FinCen Proposal to Extend AML Regulations to Investment Advisers: On August 25, 2015, FinCen proposed regulations that, if adopted, would (1) require investment advisers to establish anti-money laundering programs and report suspicious activity to FinCEN pursuant to the Bank Secrecy Act and (2) include investment advisers in the general definition of “financial institution,” which, among other things, would require them to file currency transaction reports and keep records relating to the transmittal of funds. The proposal is currently out for comment.
U.S. v. Salman: On 8/20/15, the Ninth Circuit sitting en banc denied a rehearing of the panel’s 7/6/15 decision to uphold the defendant’s insider trading conviction. Defendant had sought to get his conviction overturned based on the Second Circuit’s decision in U.S. v. Newman, which he was urging the Ninth Circuit to adopt (see our discussion of the Ninth Circuit’sSalman decision in our August newsletter under “Are the Circuits A-Splitting? The Ninth Circuit Declines to Follow the Second Circuit’s Insider Trading Decision in U.S. v. Newman”).
Challenges to SEC Administrative Proceedings: Updates to cases reported on in our April 2015 newsletter under “Wherefore Art Thou Due Process? SEC Administrative Hearings Under Attack” and our June 2015 newsletter under “Wherefore Art Thou Due Process – The Sequel.” We are sensing a potential circuit split in the works:
- Bebo v. SEC: On 8/24/15, the Seventh Circuit upheld an Eastern District of Wisconsin judge’s decision to dismiss the case for lack of subject matter jurisdiction, holding that Bebo must first exhaust her statutory-mandated administrative remedies through the SEC’s in-house proceedings prior to seeking redress in federal court.
- Duka v. SEC: On 8/12/15, Southern District of New York Judge Richard M. Berman enjoined the SEC’s administrative proceedings as “likely unconstitutional.”
- Hill v. SEC: On 8/4/15, the SEC appealed Hill to the Eleventh Circuit. Northern District of Georgia Judge Leigh Martin May was the first federal judge to enjoin the SEC’s administrative proceedings as “likely unconstitutional” on 6/8/15.
- Gray Financial Group, Inc. v. SEC: On 8/4/15, Judge May followed her decision in Hill and again enjoined the SEC’s administrative proceedings as “likely unconstitutional.” Given its actions in Hill, an SEC appeal to the Eleventh Circuit is likely.
- Avon Products and lawyers representing shareholders filed a motion in the Southern District of New York seeking approval of a $62 million settlement in a securities fraud lawsuit which alleged that Avon and two former executives failed to disclose problems with the company’s FCPA compliance program in China (8/18/15).
- The DOJ asked several European countries to freeze an additional $1 billion in assets in the widening Uzbek telecom scandal. The DOJ alleges that Russian and Swedish companies paid bribes to the eldest daughter of Uzbekistan’s president, Gulnara Karimova (under house arrest since 9/14), in exchange for access to the Uzbek telecom market (8/13/15). As reported in our August 2015 newsletter under “Keeping an Eye Out – Updates and Briefly Noted,” on 7/9/15 U.S. District Court Judge Andrew Carter allowed the DOJ to seize $300 million in funds linked to the scandal that were being held by Bank of New York Mellon in Ireland, Luxembourg and Belgium.
- The SEC announced that Vicente E. Garcia, former executive at worldwide software manufacturer SAP, Inc., agreed to settle charges that he had violated the FCPA by paying $145,000 in bribes to Panamanian government officials to procure software license sales. The DOJ simultaneously announced a parallel criminal action against Garcia (8/12/15).
- Atlanta-based NCR Corp. disclosed that the SEC had declined to commence an enforcement action following a three-year whistleblower-initiated FCPA investigation (8/4/15).
- The DOJ announced that it is hiring an FCPA compliance attorney to review putative corporate defendants’ compliance programs and help determine whether the DOJ should nevertheless prosecute such companies for FCPA violations (7/30/15).
- Texas-based Flowserve Corporation reported in a filing that it received a subpoena from the SEC in connection with possible FCPA violations (7/30/15).
- OFAC announced that Zurich-based bank UBS AG agreed to pay approximately $1.7 million to settle potential civil liability for processing 222 transactions from 2008 to 2013 that were in violation of U.S. antiterrorism sanctions laws. The violations, which OFAC deemed “non-egregious,” were due to compliance department error(8/27/15).
- Schlumberger: OFAC issued a Finding of Violation to Schlumberger Oilfield Holdings, Ltd., for violations of Iran and Sudan sanctions but declined to impose additional penalties over the $232.7 million previously imposed in March (8/7/15) (reported on in our April newsletter under “Is OFAC the New Black? Schlumberger andPayPal—The Rise in the Enforcement of Sanctions Penalties”).
SEC Enforcement Action Against Wells Fargo Compliance Officer Dismissed: SEC administrative law judge Cameron Elliot dismissed an SEC enforcement action against a Wells Fargo compliance officer who had allegedly altered a document before producing it to the SEC in an investigation (Administrative Proceeding In the Matter of Judy K. Wolfbrought in 10/14). ALJ Elliot ruled that the dismissal was justified because Wolf did not act alone and the case was indicative of widespread systematic problems at Wells Fargo that could not be “pinned” on any one individual (8/5/15).
Swiss Bank Program (8/27/15, 8/20/15, 8/7/15 and 8/3/15): Seven more Swiss banks reached resolution with the DOJ under its Swiss Bank Program (first reported on in our April newsletter under “First Swiss Bank Reaches Resolution with the DOJ Under Its Swiss Bank Program”).