THIRD CIRCUIT VALIDATES RULE 10b5-2(b)(2) IN CASE INVOLVING INSIDE INFORMATION OBTAINED IN AA MEETING
In United States v. McGee, the Third Circuit recently held that SEC Rule 10b5-2(b)(2) was within the SEC’s rulemaking authority and was deserving of Chevron deference. Rule 10b5-2(b)(2) potentially expands the scope of the “misappropriation” theory of insider trading liability and is a frequent enforcement tool in insider trading cases. In McGee, the Court validated the SEC’s expansion of the type of relationships that could give rise to
misappropriation insider trading liability to include any relationships between an information source and an outsider where there is a “history, pattern, or practice of sharing confidences.”
CONTINUED ON PAGE 2
SEC TARGETS LATE FILERS IN RECENT “BROKEN WINDOWS” ENFORCEMENT ACTIONS
On September 10, 2014, the SEC announced administrative actions against 34 individuals and entities for violating provisions of the Securities Exchange Act of 1934 (“Exchange Act”) requiring prompt reporting of certain stock
transactions and holdings. Thirty-three of the 34 respondents agreed to settle the SEC charges against them and to pay penalties ranging from $25,000 to
$150,000 each. In a separate release the same day, the SEC announced settled administrative actions charging a biotech company and its former executive with fraud in connection with similar filing lapses; those respondents agreed to pay a combined $550,000 in penalties.
The SEC charged the individuals and entities with failures to timely file Form 4 and Schedules 13D and 13G. Under SEC rules, corporate officers, directors,
and certain beneficial owners of more than 10 percent of a registered class of a company’s stock must file Form 4 reporting transactions in the company’s stock
CONTINUED ON PAGE 3
THIRD CIRCUIT VALIDATES RULE 10b5-2(b)(2) IN CASE INVOLVING INSIDE INFORMATION OBTAINED IN AA MEETING CONTINUED FROM COVER PAGE
The case arose after financial advisor Timothy McGee purchased and later sold shares in a publicly traded company based on information about the imminent sale of the company. McGee had learned of the sale from an
insider he knew from Alcoholics Anonymous (“AA”). It was at an AA meeting—in the context of a conversation in which the source was divulging reasons for a recent relapse—that the upcoming acquisition of the company was mentioned. The source at no point told McGee to keep the information confidential or abstain from trading on the information, but the source testified that he had expected McGee to keep the information confidential.
McGee was criminally charged with insider trading based on his misappropriation of the information he obtained during the AA meeting. Because the AA meeting was understood to be confidential, the Government reasoned that it created a history, pattern, or practice of sharing confidences within the meaning of Rule 10b5-2(b)(2).
In appealing his conviction for insider trading, McGee challenged the SEC’s power to promulgate Rule 10b5-2 and claimed that the rule was invalid because it allowed for criminal liability absent any fiduciary relationship with the source of the information traded upon. The Third Circuit disagreed, finding that McGee’s trades violated a relationship of “trust or confidence” created by the AA meetings and thus fell within the meaning of Rule 10b5-2(b)(2).
Using the two-step Chevron deference framework, the Court found that the promulgation of Rule 10b5-2 was within the broad rulemaking authority granted to the SEC under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”). Under Chevron step one, the Court found that Section 10(b) was ambiguous as to what qualifies as “deception” and that Rule 10b5-2(b)(2) was not judicially foreclosed under Supreme Court precedent. Specifically, Supreme Court precedent did not “set the contours of a relationship of ‘trust and confidence’” that would give rise to a duty to disclose. Nor did any precedent “unequivocally
require a fiduciary duty” for Section 10(b) liability. Under
Chevron step two, the Court found that Rule 10b5-2(b)
was “reasonable in light of the language, policies, and legislative history” of Section 10(b) and the Exchange Act.
In reaching its decision, the Court noted that it was “not without reservations concerning the breadth of
misappropriation under Rule 10b5-2(b)(2).” However, it was up to Congress to “limit its delegation of authority to the SEC or to limit misappropriation by statute.” Unless and until Congress takes such steps, Rule 10b5-2 will continue to be
a basis for insider trading cases based on relationships far different from the traditional insider trading paradigm.
SEC Announces Results of Rule 105 Sweeps
On September 16, 2014, the SEC announced cases against 19 firms and one individual for violating Rule 105 resulting in over $9 million in penalties, disgorge- ment, and interest. As was discussed in a prior edition of the SEC Enforcement Quarterly, in September 2013, the SEC announced that it was undertaking a sweep for violations of Rule 105 of Regulation M. Rule 105
is intended to prevent stock price manipulation by generally prohibiting firms and individuals from short selling a stock within five business days of participating in an offering for that same stock.
