The need for an effective compliance program to assist companies in preventing, detecting and, if necessary, promptly correcting issues before they become problems is nothing new. However, there is an increased focus by the government designed to induce employees to report suspected unlawful conduct by their employers to regulatory agencies. While this focus may benefit consumers and investors, it also raises the real possibility a company will first learn about an issue after an audit or enforcement action has already been commenced, and control of the situation is largely out of the company’s hands. This new era of external enforcement means that companies must place an even greater emphasis on their internal compliance programs. But where to start?
The following scenario is more common—and more troubling—than ever before. A high-ranking employee who has signed an agreement to preserve the confidentiality of business plans, financial information, and trade secrets stealthily collects confidential information belonging to the employer.
Attorney General Jeff Sessions has announced a new Department of Justice policy regarding the federal adoption of assets seized by state or local law enforcement under state law. The new policy, issued on July 19, 2017, is intended to strengthen and streamline the civil asset forfeiture program allowing a more aggressive pursuit of asset forfeiture cases and the increased sharing of proceeds of those seizures with local law enforcement.
During his campaign, President Donald Trump raised uncertainty with statements that he disapproved of the Foreign Corrupt Practices Act. Since then, however, the Department of Justice has emphasized its continued enforcement efforts for FCPA violations.
The Association of Corporate Counsel (ACC), which represents over 42,000 in-house counsel across 85 countries, recently released its ACC Chief Legal Officers (CLO) 2017 Survey which found that two-thirds of in-house legal leaders ranked data protection and information privacy as ‘very’ or ‘extremely’ important.
The Mandatory Victims Restitution Act of 1996 provides that defendants convicted of crimes committed by “fraud or deceit” must compensate victims for the full amount of their losses. A question that courts often face is whether the government and victim have provided sufficient evidence of their actual losses to obtain restitution under the MVRA. The U.S. Court of Appeals for the Eleventh Circuit, in Atlanta, has provided new guidance in United States v. Stein, No. 14-1521 (11th Cir. Jan. 18, 2017).
On April 5, 2016, the Department of Justice had set forth a Foreign Corrupt Practices Act (“FCPA”) Enforcement Plan and Guidance on enforcement, announcing an FCPA enforcement pilot program to promote greater accountability for individuals and companies that engage in corporate crime by motivating companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate with the DOJ, and, where appropriate, remediate flaws in their controls and compliance programs.
We are seeing a growing number of False Claims Act (“FCA”), 31 U.S.C. §§ 3729 – 3733 cases where defendants test the sufficiency of relators’ pleadings, which is the heightened pleading standard under Rule 9(b). Rule 9(b) acts as a gatekeeping function by requiring that “in alleging fraud” a “party must state with particularity the circumstances constituting fraud.” In general terms, under Rule 9(b), courts require Relators to plead with particularity the “who, what, when, where and how” of the supposed fraudulent activity. See Kanter v. Barella, 489 F.3d 170, 175 (3d Cir. 2007). However, the question of what constitutes such “particularity” remains an open question, as courts continue to grapple over whether “particularity” requires a relator to identify specific false claims that were submitted for payment by a federal health care program.
The Department of Justice is suspending a program allowing local police departments to keep a large portion of assets seized under federal law, the Department announced December 21.
Early in 2015, the FBI launched a new program aimed at routing out foreign bribery in which it established three dedicated international corruption squads, based in New York City, Los Angeles, and Washington, D.C. The FBI reported that members of these three squads—agents, analysts, and other professional staff—have a great deal of experience investigating white-collar crimes and, in particular, following the money trail in these crimes. Now, the Department of Justice is taking aim at corporations and investing resources into the evaluation of the effectiveness of corporate compliance programs.
The Justice Department announced that it secured over $3.5 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending September 30, 2015 (“FY2015”). This is the fourth year in a row that the Justice Department has recovered more than $3.5 billion in cases under the False Claims Act (“FCA”) and brings the total recoveries under the FCA to $26.4 billion since January 2009.
In September the Department of Justice released its new directive on individual accountability for corporate wrongdoing in a revived effort to fight corporate fraud. The “Yates Memo” by Deputy U.S. Attorney General Sally Quillian Yates, outlines the DOJ’s policy on targeting and pursuing corporate executives in cases of corporate wrongdoing. With the DOJ’s new guidelines companies should be taking a fresh look at their D&O insurance.
The findings from a 2013 survey of “International Business Attitudes to Corruption” conducted by Control Risks and the Economist Intelligence Unit, two independent international business risks and opportunities consultancy firms, suggest that many companies are unprepared to handle a corruption scandal and have yet to implement best practices for anti-corruption compliance. The study surveyed general counsels, senior corporate lawyers and compliance heads in more than 300 companies worldwide.