Publications

09.28.16 | Blog Posts

Prosecutions from the Financial Crisis: When Is It Safe to Come Out of the Woods?

The Insider: White Collar Defense and Securities Enforcement

Florian Homm, a German hedge fund manager prosecuted by the United States for wrongdoing in connection with the financial crisis, fled Europe in 2008 under cover of darkness on a private plane with cash stuffed in his underwear. He hid out in South America for five years – the length of the statute of limitations generally applicable to most United States federal criminal cases. When he emerged and trumpeted his return to high society in 2013, believing that the statute of limitations on any possible United States criminal claims against him had run, he was arrested in Italy on U.S. federal fraud charges. [...]

Related Lawyers: Robert J. Anello

08.03.16 | Blog Posts

The Microsoft Warrant Case: Unintended Consequences of the Second Circuit's Ruling

The Insider: White Collar Defense and Securities Enforcement

In a long-awaited ruling in a case in which the government had served a warrant on Microsoft demanding the production of customer emails, the Second Circuit held in July that Microsoft had no obligation to produce customer emails because they were stored on a server located in Ireland. Some privacy groups cheered the decision, while others cautioned that the opinion’s focus on the location where data is stored could have negative consequences for privacy rights and the internet generally, as it could make user data more easily obtainable when the relevant servers are located in countries that may impose less stringent safeguards than exist in the U.S. Aside from privacy concerns, others warned the opinion could make it harder for law enforcement to investigate criminal activity. For example, Law Professor Orin Kerr wrote in a tweet: “Want to stymie U.S. law enforcement? Store your data in the cloud fragmented over many locations outside U.S.” And, in a concurring opinion, Judge Lynch urged Congress to take action to modernize the law, a call echoed by commentary following the decision. [...]

Related Lawyers: Brian A. Jacobs

07.14.16 | Blog Posts

SCOTUS Quid Pro Quo Analysis in McDonnell May Broadly Affect Bribery and Insider Trading Prosecutions

The Insider: White Collar Defense and Securities Enforcement

Last month’s decision from the Supreme Court in McDonnell v. United States takes federal prosecutors to task for applying federal criminal corruption laws in too broad a manner. The Court’s decision makes clear that distasteful or offensive conduct does not necessarily rise to the level of criminality. The Court’s insistence on a “specific and focused” benefit suggests that the government may have to rethink prosecutions ranging from all forms of bribery as well as insider trading. [...]

Related Lawyers: Robert J. Anello

07.12.16 | Blog Posts

Recent Trials Highlight DOJ's Challenges in Prosecuting Individuals for Corporate Misconduct

The Insider: White Collar Defense and Securities Enforcement

Since the 2008 financial crisis, the Department of Justice has faced criticism for not aggressively prosecuting individuals and companies for alleged wrongdoing. The Department has acknowledged and addressed this criticism in speeches and policy statements, notably the September 2015 Yates Memorandum, which declared a heightened commitment to prosecuting individuals for white-collar crimes and, as I have written elsewhere, a heightened expectation of corporate cooperation in the investigation of employee conduct. [...]

Related Lawyers: Jonathan S. Sack

06.01.16 | Blog Posts

Insider Trading, Official Corruption, and Their Common Roots in Fraud

The Insider: White Collar Defense and Securities Enforcement

Insider trading and official corruption prosecutions—two of the cornerstones of recent white-collar enforcement efforts by the Department of Justice—have both generated sufficient doctrinal confusion to land them on the Supreme Court’s docket this year and next. This past April, the Court heard the appeal of former Virginia Governor Bob McDonnell from his corruption conviction, and next term, the Court is set to hear Bassam Salman’s appeal from his insider trading conviction. On the surface, these cases have little in common: McDonnell concerns what constitutes a sufficient “official action” to trigger criminal liability under anti-corruption laws, and Salman concerns what constitutes a sufficient “personal benefit” to trigger criminal liability under insider trading precedent. But beneath the surface, the legal doctrines at issue are related, in that both official corruption and insider trading cases are rooted in theories of fraud. Further, one of the fundamental principles of fraud—that a material misrepresentation is an element of the crime—could provide important guidance as to how these cases and others might be resolved. [...]

