These are some of the recent compliance-related stories that caught my attention.
The SEC and the DMV by Thomas O. Gorman in SEC Actions
“The SEC Should Copy the DMV” is the title of an article published in the New York Times by Joseph S. Fichera recently. The article focuses on the use of corporate fines, questioning whether they are effective: “The SEC and other federal regulators have levied over $125 billion in penalties on Wall Street since the global financial crisis of 2008. Yet few believe that these fines are enough to change behavior. For the largest financial institutions, a multibillion-dollar penalty can amount to a speeding ticket – another cost of doing business,” Mr. Fischera notes. He goes on to argue that the point system of the DMV might be adopted. Under that system drivers collect points for each infraction. When the driver accumulates enough points their driving privileges are revoked for a period of time. If the SEC adopted a similar system, then the market place might force firms into effective compliance as points pile up.
Trial Lawyering and FCPA Compliance by Tom Fox in the FCPA Compliance and Ethics Blog
It is that type of trial lawyer mentality which also seems to seep into the debate about a compliance defense under the FCPA. Leaving aside the Arthur Andersen effect of 63,000 people losing there livelihoods because one corporation made an idiotic decision to go to trial; the trial lawyer mentality that wants to tee it up with the DOJ does not serve the counseling function which corporations require. What does a trial lawyer tell a client about its chances at trial? You have a 10% chance; 20% chance; 50% chance; 75% chance of winning? What is that based on? Knowing what 12 (or perhaps 6) citizens will say? If there is a potential $500MM fine for a guilty verdict and there is a 10% chance of losing, is settling for $50MM reasonable? What if your illegal conduct was over five years ago, are you really going to trial on statute of limitations defense, where your own conduct hid the FCPA violations? Want to try and use that fact issue to persuade a jury that the government waited too long to indict?
SEC’s Increased Use of Administrative Proceedings Draws Criticism and Legal Challenges by Chip Phinney in Mintz Levin’s Securities Litigation & Compliance Matters
The SEC’s plan to bring more enforcement actions as administrative proceedings before its own administrative law judges rather than in the federal district courts — even in insider trading cases — has been drawing increasing criticism and legal challenges. Most recently, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York questioned the SEC’s use of administrative proceedings in a speech last Wednesday before the Practising Law Institute’s Annual Institute on Securities Regulation. Judge Rakoff observed that the SEC’s administrative powers, which were originally quite limited, have been expanded considerably by the Sarbanes-Oxley Act of 2002 and especially by Section 929P(a) of the Dodd-Frank Act of 2010, which respectively enabled the SEC to obtain administrative orders barring defendants from serving as officers and directors of registered companies and assessing monetary penalties.
AIFMD Reporting by non-EEA AIFMs by Winston Penhall and Paul Moran in ReedSmith’s Private Funds Law Update
AIFM that are authorised by the UK Financial Conduct Authority (or “FCA”) are already subject to compulsory reporting, while non-EEA AIFM become subject to FCA reporting when they register with the FCA under the UK national private placement regime (the “UK NPPR”).
Digging into the Data by Matt Kelly in Compliance Week
There are two truths about corporate compliance: no universal solution exists for all businesses, and everyone wants to know what everyone else is doing. As part of Compliance Week’s effort to better serve the compliance community, we now have a way to address both those points of pressure.
Decay – Aged brick & mortar in Puerto Rico is by Rusty Long
