Publications

04.23.15 | Blog Posts

Duka v. SEC Redux - SEC Holds Home Court Advantage for Another Round

The Insider: White Collar Defense and Securities Enforcement

Defendants widely view the SEC’s administrative courts as an unfavorable venue to square off against the SEC’s own enforcement staff. Accordingly, as the SEC has recently channeled enforcement proceedings away from the federal courts to its “home” courts, a number of defendants have brought federal court challenges attacking the administrative proceedings on a variety of grounds. Many such challenges have failed to reach the merits, as courts have accepted SEC arguments against the courts’ jurisdiction to interfere with an ongoing agency proceeding and found that defendants are limited to the ordinary post-hearing appellate process to obtain review. In a decision filed last week in Duka v. SEC, Southern District of New York Judge Richard N. Berman ruled that one such challenge seeking to stop an SEC administrative hearing cleared these preliminary hurdles, but ultimately did not make it across the finish line. [...]

Related Lawyers: Richard F. Albert

04.22.15 | Articles

Class Action Attorney Fee Applications Under Closer Scrutiny

New York Law Journal

In this article, we discuss two recent decisions by U.S. Southern District Judge Lewis A. Kaplan commenting on the lack of effective adversarial testing of proposed fee applications following securities class action settlements, and stressing the fiduciary obligation of the court to exercise stewardship over settlement funds in that circumstance. Judge Kaplan’s thoughtful approach to the fee awards in these two decisions is likely to influence other judges considering fee applications and may well reinforce the trend of shrinking fee awards, that Judge Kaplan himself noted.

Related Lawyers: Edward M. Spiro, Judith L. Mogul

04.17.15 | Blog Posts

Big Brother Gets Bigger: Installing Independent Monitors Before a Settlement is Signed

The Insider: White Collar Defense and Securities Enforcement

Federal and state regulators frequently rely on independent compliance monitors to ensure that corporate wrongdoers follow-through on correcting the conduct that got them into trouble. Southern District of New York Judge Jed Rakoff has referred to a corporate monitor as both a “financial watchdog” and “an overseer who has initiated vast improvements in the company’s internal controls and corporate governance.” Typically installed as part of a settlement agreement between the government and those companies that have had legal and regulatory issues, the monitors assess and report back to the government on violations of the law and on the effectiveness of the corporation’s compliance and ethics programs. [...]

Related Lawyers: Robert J. Anello

04.08.15 | Articles

New Counterattack on SEC’s Home Court Advantage

New York Law Journal

In the wake of the 2010 Dodd-Frank Act’s broadening of the reach of SEC administrative enforcement proceedings, the agency undertook a major shift toward pursuing such proceedings instead of federal district court actions. Administrative proceedings, which are heard by judges employed by the Securities and Exchange Commission, are widely perceived to favor the agency. Indeed, recent data on the results of such proceedings reveal that the SEC has enjoyed a lopsided record of success, compared to its far more modest record in federal court trials. In this article, we discuss federal court challenges to the SEC’s initiation of administrative proceedings, including Duka v. SEC, in which Duka relies on recent Supreme Court precedent to assert an intriguing constitutional challenge to the status of SEC administrative law judges.

Related Lawyers: Richard F. Albert, Robert J. Anello

03.26.15 | Blog Posts

Ethical Rules for Social Media Gain Clarity

The Insider: White Collar Defense and Securities Enforcement

On March 10, 2015, the New York County Lawyers Association ("NYCLA") weighed in on the ethical implications for lawyers who use social media websites for professional self-promotion. In Formal Opinion 748, NYCLA addressed the widespread use of LinkedIn and specifically examined (1) whether a LinkedIn profile is considered "Attorney Advertising;" (2) when it is appropriate for attorneys to accept endorsements and recommendations; and (3) what information attorneys should include and exclude from social media profiles. Although the NYCLA opinion does not resolve all open questions about the nature and extent of the information attorneys can post on LinkedIn without running afoul of the New York Rules of Professional Conduct, it answers significant questions left open by two Committees of the New York State Bar Association ("NYSBA"). [...]

Related Lawyers: Catherine M. Foti

03.19.15 | Articles

Discharging Tax Debts in Bankruptcy: When is a Return not a Return?

New York Law Journal

Falling behind on one’s taxes often leads to a downward spiral, and it is not uncommon for a taxpayer who cannot pay her tax obligations to decide not to file a return. Not only does such a failure to file expose the taxpayer to additional penalties and potential criminal liability, but it can have devastating ramifications if she subsequently files for bankruptcy. This article discusses In re Fahey, in which the United States Court of Appeals for the First Circuit joined the Fifth and Tenth Circuits in concluding that filing deadlines are “filing requirements” under 11 U.S.C. Section 523(a)(*) and thus that the tax liabilities reflected on untimely returns are not subject to discharge. While these Courts of Appeals have all interpreted the so-called “hanging paragraph” in a manner that precludes virtually all late-filers from discharging tax liabilities in bankruptcy, there are compelling reasons to exclude returns accepted by the relevant taxing authority from such a harsh rule. Clearly, there is more to come on this issue. In the meantime, Fahey provides yet another reason for practitioners to urge their clients to file their returns on a timely basis.