Related Lawyers: Brian A. Jacobs

05.06.16 | Blog Posts

FCPA Pilot Program: Missing the Big Picture

The Insider: White Collar Defense and Securities Enforcement

For decades, the government has been trying to incentivize companies to self-report illegal activity by dangling the carrot of reduced punishment. The Justice Department’s one-year Foreign Corrupt Practices Act “pilot program,” announced on April 5, 2016, is the latest iteration of this enforcement technique. Although a valiant effort to formalize a practice known to white collar practitioners, the program does not address some of the more significant variables that are of importance to corporate decision makers. [...]

Related Lawyers: Robert J. Anello

04.14.16 | Blog Posts

Ransomware, Cyberattacks, and Hacking in the Health Care Industry: Lessons from a Letter to the FBI

The Insider: White Collar Defense and Securities Enforcement

The last several weeks have brought a host of alarming revelations regarding the vulnerability of some of the most confidential data that corporations and legal entities maintain on their servers. Most notably, the story of the so-called “Panama Papers” continues to attract substantial media attention, as the theft of approximately 2.6 terabytes of data from the Panamaian law firm Mossack Fonseca, and its disclosure to the International Consortium of Investigative Journalists, has already caused the resignation of one international leader and threaten the fates of several more. Perhaps less provocative, but no less significant, is a recent Wall Street Journal article reporting that hackers illegally accessed the computer networks at some of the most respected and prestigious law firms in the United States, apparently for the purpose of stealing confidential information that in turn can facilitate insider trading. [...]

Related Lawyers: Robert M. Radick

04.05.16 | Blog Posts

Why Do Federal Agents Still Take Interview Notes by Hand?

The Insider: White Collar Defense and Securities Enforcement

Anyone who has attended a law school lecture in the last decade knows this sight: row after row of students typing on laptops, each taking down a nearly verbatim transcript. At the same time, anyone who has attended a witness interview—a proffer—in a federal criminal investigation in the last decade knows this sight: a group of Assistant U.S. Attorneys and law enforcement agents, all asking questions, while a single agent takes down occasional notes by hand on a yellow pad. Student notes can impact grades; agent notes can put people in jail. Yet the typed student notes will almost invariably be more complete than the handwritten agent notes. Why are law students taking better notes than federal agents? [...]

Related Lawyers: Brian A. Jacobs

03.28.16 | Blog Posts

Charging Too Many Counts Hurts Prosecutions

The Insider: White Collar Defense and Securities Enforcement

In a recent criminal case in New York County in which I was involved, the District Attorney’s Office charged one of the defendants with 106 counts – 105 felonies and one misdemeanor (two other defendants were charged with over 100 counts each). The case was a complex fraud case and the prosecution charged violations of five different statutes: (1) scheme to defraud in the first degree (one count), (2) grand larceny in the first degree (15 counts), (3) falsifying business records in the first degree (88 counts), (4) the Martin Act (the New York securities fraud statute) (one count), and (5) conspiracy in the fifth degree (one count – a misdemeanor). [...]

Related Lawyers: Lawrence S. Bader

02.17.16 | Blog Posts

GSK and the U.K.’s Competition and Markets Authority: A New Agency Arrives in Health Care Enforcement

The Insider: White Collar Defense and Securities Enforcement

It does not take much these days to notice that law enforcement has gone global. The transnational nature of prosecutions, enforcement actions, and regulatory proceedings can be seen in a host of recent cases. The prosecution of the FIFA scandal, for example, involves not just the U.S. Department of Justice but also the active participation of the Swiss authorities, and the governments of Costa Rica and Colombia have recently announced their own independent investigations. Similarly, the alleged manipulation of interbank lending rates has led to prosecutions by the United Kingdom’s Serious Fraud Office and the U.S. Department of Justice, as well as actions by a less well-known enforcement agency, Japan’s Financial Services Agency. And as this blog noted over two years ago, the Chinese Ministry of Public Security led an investigation into Glaxo Smith Kline’s alleged bribing of officials and doctors to utilize the company’s drugs, which ultimately resulted in a $500 million corporate fine and a suspended sentence for a Glaxo executive who otherwise would have been relegated to a Chinese prison. [...]

Related Lawyers: Robert M. Radick

02.10.16 | Blog Posts

Non-Prosecution Agreements: Reserved for VIPs?

The Insider: White Collar Defense and Securities Enforcement

Should individuals who cooperate with the government in high-profile cases get better deals than individuals who cooperate in cases that do not make the headlines? The rules laid out in the Department of Justice’s U.S. Attorney’s Manual suggest that the answer—at least in the government’s view—is “yes.” [...]