As with the SEC’s recent announcement of cases against 34 individuals and firms for failing to promptly report certain stock transactions (discussed elsewhere in this edition), this is yet another example of the SEC announcing the results of sweeps in the last weeks
of its fiscal year. By bringing these cases in the last weeks of its fiscal year, the SEC will also raise its overall enforcement statistics for the year.
SEC TARGETS LATE FILERS IN RECENT “BROKEN WINDOWS” ENFORCEMENT ACTIONS CONTINUED FROM COVER PAGE
within 2 business days of the transaction. Beneficial owners of more than 5 percent of a registered class of a company’s stock must use Schedules 13D or 13G to report holdings or intentions with respect to the company. According to the SEC release, these reports are necessary to give investors the opportunity to evaluate whether insider transactions and holdings could be indicative of the company’s future prospects. Failure to file these forms when required— irrespective of mental state—is a violation of the Exchange Act. Please see our prior client alert for some practical
tips that companies should take in response to these latest developments.
These late-filer actions appear to be another chapter in the SEC’s ongoing efforts to carry out SEC Chair Mary Jo White’s much-discussed “broken windows” enforcement campaign. In an October 9, 2013 speech announcing this campaign (addressed more fully in a prior newsletter),
Chair White stated her belief that “it is important to pursue even the smallest infractions” and announced her desire to pursue “violations such as control failures, negligence-based offenses and even violations of prophylactic rules with no intent requirement.” She also emphasized that the SEC was using “data analytics and related technology to … streamline our investigative efforts.”
The filing failures charged on September 10, consistent with Chair White’s speech, concern strict-liability violations that were uncovered using “quantitative data sources and ranking algorithms to identify these insiders as repeatedly filing late,” probably resulting from the work of the SEC’s new Center for Risk and Quantitative Analytics. In announcing the charges,
Enforcement Director Andrew J. Ceresney emphasized that the SEC sought to “send a clear message about the importance of these filing provisions” and warned that it will “vigorously police these sorts of violations through streamlined actions.”
Other “broken windows” actions speak to the breadth of the campaign. In particular, the SEC under Chair White has also now brought 2 rounds of actions charging violations of Rule 105 of Regulation M of the Exchange Act. These violations, like the violations of the filing rules, do not require proof of intent and were identified and pursued using a streamlined approach. The first round of Rule 105 actions were covered in a prior newsletter and the latest round of actions are discussed at page 2. Although the “broken windows” campaign is not without its critics, it seems clear, based
on its recent track record, that the SEC will continue to aggressively pursue such actions.
THE SEC USES A SARBANES-OXLEY PROVISION TO CLAWBACK THE COMPENSATION OF A CEO NOT CHARGED WITH MISCONDUCT
In September 2014, in connection with its announcement of accounting fraud charges against Saba Software, a Silicon Valley software company, and two former executives of the company, the SEC also announced that it would clawback approximately $2.57 million in bonuses and stock profits that the CEO of the company received while the fraud was occurring, even though the CEO was not charged with any misconduct. The underlying fraud scheme involved U.S. managers directing Indian consultants to either record time they had not yet worked or not record time worked during
certain periods to conceal budget overruns. As a result of the alleged fraud, Saba Software overstated gross earnings for 2008 through the second quarter of 2012 by approximately
$70 million. Saba Software agreed to pay $1.75 million to settle the charges, and the two former executives agreed to settle by paying $85,017 and $69,621, respectively.
What is notable about these enforcement actions is that Saba’s CEO, who does not appear to have been involved in the fraudulent scheme, was required to disgorge his compensation under Section 304 of the Sarbanes-Oxley Act of 2002. Section 304 requires the CEO or CFO of a public company to repay certain types of compensation
received if the company is required to undertake, as a result of misconduct, an accounting restatement due to material noncompliance with financial reporting requirements under the federal securities laws. Specifically, Section 304(a) requires a CEO or CFO to return any bonus or other incentive-based or equity-based compensation and any
profits realized from the sales of stock in the company during the twelve-month period following the filing of a report that requires a restatement.
