ On September 29, 2015, the SEC named William Royer the new head of the examination program in the Atlanta Regional Office. In his role as Associate Director of the examination program in the Atlanta office, Mr. Royer will oversee a staff of approximately 40 examiners, accountants and attorneys responsible for examining broker-dealers, investment advisers, investment companies, transfer agents and other SEC registrants. FCPA FOCUS The Foreign Corrupt Practices Act (FCPA) continues to be a high enforcement priority of the SEC. Here are some highlights of FCPA enforcement from the past quarter. For more information on the FCPA, please see Sidley’s Anti-Corruption Quarterly. June 30, 2015 The DOJ filed a complaint for the civil forfeiture of $34 million against Griffiths Energy International Inc., a Canadian oil company, that was allegedly used to bribe Chad’s former Ambassador to the United States and Canada. The bribe was alleged to have influenced the award of oil development rights. The complaint further alleges that Griffiths Energy paid a $2 million consulting fee to the Ambassador’s wife. July 20, 2015 Louis Berger International, Inc., a construction management company, entered into a Deferred Prosecution Agreement in which it admitted to violating the FCPA and agreed to pay a $17.1 million criminal penalty for paying $3.9 million in bribes to foreign officials in India, Indonesia, Vietnam and Kuwait to win construction management contracts. The company also agreed to enhance internal controls and retain a compliance monitor for at least three years. Additionally, two former officials also pleaded guilty to conspiracy and FCPA charges. July 28, 2015 Mead Johnson Nutrition Co., the infant formula maker, agreed to pay $12.03 million to settle civil FCPA charges. A China unit of Mead Johnson allegedly paid $2 million in bribes to healthcare professionals at state-owned hospitals in China. The SEC stated that Mead Johnson had violated the FCPA’s books and records provisions by failing to properly record the illegal payments and also that the company had an inadequate system of internal accounting controls. August 6, 2015 NCR Corp., which makes ATMs, received a notice from the SEC that the SEC “did not intend to recommend an enforcement action” after a three-year investigation into FCPA compliance issues. In 2012, NCR Corp. received anonymous allegations about business practices in China, the Middle East and Africa. August 17, 2015 The DOJ asked authorities in European countries to freeze approximately $1 billion in assets tied to alleged bribes from VimpelCom and MTS of Russia and TeliaSonera of Sweden. The SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 9 bribes were allegedly paid to the eldest daughter of the Uzbek president for access to the country’s telecom market. August 18, 2015 The SEC announced that BNY Mellon paid $14.8 million to settle allegations that it violated the FCPA by providing student internships in 2010 and 2011 to family members of foreign officials affiliated with a Middle Eastern sovereign wealth fund, without following standard hiring procedures for interns. August 19, 2015 Avon Products asked a district court judge to approve a $62 million settlement in a securities fraud lawsuit stemming from allegations that the company and two former officers failed to disclose FCPA compliance issues in China. Avon paid $135 million to settle an FCPA enforcement action in December 2014. August 31, 2015 A Russian official, director of the Pan American Department of JSC Techsnabexport (Tenex), pleaded guilty to conspiracy to commit money laundering “in connection with his role in arranging over $2 million in corrupt payments to influence the awarding of contracts” with the Russian State Atomic Energy Corporation’s subsidiary Tenex, according to a DOJ press release. SEC Enforcement QUARTERLY SEC Enforcement | 3Q 2015 • 10 AMERICA • ASIA PACIFIC • EUROPE sidley.com Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Prior results do not guarantee a similar outcome. Attorney Advertising–For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212 839 5300; One South Dearborn, Chicago, IL 60603, 312 853 7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202 736 8000. Sidley Austin refers to Sidley Austin LLP and affiliated partnerships as explained at sidley.com/disclaimer. SECURITIES & DERIVATIVES ENFORCEMENT AND REGULATORY PRACTICE OF SIDLEY AUSTIN LLP Sidley’s Securities & Derivatives Enforcement and Regulatory group advises and defends clients in a wide range of securities- and derivatives-related matters. With more than 150 lawyers in 10 offices worldwide, we provide comprehensive regulatory, enforcement and litigation solutions in matters involving the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), the Financial Industry Regulatory Authority (FINRA), self-regulatory organizations (SROs), state attorneys general and state securities regulators. Our team is distinctive in that it combines the strength of nationally recognized enforcement lawyers with the skills of equally prominent counseling lawyers. We work collaboratively to provide our clients with informed, efficient and effective representation. Our team features many prominent practitioners and former officials from the SEC, FINRA and CFTC, as well as state regulators. Our lawyers include a former associate director of the SEC’s Division of Enforcement, a former co-head of enforcement and associate regional director of the SEC’s Northeast Regional Office, a former deputy director of the SEC’s Division of Trading and Markets, a former SEC senior trial counsel, the former head of enforcement for FINRA and the former chief of the Massachusetts Securities Division. We also understand the “inside” perspective. Our team includes former general counsels of Charles Schwab and UBS Financial (Paine Webber), as well as the former global head of compliance at J.P. Morgan. Our team has earned acknowledgement in numerous industry publications, including being named in the 2011 U.S. News–Best Lawyers “Law Firm of the Year” for Securities Regulation. In its 2013 edition, Chambers USA ranked us among the best U.S. law firms for Securities. In a recent edition, that publication noted the firm’s “well-regarded enforcement practice with a considerable depth of resources.” Sources told that publication that our practice “is highly thought of for public company representations and advisory work.” CONTACTS Paul V. Gerlach Senior Counsel +1 202 736 8582 [email protected] Barry W. Rashkover Partner +1 212 839 5850 [email protected] Neal E. Sullivan Partner +1 202 736 8471 [email protected]
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