Related Lawyers: Brian A. Jacobs

01.20.16 | Blog Posts

Mixed Messages When Courts Issue a Stern Warning to Prosecutors

The Insider: White Collar Defense and Securities Enforcement

Much has been written over the past few years about prosecutors’ violations of Brady v. Maryland, the Supreme Court case which held that prosecutors must turn over exculpatory material to the defense in time for the defense to use such material. There is a controversy about whether such Brady violations are an epidemic or an aberration. Often, litigation over Brady violations will focus on whether the violation was deliberate or accidental, although Brady violations occur even when the prosecutor acts in good faith. [...]

Related Lawyers: Lawrence S. Bader

01.15.16 | Blog Posts

LinkedIn for Lawyers: Newly Issued Ethical Guidance Makes Social Media Use Less Risky

The Insider: White Collar Defense and Securities Enforcement

The ethics guidance interpreting "Attorney Advertising" rules in the social media context continues to evolve, but this time the evolution appears to be for the better, taking into account the realities of the growing use of social media. As you may recall, early last year, the New York County Lawyers Association ("NYCLA") weighed in on the ethical implications for lawyers using LinkedIn and suggested that attorneys using the self-proclaimed “World’s Largest Professional Network” needed to beware that their posts on that site, even the most casual, did not run afoul of the attorney advertising rules. Now, however, a recently published Formal Opinion of the Committee on Professional Ethics of the Association of the Bar of the City of New York ("City Bar") has called into question the scope and applicability of the NYCLA opinion, recognizing that use of ethic rules developed for a pre-social media world in a post-social media context may be akin to attempting to fit a square peg into a round hole. As the City Bar acknowledged: the current attorney advertising rules "defy easy extension to the digital world and, in particular, to social media content." The difficulty of applying the rules of ethics to lawyers' social media activities, however, has not stopped lawyers from using social media websites -- particularly LinkedIn -- for professional self-promotion. The new City Bar opinion, however, sets forth a test that might make it easier for attorneys to navigate their responsibilities while continuing to document their achievements, both personal and professional on the internet. [...]

Related Lawyers: Catherine M. Foti

01.13.16 | Blog Posts

Added Penalties for Worker Safety Violations: The Other Yates Memorandum

The Insider: White Collar Defense and Securities Enforcement

In September 2015, Department of Justice Deputy Attorney General Sally Quillian Yates issued a memorandum instructing federal prosecutors to step-up individual prosecutions for corporate wrongdoing. The much-discussed “Yates Memorandum” was issued in response to criticism that federal prosecutors had been lax in prosecuting individual executives for crimes committed during the 2008 financial crisis and has garnered a lot of attention from practitioners and commentators. White-collar lawyers and their corporate clients also should be aware of the “other” Yates Memorandum quietly issued at the end of 2015, announcing that federal prosecutors will look for ways to charge a variety of felonies in routine worker safety cases to take advantage of the greater penalties available under environmental and other criminal laws. [...]

Related Lawyers: Robert J. Anello

12.16.15 | Blog Posts

United States v. Bert: The Second Circuit’s Newfound Need for Speed?

The Insider: White Collar Defense and Securities Enforcement

In September 2015, a divided panel of the Second Circuit took the drastic step of ordering the reversal of defendant Raheem Bert’s conviction for firearms offenses and the dismissal of his indictment with prejudice due to an inadvertent violation of the Speedy Trial Act.* The panel’s decision, written by Circuit Judge Rosemary S. Pooler and joined by Circuit Judge Peter W. Hall—over a dissent by Circuit Judge Dennis Jacobs—explained this result by referencing the need to vindicate the Speedy Trial Act’s “purpose of expeditiously bringing criminal cases to trial,” and found that “[b]arring reprosecution in this case will have a more positive and substantial impact upon the administration of justice—and most certainly on improved administration of the Speedy Trial Act—than would permitting the prosecution to proceed.” [...]