While Section 304 has typically been used against CEOs and CFOs who participated in misconduct, in 2009 the SEC began using Section 304 to seek disgorgement from CEOs and CFOs who were not involved in the frauds charged against their companies. Section 304 is a powerful tool in the SEC’s arsenal, and Enforcement Director Andrew J. Ceresney noted last September that the SEC would exercise its authority to disgorge compensation through Section 304
“in appropriate cases.” Echoing these statements, Ceresney stated in the press release for the Saba Software enforcement action that, in “appropriate cases,” the SEC will not hesitate to deprive CEOs and CFOs of their “bonuses and stock profits if there is misconduct on their watch that requires a restatement by their employer.”
It remains unclear what qualifies as an “appropriate case” for disgorgement under Section 304 in the SEC’s view. The Saba Software order suggests that it is not enough for a company just to have internal controls in place. Rather, a company’s internal controls and compliance program must be robust and matched by a culture of compliance sufficient to detect and prevent financial reporting risks. Otherwise, the CEOs and CFOs responsible for enacting and reviewing these controls and for creating the appropriate culture throughout the organization may face compensation clawback under Section 304 should fraudulent reporting occur.
: WHISTLEBLOWER DEVELOPMENTS :
A variety of recent decisions and statements by government officials have again thrown the spotlight on whistleblower issues. This section of the SEC Enforcement Quarterly discusses these important developments.
ATTORNEY GENERAL HOLDER SUGGESTS INCREASING FIRREA WHISTLEBLOWER AWARDS
Although it was enacted in the wake of the savings and loan crisis over twenty years ago, the Financial Institutions Reform, Recovery and Enforcement
Act (“FIRREA”) has emerged during the recent mortgage crisis as one of the government’s weapons of choice against banks. Within the past calendar year alone, the Department of Justice (“DOJ”) has collected over $36 billion under FIRREA.
As amended, Section 951 of FIRREA authorizes the DOJ to bring a complaint seeking civil money penalties based on one of fourteen predicate violations that include both offenses inherently related to federally insured financial institutions and more general criminal provisions. The law carries a ten-year statute of limitations, and unlike a criminal prosecution, the DOJ need only prove that a party committed one of the fourteen predicate violations by a preponderance of the evidence. Between the breadth of the predicate violations, a long statute of limitations, a relaxed burden of proof, and a hefty penalty structure—up to the greater of $1.1 million per violation or the full “pecuniary gain” of the defendant— it is no wonder that FIRREA has emerged as such an effective tool for the DOJ.
In recent comments, Attorney General Eric Holder called on Congress to boost FIRREA enforcement by increasing whistleblower payouts. Under the current law, an individual whistleblower can be entitled to up to 20–30 percent of the first $1 million recovered, 10–20 percent of the next $4 million recovered, and 5–10 percent of the next $5 million recovered, for a maximum total reward of
$1.6 million. In his recent speech, Holder called the $1.6 million maximum award a “paltry sum” that is “unlikely to induce an employee to risk his or her lucrative career in the financial sector.” Instead, Holder proposed that Congress “think about modifying the FIRREA whistleblower provision—perhaps to
False Claims Act levels—to increase its incentives for individual cooperation.” Holder suggested that such an increase would “significantly improve the Justice Department’s ability to gather evidence of wrongdoing . . . [and make] it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis.”
While the Attorney General is correct to point out that the maximum award allowed by FIRREA’s current whistleblower provision is relatively low compared to other regulatory regimes, his suggested changes would dramatically increase potential FIRREA whistleblower awards. For example, the False Claims
Act provides for a whistleblower award of up to 30% of any recovery that the government receives under the Act. Similarly, the SEC’s whistleblower
CONTINUED ON PAGE 6
RECENT SEC STAFF CHANGES
On July 7, 2014, the SEC named Thomas J. Krysa as the Associate Regional Director for Enforcement in its Denver Office, where he will oversee enforcement efforts in seven western states. On July 21, 2014, the SEC named Mark J. Flannery as its Chief Economist and Director of its Division of Economic and Risk Analysis. On July 30, 2014, the SEC announced that Alberto Arevalo had been named an Associate Director in the Office of International Affairs. In the position, Arevalo will oversee international enforcement, supervisory cooperation, and technical assistance programs. On August 8, 2014, the SEC named Thomas M. Piccone to lead the National Exam Program in the Denver Regional Office. On August 12, 2014, the SEC announced that Robert J. Keyes, a Senior Officer in the New York Regional Office, would retire at the end of August following 18 years of service at the SEC. On August 26, 2014, the SEC named James Schnurr as its Chief Accountant. Schnurr replaces Paul
A. Beswick, who joined the SEC staff in September 2007 and served as its Chief Accountant since 2012.
On August 29, 2014, the SEC announced that Martin Murphy, the Associate Regional Director for Examinations in the agency’s Los
Angeles Office, was retiring after more than 24 years at the agency.