Related Lawyers: Jeremy H. Temkin

03.12.15 | Blog Posts

Meet the Fokker: Continued Judicial Skepticism toward Deferred Prosecution Agreements

The Insider: White Collar Defense and Securities Enforcement

In recent years, the Department of Justice has come to rely on Deferred Prosecution Agreements (DPAs) to resolve many high-profile investigations of corporate wrongdoing. Under DPAs, criminal charges are filed in district court, and prosecution is deferred pending a corporate defendant’s fulfillment of remedial obligations, including payments to the government. [...]

Related Lawyers: Jonathan S. Sack

03.04.15 | Articles

White-Collar Enforcement Under Attorney General Eric Holder

New York Law Journal

When Attorney General Eric Holder took office in February 2009, the country was in the midst of a financial crisis, and many voices called for holding companies and individuals accountable for alleged criminal conduct. In this article, we discuss how the Department of Justice responded to the financial crisis, highlight key initiatives separate from the financial crisis, and address likely Department priorities going forward.

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

02.27.15 | Blog Posts

A Small Barracuda in a Big Pond: New York’s Department of Financial Services

The Insider: White Collar Defense and Securities Enforcement

World-wide financial institutions take notice – New York has a new regulator on the scene. Newsweek describes him as “body-slamming” one of the world’s largest banks, “the man the banks fear most.” The Wall Street Journal has labeled him “one of Wall Street’s most dogged pursuers.” American Banker characterizes him as “pushing the envelope” of bank regulation. In three years on the job, this regulator and the new agency he rules have extracted more than $3 billion in fines from global banks. In a speech he delivered at Columbia University this Wednesday, the regulator made clear that, in all likelihood, these headline-grabbing events are just a sign of things to come. [...]

Related Lawyers: Robert J. Anello

02.18.15 | Articles

Recurring Challenges to Privilege and Work Product Doctrine

New York Law Journal

In this article, we discuss three recent decisions by judges of the U.S. District Court for the Southern District of New York which expose some common misconceptions regarding the attorney-client privilege and work product doctrine and offer some valuable guidance for those litigating privilege and work product disputes.

Related Lawyers: Judith L. Mogul, Edward M. Spiro

02.12.15 | Blog Posts

The Surprise Cost of Whistleblowing

The Insider: White Collar Defense and Securities Enforcement

On February 3, 2015, in United States v. Huron Consulting Group, Inc., U.S. District Judge Jed S. Rakoff, took the unusual – but not unprecedented – step of ordering a False Claims Act (“FCA”) relator to pay thousands of dollars of costs to the prevailing defendants Huron Consulting Group, Inc. and Empire Health Choice Assurance, Inc. This opinion highlights the financial dangers faced by individuals who try to blow the whistle on potentially illegal behavior. [...]

Related Lawyers: Catherine M. Foti

02.04.15 | Articles

Waning Influence of Sentencing Guidelines in White-Collar Cases

New York Law Journal

The restoration of sentencing judges’ discretion in the post-Booker era has rendered the federal sentencing guidelines—widely perceived as unduly punitive—less important in the white-collar context. Statistics confirm that courts increasingly have chosen to impose non-guideline sentences and, in some recent high profile cases, even the prosecution has proposed sentences below the guideline range. The U.S. Sentencing Commission recently has responded to complaints about the guidelines’ application by proposing a series of amendments to the guidelines governing economic crimes. We discuss all of this in our latest New York Law Journal article.

Related Lawyers: Robert J. Anello, Richard F. Albert

01.29.15 | Articles

Internal Revenue Service Budget Cuts Spell Trouble

New York Law Journal

According to its mission statement, the Internal Revenue Service’s goal is “to provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.” Over the past few years, the IRS has had to fulfill this mission with shrinking resources, and National Taxpayer Advocate Nina E. Olson has noted that “the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively.” In this article, we discuss concerns that the additional cuts implemented as part of the recent budget deal will undermine both revenue collection and the fair enforcement of the Internal Revenue Code. 

Related Lawyers: Jeremy H. Temkin

01.09.15 | Articles

Implications of Second Circuit Reversal of Insider Trading Convictions

New York Law Journal

The Department of Justice has brought few high-profile criminal cases against individuals arising from the 2008-2009 financial crisis. The department’s cases have tended to charge large financial institutions, not senior officials. A number of the high-profile cases arising from the collapse of mortgage-backed securities have resulted in civil, not criminal, charges and settlements. And the typical sanction has been the payment of substantial (often multi-billion dollar) sums to the government, not imprisonment.