* Update: On February 9, 2016, subsequent to the publication of this blog post, the Second Circuit withdrew its original opinion in United States v. Bert and issued a new opinion. Just as in the original opinion, Judge Pooler wrote for herself and for Judge Hall, while Judge Jacobs dissented. In this new opinion, however, instead of taking what my original post called the “drastic step” of ordering the reversal of Bert’s conviction and the dismissal of his indictment with prejudice, the majority took the more modest step of remanding Bert’s case so that the district court could make additional factual findings regarding the speedy trial delay. Nevertheless, as Judge Jacobs highlights in his dissent, in many respects, the majority’s instructions to the district court to make additional factual findings go beyond what had previously been legally required, and warrant close attention by counsel in future cases.

Related Lawyers: Brian A. Jacobs

12.10.15 | Blog Posts

Latest International Assault on Attorney-Client Privilege Causes Headaches for Corporations' Lawyers

The Insider: White Collar Defense and Securities Enforcement

When dealing with international investigations, counsel for corporations must navigate a variety of issues relating to the attorney-client privilege. By now, many experienced white-collar lawyers are aware of the vagaries of the rules applicable to in-house counsel (in many European jurisdictions, the privilege does not apply to communications with them), but recent pronouncements by United Kingdom authorities prodding companies to forego the protection of the privilege in connection with internal investigations have introduced a new twist into the mix. The approach to the corporate attorney-client privilege taken in the United Kingdom is symptomatic of a relatively negative view of the privilege articulated by many European regulators and courts. [...]

Related Lawyers: Robert J. Anello

10.22.15 | Blog Posts

Upcoming Federal Sentencing Reform Offers Little Benefit for White Collar Defendants

The Insider: White Collar Defense and Securities Enforcement

Likely to sate the public’s appetite to punish perpetrators of financial crimes, in recent years Congress and the United States Sentencing Commission (USSC) have created a scheme where individuals convicted of white collar crimes serve long sentences and, thereafter, are saddled with a lifetime of disabilities that often are out of proportion to the venality of their conduct or the legitimate goals of our criminal justice system. For years, the length of sentences in white collar cases largely has been determined by the United States Sentencing Guidelines almost-singular focus on “loss” as the key factor in economic crimes, which obscures the myriad other factors that affect a defendant’s true culpability in an individual case and often results in unduly punitive results. In some cases, relatively low-level and ministerial employees faced life sentences in prison because the guidelines did not properly account for their role in the scheme. In others, defendants faced decades-long sentences for activity that was more “farcical than dangerous” simply because the “intended loss” of their “ridiculous” scheme numbered in the billions of dollars. [...]

Related Lawyers: Robert J. Anello

09.10.15 | Blog Posts

Second Circuit Rules Dodd-Frank Protects Whistleblowers Who Report Internally

The Insider: White Collar Defense and Securities Enforcement

In a much-anticipated opinion, a divided panel of the Second Circuit Court of Appeals held in Berman v. Neo@Ogilvy LLC, that whistleblowers who report wrongdoing internally, but not to the Securities and Exchange Commission ("SEC"), are protected by the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). [...]

Related Lawyers: Catherine M. Foti

09.08.15 | Blog Posts

Addressing the SEC’s Administrative “Home Court” Advantage in Enforcement Proceedings

The Insider: White Collar Defense and Securities Enforcement

A recent decision from the Seventh Circuit Court of Appeals highlights the ongoing debate regarding the Securities and Exchange Commission’s continued pursuit of administrative enforcement proceedings for securities violations. In Bebo v. SEC, a panel of the Seventh Circuit held that federal courts do not have jurisdiction to hear claims regarding the constitutionality of the SEC’s administrative hearing process and forum until all administrative remedies have been exhausted. The breadth and number of constitutional challenges raised by individuals subject to the SEC’s administrative process, however, signal that it may be time for the agency or Congress to make some changes. [...]

Related Lawyers: Robert J. Anello

09.01.15 | Blog Posts

Dog Days for the SEC

The Insider: White Collar Defense and Securities Enforcement

This summer has been a hot one for the Securities and Exchange Commission (“SEC”). In particular over the past couple of months, the SEC has been busy promoting and defending its rules and practices in front of federal courts across the country, including defending the constitutionality of the Commission’s administrative enforcement proceedings in various circuits, while venturing further into the morass of cases grappling with the definition of who is a “whistleblower” entitled to the anti-retaliation protections of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) by issuing an Interpretive Release on the issue “clarifying” its position. Whether the SEC’s positions will ultimately triumph is not clear but the SEC is fighting hard to protect its interpretation of Dodd Frank. [...]

Related Lawyers: Catherine M. Foti


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