On September 5, 2014, the SEC announced that Brent J. Fields had been appointed as the agency’s Secretary. In this role, Fields will be responsible for overseeing the administrative aspects of SEC
meetings, rulemakings, and procedures.
CONTINUED ON PAGE 6
: WHISTLEBLOWER DEVELOPMENTS :
ATTORNEY GENERAL HOLDER SUGGESTS INCREASING FIRREA WHISTLEBLOWER AWARDS CONTINUED FROM PAGE 5
program—implemented under Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act—can award a whistleblower between 10 and 30% of the value of the total money collected by the government when the whistleblower provides the SEC with “original information” that leads to an enforcement action with monetary sanctions exceeding $1 million. Given the dollar amounts involved in the recent FIRREA actions, the whistleblower awards that could be available if the Attorney General’s proposal is enacted could be staggering. Although there may be clear policy reasons for increasing FIRREA whistleblower awards, it is equally important to recognize how the sheer size of FIRREA settlements may require a more nuanced whistleblower award scheme.
THE SEC ANNOUNCES ITS FIRST-EVER WHISTLEBLOWER AWARD TO A COMPLIANCE PROFESSIONAL
On August 29, 2014, the SEC announced its first-ever whistleblower award to an audit and compliance professional. According to the SEC, the recipient of the
$300,000 award reported wrongdoing to a supervisor within the company. When the company failed to take any action for 120 days, the individual reported the concerns to the SEC. The tip led to an enforcement action, and the whistleblower received 20% of the amount collected as a result of the action.
Although the SEC touted the importance of compliance and audit personnel in detecting wrongdoing, the SEC may have undermined the willingness of such individuals to come forward by accidentally disclosing information that could be used to identity the supposedly anonymous tipster. Specifically, in its initial release, the SEC failed to redact information identifying the enforcement action that stemmed from the whistleblower’s tip. In a corrected release regarding the whistleblower award, the SEC redacted the identifying information.
RECENT SEC STAFF CHANGES
CONTINUED FROM PAGE 5
On September 5, 2014, the SEC selected Tracey L. McNeil as the first Ombudsman for the agency. The Dodd-Frank Act called for the appointment of an ombudsman who will act as a liaison in resolving problems that retail investors
may have with the agency or self- regulatory organizations. The ombudsman also will establish safeguards to maintain the confidentiality of communications with investors. Ms. McNeil was previously Senior Counsel in the agency’s Office of Minority and Women Inclusion.
On September 8, 2014, the SEC announced that Victor J. Valdez had been named Chief Operating
Officer and Managing Executive of the agency’s Enforcement Division.
On September 22, 2014, the SEC announced that Jason S. Patil had been named as a new Administrative Law Judge (“ALJ”). This follows the announcement earlier this summer of the hiring of another ALJ and three law clerks. Together, these hirings nearly double the staff of the Office of Administrative Law Judges. On September 23, 2014, the SEC named Rhea Kemble Dignam as Senior Counsel to the Director of the Office of Compliance Inspections and Examinations. Ms. Dignam was previously the Regional Director of the agency’s Atlanta Regional Office. On September 23, 2014, the SEC announced the appointment of
Liban Jama as Director of the Atlanta Regional Office.
: WHISTLEBLOWER DEVELOPMENTS :
SECOND CIRCUIT REFUSES EXTRATERRITORIAL APPLICATION OF DODD-FRANK WHISTLEBLOWER ANTI-RETALIATION PROVISION
In Liu v. Siemens AG, the Second Circuit unanimously held that the anti-retaliation provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd- Frank”) does not protect foreign workers employed by a foreign corporation, where all relevant events occurred abroad. Dodd-Frank generally prohibits retaliation against employees who provide information to the SEC relating to a violation of the federal securities laws.
