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The V&E Report
Insights in Government Enforcement and Investigations

European Union Expands Anti-Money Laundering Requirements and Increases Beneficial Ownership Transparency

Recently, a number of European countries, including the U.K. and Germany, have enacted revised anti-money laundering laws implementing the European Union’s (“EU”) 5th Anti-Money Laundering Directive (“the Directive”), in some instances giving companies only weeks to comply with their new anti-money laundering obligations. European authorities have not shied away for handing down large fines against corporations in the past, and it is imperative that companies operating in the EU reassess their current anti-money laundering compliance programs to ensure they are complying with the current state of the law.

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FCPA Agency Theory Post-Hoskins Takes the Spotlight at FCPA Conference

The recent bribery conviction of British citizen Lawrence Hoskins created a stir among white collar practitioners because it showed that the US Department of Justice (“DOJ”) could be successful using an agency theory to prosecute individuals or entities that are outside the traditional jurisdiction of U.S. prosecutors. Last Thursday, December 5, however, Assistant Attorney General Brian Benczkowski gave a speech at the American Conference Institute’s 36th International Conference on the FCPA, in which he suggested that DOJ does not intend to push the bounds of its jurisdictional reach and, importantly, reinforced that there are limits to how far DOJ might push the agency theory.

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GAO Urges DOD To Systematically Assess Fraud Risks Related to Contractor Ownership

On November 25, 2019, the Government Accountability Office (“GAO”) published a report examining the financial and nonfinancial fraud and national security risks to the Department of Defense (“DoD”) when contractors employ “opaque ownership structures.” GAO defined opaque ownership structures as those that conceal or obfuscate entities or individuals who own, control, or benefit financially from the contractor.

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With Bipartisan Support, House Passes Explicit Ban on Insider Trading

The U.S. House of Representatives recently approved a bill that aims to create the first federal statute explicitly banning insider trading. By a 410-13 margin, the House voted to amend the Securities Exchange Act of 1934 to prohibit financial trades based on confidential information and related communications by those who possess material, nonpublic information.

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  • 04
  • December
  • 2019

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Court Rejects “Tacit Understanding” Theory to Set Aside Part of Guilty Verdict in Executives’ Opioid Trial

Executives convicted of an illegal scheme involving opioid marketing received a partial victory when the trial court vacated part of the jury’s guilty verdict. On November 26, 2019, the court issued its ruling, setting aside some of the convictions of several former Insys Therapeutics, Inc. executives who were convicted of conspiring to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by devising an illegal marketing scheme for the company’s fentanyl-based opioid product, Subsys.

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DOJ Antitrust Division Intervenes in Private No-Poach Class Action to Obtain Right to Enforce Settlement Agreement

On November 9, 2019, the DOJ Antitrust Division issued a press release detailing its role in the resolution of a private no-poach class action against Duke University and the University of North Carolina for their alleged agreement not to compete for each other’s medical faculty. Earlier this year, DOJ took the unprecedented step of intervening in the private litigation for the limited purpose of joining the proposed settlement to obtain the right to enforce injunctive relief against Duke.1

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Governments Are Feeding on Facebook Data: Report Shows Recent Rise in Official Requests for User Information

For the period between January and June 2019, Facebook received 128,617 requests for user data from various government entities—16% above the 110,634 requests in the period between July and December 2018.1 This uptick was described in Facebook’s latest transparency report (the “Report”), which provides information about government data requests.2

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SEC Enforcement Report Signals Increased Enforcement, Lingering Limitations from Kokesh

Last week on November 6, 2019, the SEC Enforcement Division released its annual report on the Commission’s enforcement activities for the fiscal year. This article discusses prominent takeaways from the report, and what these and other findings mean for companies under the SEC’s jurisdiction.

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Second Circuit Considers Reach of Bribery Laws Beyond U.S.

On November 7, 2019, a Second Circuit panel1 heard oral argument on whether the use of United States wire services in effecting a bribery scheme is enough, without more, to pull defendants within the scope of U.S. criminal honest-services wire fraud statutes.2 Appellants Juan Angel Napout, the former president of the South American soccer confederation known as CONMEBOL, and Jose Maria Marin, the former president of the Brazilian soccer federation known as the Brazilian Football Confederation, were convicted of wire fraud and racketeering in 2017, where after a six-week trial, the jury found that they had fraudulently awarded broadcast and media rights to international soccer tournaments to officials in Paraguay, Argentina, and Brazil.

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DOJ’s FCPA Reach Over Foreign “Agents”

The Criminal Information against two former executives of Unaoil, Inc. was unsealed on October 30, 2019, laying out the U.S. government’s case against them for facilitating bribes on behalf of companies in foreign countries in exchange for oil and gas contracts.1 Former CEO Cyrus Ahsani and former COO Saman Ahsani, both citizens of the United Kingdom, pled guilty to conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”), 15 U.S.C. § 78dd-1 et seq.2

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Supreme Court to Decide Validity of SEC Disgorgement Actions

On November 2, 2019, the United States Supreme Court granted the petition for a writ of certiorari in Liu v. SEC to address whether the Securities and Exchange Commission (the “SEC”) has authority to recover disgorgement of ill-gotten profits from violators of the federal securities laws.This decision comes after the Ninth Circuit upheld the District Court’s order, which awarded summary judgment to the SEC with respect to its claim that Liu and his wife committed securities fraud by raising approximately $27 million from Chinese investors under the EB-5 Immigrant Investor Program in 2018.2

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U.K.’s SFO Recognizes Expectation that Compliance Functions Will be Insulated from Routine Cost Cutting Pressures

Sarah Lawson, the General Counsel of the U.K.’s Serious Fraud Office (“SFO”), recently emphasized that corporate compliance functions must be well resourced and that the SFO expects such programs should be insulated from routine cost-cutting pressures. This expectation parallels the U.S. Department of Justice (“DOJ”)’s long-standing focus on corporate compliance programs and its own recent focus on ensuring that compliance functions are provided with sufficient resources.

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Data Without Borders: The U.S. and UK Sign CLOUD Act Agreement Making it Easier to Gather Electronic Evidence

The United States and the United Kingdom recently entered the first ever CLOUD Act Agreement, which aims to streamline the process by which either government can collect electronic evidence located in the other country. Under the agreement, designated authorities from the U.S. and UK will be able to issue orders for the collection of electronic data directly to covered providers in the other country.

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Don’t Get “Pulled-In”: Marvell Fined by SEC for Failing to Disclose Aggressive Sales Plan

The SEC recently entered into a settlement with Marvell Technology Group, Ltd., based on Marvell’s manipulation of revenue reported in the company’s public statements. Marvell used so-called “pull-ins” — in which the company pulled revenue from future quarters into the current quarter — to mislead investors about the company’s ability to meet its revenue targets.

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