Related Lawyers: Elkan Abramowitz, Jonathan S. Sack

01.08.15 | Blog Posts

The Year in White-Collar Crime: A Look Back Helps Us See Ahead

The Insider: White Collar Defense and Securities Enforcement

The Justice Department’s white-collar agenda in 2014 was marked by skyrocketing corporate settlements and continued reliance on deferred and non-prosecution agreements, coupled with compliance monitors. Several significant decisions with long-term implications for white-collar cases also were issued by federal courts in 2014. A look at the Justice Department’s approach and these decisions offer a clue as to what to expect in white-collar cases in 2015. [...]

Related Lawyers: Robert J. Anello

12.18.14 | Articles

Practical Observations by Judges on the Scope of Discovery

New York Law Journal

In the last several months, judges of the U.S. District Court for the Southern District of New York have issued a number of rulings on discovery disputes that offer both pragmatic resolution of the dispute at hand and broader, instructive commentary on the scope of permissible discovery. These rulings make clear that Southern District judges are increasingly losing patience with discovery for discovery’s sake. This article discusses several of those opinions.

Related Lawyers: Edward M. Spiro, Judith L. Mogul

12.17.14 | Blog Posts

The Barko v. KBR Privilege Battle Continues

The Insider: White Collar Defense and Securities Enforcement

A high-profile qui tam suit against Kellogg, Brown & Root and Halliburton continues to generate important case law relating to the scope of attorney-client privilege and work product protection given to internal investigations.

In the lawsuit, arising out of alleged false claims to the government under Iraq reconstruction-related contracts, federal judge James S. Gwin in Washington, D.C. held, in March 2014, that internal investigation materials were not protected by the attorney-client privilege because the investigation had been conducted as a matter of regular company policy by internal compliance personnel and as required by federal law. (I wrote about Judge Gwin’s ruling in a blog entitled “When Is An Internal Investigation Not Privileged.”) The defendants appealed the ruling, which led to a unanimous decision three months later in In Re: Kellogg Brown & Root, Inc., No. 14-5055 (D.C. Cir. June 27, 2014), in which the U.S. Court of Appeals for the D.C. Circuit vacated the district court decision, holding that an internal investigation is privileged so long as “one of the significant purposes” of the investigation is to obtain or provide legal advice. The Court of Appeals remanded the case to the District Court for further proceedings. (I discussed the D.C. Circuit’s opinion in “D.C. Circuit Upholds Claim of Corporate Attorney-Client Privilege.”) That ruling is now subject to a petition for certiorari to the Supreme Court. [...]

Related Lawyers: Jonathan S. Sack

12.03.14 | Articles

Missing Fish, Obstruction Statute and Prosecutorial Discretion

New York Law Journal

White-collar criminal practitioners spend much of their time arguing about how prosecutors should exercise their discretion in making charging decisions, often against the backdrop of broad and uncertain criminal statutes. When the Supreme Court grapples with the same issue, however, significant new criminal law doctrine may emerge. That potential became apparent most recently during the oral argument of Yates v. United States, the peculiar case of a fisherman prosecuted for obstruction of justice under the Sarbanes-Oxley Act for throwing undersized fish back into the sea. In this article, we discuss this case, the critical comments the justices directed toward the government regarding its exercise of prosecutorial discretion, and potential judicial remedies.

Related Lawyers: Richard F. Albert, Robert J. Anello

12.01.14 | Blog Posts

Prosecuting Individuals for Financial Crimes - Some Questionable Recent Ideas

The Insider: White Collar Defense and Securities Enforcement

The government must be very sensitive about all the criticism it has been getting, from Congress, some judges and others, for not prosecuting more individuals for financial crimes. Perhaps in response, senior government officials have given a series of speeches since September declaring the commitment of the Justice Department to such prosecutions.

White-collar defense lawyers know that individuals are investigated and prosecuted all the time, so in some ways the recent speeches don’t tell us very much. But the speeches introduce a few ideas that raise concern that, perhaps, the government’s sensitivity is generating some questionable proposals. [...]

Related Lawyers: Jonathan S. Sack

11.21.14 | Articles

Redefined Role of Profit in Economic Substance Doctrine

New York Law Journal

Learned Hand famously opined that “[a]ny one may so arrange his affairs that his taxes shall be as low as possible.” There is, however, a line between legitimate tax avoidance and illegal tax evasion and, in drawing that line, the IRS has long challenged attempts by taxpayers to reduce their tax liability by executing transactions that lack economic substance. In this article, I discuss the increasing focus of the economic substance doctrine on the proportionality between the potential profits to be derived from a transaction and the corresponding tax benefits, as well as the effect this changing focus will have on future cases.

Related Lawyers: Jeremy H. Temkin


Load More