Liu Meng-Lin, a citizen of Taiwan, was employed as a compliance officer for the healthcare division of Siemens China Ltd., a Chinese corporation wholly owned by Siemens AG (“Siemens”), a German corporation. Liu allegedly discovered that Siemens employees were making improper payments to officials in North Korea and China in connection with medical equipment sales potentially in violation of the Foreign Corrupt Practices Act (“FCPA”). Liu reported this conduct to his superiors, at which point he was demoted and ultimately fired. Two months later, Liu reported the allegedly corrupt conduct to the SEC, contending that Siemens had violated the FCPA. Liu also sued Siemens, alleging that,
by firing him, Siemens had violated the anti-retaliation provision of Dodd-Frank. The Southern District of New York granted Siemens’ motion to dismiss on the grounds that the anti-retaliation provision does not have extraterritorial reach. That decision was covered in a prior newsletter.
The Second Circuit affirmed, holding that, in order to survive Siemens’ motion to dismiss, Liu had to demonstrate that either (i) the facts alleged in his complaint stated a domestic application of the anti-retaliation provision of Dodd-
Frank; or (ii) the anti-retaliation provision was intended to apply extraterritorially. The court held that Liu had failed to prove either, concluding that, “[b]ecause a statute is presumed, in the absence of clear congressional intent to the contrary, to apply only domestically, and because there is no evidence that the anti-retaliation provision is
intended to have extraterritorial reach,” the provision did not apply extraterritorially. The court rejected Liu’s argument that Siemens’ listing of securities on the New York Stock Exchange exposed it to all federal securities laws, noting
that “the listing of the securities alone” is the type of fleeting connection that cannot overcome the presumption against a statute’s extraterritoriality.
Although the affect of the Second Circuit’s decision remains to be seen, it is unlikely that the Liu case will have a chilling effect on future foreign whistleblower claims. As the SEC itself pointed out in a recent order (discussed at page 8 of this edition of the SEC Enforcement Quarterly), the issues in Liu did not concern the whistleblower program itself, just the anti-retaliation provision. Moreover, Liu’s complete lack of any jurisdictional nexus alone makes the case unusual.
: WHISTLEBLOWER DEVELOPMENTS :
SEC GRANTS WHISTLEBLOWER A RECORD-SETTING AWARD
A whistleblower recently was awarded at least $30 million under the SEC’s Whistleblower Program, with the SEC indicating that the award may grow to $35 million. This represents the largest whistleblower award yet, and is more than twice the size of the previous record of $14 million.
The award stems from a successful enforcement action that began with a tip from the whistleblower, who is a foreign national. Although the SEC’s order granting the award is short on detail, the size of the award indicates that the SEC likely collected well over $100 million in the enforcement action. According to Andrew J. Ceresney, the SEC’s Director of the Division of Enforcement, the whistleblower provided the SEC “with information about an ongoing fraud that would have been very difficult to detect.”
Although the award was large, it apparently would have been larger had the whistleblower reported the
wrongdoing sooner. According to the SEC’s order, it took the whistleblower years to report the misconduct. This delay was unreasonable to the SEC, which noted that it meant “investors continued to suffer significant monetary injury that otherwise might have been avoided.” The SEC did not consider persuasive the whistleblower’s argument that he
or she was unsure whether the SEC would act on the tip. It commented that such uncertainty exists in every instance of wrongdoing. Still, because a portion of the whistleblower’s
delay occurred prior to the enactment of Dodd-Frank and the applicable whistleblower provision, the SEC noted it would not punish the whistleblower as severely as it would for a delay that occurred now that the Whistleblower Program is in place.
While the sheer size of the award is notable in its own right, the SEC’s order also reinforced its view that the bounty provision of the Whistleblower Program applies in full force overseas. In a footnote, the SEC took a liberal view of the extraterritorial reach of the program, stating that the SEC considers an award appropriate so long as “a claimant’s information leads to the successful enforcement of a covered action brought in the United States, concerning violations of the U.S. securities laws, by the Commission.” This position is in tension with the recent decision by the Second Circuit in Liu v. Siemens AG (also discussed in this edition of the
SEC Enforcement Quarterly), ruling that the anti-retaliation provision of Dodd-Frank did not apply to a particular foreign whistleblower. In the same footnote in the SEC’s order, it acknowledged the Liu decision but distinguished it, noting that the whistleblower award provisions had a different Congressional focus than the anti-retaliation provisions at issue in Liu.
SEC ENFORCEMENT Quarterly
The Foreign Corrupt Practices Act 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.
7/1/2014: Mark Jackson and William Ruehlen settled with the SEC without paying any penalties and neither admitting nor denying any wrongdoing. Jackson and Ruehlen consented to the entries of final judgments enjoining them from violating or aiding and abetting
a violation, respectively, of Section 13(b)(2)(A). The former CEO of Noble Corporation and current head of the company’s Nigeria unit were charged in February 2012 with FCPA books-and- records offenses for bribing officials in Nigeria in exchange for illegal import permits for drilling rigs.
7/3/2014: Biomet announced, in a securities filing, that the SEC issued a subpoena requiring production of
documents relating to “certain alleged improprieties” in the company’s Brazilian and Mexican operations. According to the filing, Biomet learned of the possible violations in October 2013 and disclosed them to the SEC and DOJ in April 2014, pursuant to the terms of its deferred prosecution agreement.
7/17/2014: William Pomponi, a former vice president of regional sales at Alstom Power Inc., pleaded guilty to conspiracy to violate the FCPA. Three other defendants pleaded guilty to paying bribes to Indonesian officials through two hired consultants over a seven-year period.
7/23/2014: The Delaware Supreme Court affirmed a Delaware Chancery Court order requiring Walmart to turn over privileged files and documents from an internal FCPA investigation to plaintiffs in a civil shareholder suit.
7/24/2014: Bernd Kowalewski, the former CEO of BizJet, pleaded guilty to conspiracy to bribe government officials in Mexico and Panama. In 2012, BizJet
entered into a three-year deferred prosecution agreement with the DOJ to resolve FCPA offenses in Latin America.
7/28/2014: Smith & Wesson Holding Corporation agreed to an out-of-court settlement with the SEC through an internal, administrative order. Without admitting or denying any wrongdoing, the company agreed to pay the SEC
$107,852 in disgorgement, $21,040 in prejudgment interest, and a $1.9 million civil penalty for paying bribes in Pakistan, Indonesia, and other countries in order to obtain gun sales to military and police forces.
7/31/2014: The SEC awarded more than $400,000 to a whistleblower who reported fraud to the SEC after the company failed to address the issue internally, despite the fact that the SEC’s review staff initially recommended denial of the award, claiming the information was not “voluntarily provided.”
8/5/2014: Cobalt International Energy, Inc. announced in a securities filing that it had received a Wells Notice in connection with the SEC’s investigation
of its operations in Angola and potential liabilities under the FCPA.
8/11/2014: Cubist Pharmaceuticals, Inc. announced that Optimer
Pharmaceuticals, a Massachusetts-based company that Cubist acquired last year for $551 million, may have violated the FCPA. According to Cubist’s disclosure, the government is investigating “a potentially improper payment to a research laboratory” and an “attempted share grant by Optimer” in 2011.
8/14/2014: Joel Esquenazi and Carlos Rodriguez petitioned the United States Supreme Court to review their convictions on FCPA-related charges for a scheme to bribe officials at
Haiti’s state-owned telecom company. Specifically, they asked the Supreme Court to consider whether the definition of “instrumentality” under the FCPA
(1) fails to satisfy the constitutional requirement of adequate notice of what specific conduct violates the FCPA,
and (2) is erroneously derived from commentary to an unrelated treaty [the OECD anti-bribery convention] that postdates the FCPA’s enactment. On October 6, 2014, the Supreme Court denied the defendants’ petition and declined to hear the case.
9/22/2014: Kentucky-based General Cable Corporation, one of the largest wire and cable manufacturers in the world, announced that the company is investigating certain commission payments involving sales to customers
in Angola, Thailand, and India. General Cable said that its internal investigation has thus far determined that certain employees in its Angola subsidiary made payments to “officials of Angola government-owned public utilities
that raise concerns under the FCPA and possibly under the laws of other jurisdictions.” The company said that it
has voluntarily disclosed these matters to the SEC and DOJ.
9/25/2014: Australia-based BHP Billiton, the world’s largest mining company, announced that it is in discussions with the SEC to resolve an investigation of potential FCPA violations that relate to the company’s sponsorship of the 2008 Beijing Olympics. According to the company’s statement, the issues relate primarily to matters in connection with previously terminated exploration and development efforts, as well as hospitality provided during the Beijing Olympics.
SEC ENFORCEMENT Quarterly
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.
Effective representation of our clients has earned acknowledgement in numerous industry publications, including Chambers USA, which, in 2014, ranked us among the best U.S. law firms for Securities Regulation. In a recent edition, the publication noted the firm’s “well-regarded enforcement practice with a considerable depth of resources.” Sources told Chambers that our practice “is highly thought of for public company representations and advisory work.” Sidley was also named the 2011 U.S. News – Best Lawyers “Law Firm of the Year” for Securities Regulation.
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