Silicon Valley Bank: Receivership, Ripple Effects and Reactions

The collapse of Silicon Valley Bank, and the government’s actions, may have repercussions that reach into various industries. In this article, our sister publication Debtwire provides an overview of the FDIC and the receivership process, and highlights some of the effects of the bank’s failure on other companies, both in and out of Chapter 11.

DOJ Incentivizes Self-Disclosure Once More With Guidance for U.S. Attorneys’ Offices

New DOJ guidance for U.S. Attorneys’ Offices addressing voluntary self-disclosures is intended to bring consistency and transparency to self-reporting, and is ultimately intended to foster more self-reporting by corporate wrongdoers. Addressing the new guidance earlier this month, Deputy Attorney General Lisa Monaco said that having one self-disclosure policy for all U.S. Attorneys’ Offices will eliminate “geographic disparities and uncertainties.” Formally called the United States Attorneys’ Offices Voluntary Self-Disclosure Policy, the guidance promises that companies that voluntarily self-disclose misconduct pursuant to the policy “will receive resolutions under more favorable terms than if the government had learned of the misconduct through other means.” As appealing as that might seem, this latest entry to the DOJ canon must be read in the context of other recent DOJ pronouncements that may influence exactly whether, when and to whom a corporate wrongdoer might disclose that bad behavior. See “Deputy Assistant AG Miller Discusses Robust DOJ Anti-Corruption Efforts, Stressing Individual Accountability, Self-Reporting, Remediation and Cooperation” (Mar. 1, 2023).

Compliance Takeaways From Activision Blizzard's $35-Million SEC Resolution Regarding Whistleblower Protections and Workplace Misconduct

Activision Blizzard Inc., a California-based video game development and publishing company, has agreed to pay $35 million to settle charges that it failed to maintain disclosure controls and procedures to ensure that the company could assess whether its disclosures pertaining to its workforce, specifically allegations of misconduct, were adequate. As part of the resolution, Activision Blizzard also settled charges that it violated an SEC whistleblower protection rule. Notable aspects of the settlement include a rarely seen dissenting opinion by SEC Commissioner Hester Peirce that takes exception to the SEC’s standing in this case and the underlying arguments of harm to investors, and the SEC's use of fairly broad risk statements found in Activision’s regular business filings related to attracting and retaining talent as evidence of a known problem with the company’s culture. The Anti-Corruption Report spoke with Ropes & Gray partner Jeremiah Williams and senior advisor Hui Chen about the resolution and what it signals for compliance practitioners. See “ Discussing 2022 Enforcement Results, SEC Enforcement Director Stresses Trust-Building Measures” (Jan. 18, 2023).

Deputy Assistant AG Miller Discusses Robust DOJ Anti-Corruption Efforts, Stressing Individual Accountability, Self-Reporting, Remediation and Cooperation

In recent remarks, Lisa H. Miller, Deputy Assistant Attorney General for the DOJ’s Fraud and Appellate Sections, offered an overview of the Fraud Section’s robust enforcement activities and successes in 2022 and reaffirmed the DOJ’s focus on holding individuals accountable and on encouraging companies that learn of misconduct to self-report, cooperate and remediate. This article discusses the key takeaways from the speech and future coverage will further address the most recent revisions to the Corporate Enforcement Policy. See “Top FCPA Officials Discuss the State of Compliance and Advise on Negotiations, Presentations and When to Cooperate” (Dec. 21, 2022). 

Corporate Enforcement Policy Revisions: Parsing the Policy for the Path to a Declination

Just months after senior DOJ officials were warning repeat offenders about the consequences they face for corporate wrongdoing and following a years-long focus on individual accountability for white-collar crime, the DOJ took what some might consider a surprising turn. Last month, the DOJ revised its Corporate Enforcement Policy to encourage both recidivists and corporations in general to step forward and disclose their misdeeds. But with the threshold for making a deal, particularly for getting a declination, set ever higher, some might wonder whether self-reporting—and the consequences such an act triggers—ultimately will be worth the effort. It makes sense that with a specter of individual accountability looming or a potential guilty plea for corporate repeat offenders in the offing that only more innocuous misdeeds might be self-reported. With seemingly greater incentives in place, will corporations rush to self-disclose more serious offenses now? In this second part of our article series on the Revised Corporate Enforcement Policy, we take a closer look at how companies can qualify for a declination under the new policy, whether self-reporting is likely to yield an attractive return on investment for an offending corporation and whether nondisclosure might still be a viable option. Part one focused on the overall changes to the Corporate Enforcement Policy, the shift in the DOJ’s approach to recidivists and the likely impact of the revisions on the volume of self-disclosures. See “How the Revised Monaco Memo Alters Deal Making and Strategy” (Oct. 12, 2022).

ABC Trends in 2023 Include ESG

Enhanced cross-border cooperation, the increasing focus on ESG and its intersections with anti-corruption, the rise of sanctions, insights by industry, and regional spotlights including private and public dawn raids in Germany, China’s investments in Africa, and the potential impacts of leadership changes at the SFO are some of the topics covered in Hogan Lovells’ 2023 Bribery and Corruption Outlook. The watchword for anti-bribery and corruption compliance in 2023, they say, is governance. The Anti-Corruption Report spoke with Shelita Stewart, a partner and one of the editors of the report, to learn more about what to expect in 2023. See “GCs Discuss Crisis Management, Investigations, Individual Accountability and ESG” (Apr. 13, 2022).

Corporate Enforcement Policy Revisions: A More Amenable DOJ Looks to Negotiate

Announcing the DOJ’s Revised Corporate Enforcement Policy during a speech at Georgetown University, Assistant Attorney General Kenneth Polite, Jr. called on corporations to be “our allies in the fight against crime.” Via incentives in the revised policy, the DOJ invites not just corporate do-gooders of sorts—those who voluntarily self-report, cooperate, and remediate—but also more serious sinners (recidivists) to try and make a deal. This latest development seems an interesting shift coming just months after Deputy Attorney General Lisa Monaco warned so-called “frequent flyers” that the DOJ “will not shy away from bringing charges or requiring guilty pleas where facts and circumstances require.” In this first part of our article series, we look at the changes and the possible effect on self-reporting, as well as how these revisions fit in with Department initiatives. In the second part, we will take a closer look at aggravating factors, immediate self-disclosure and extraordinary cooperation, and discuss whether nondisclosure is still an option. See  “Revised Monaco Memo Affects Compensation, Clawbacks and Monitorships” (Oct. 26, 2022) and “How the Revised Monaco Memo Alters Deal Making and Strategy” (Oct. 12, 2022).

Discussing 2022 Enforcement Results, SEC Enforcement Director Stresses Trust-Building Measures

The SEC is working to fight the decline in public trust, Gurbir S. Grewal, Director of the Division SEC Division of Enforcement, emphasized as he announced the SEC’s enforcement results for the fiscal year that ended September 30, 2022, in an address at Securities Docket’s Securities Enforcement Forum. This article discusses the key takeaways from Grewal’s speech, with additional data points from the annual enforcement report. See “Gatekeepers and Service Providers Remain in the SEC’s Crosshairs" (Dec. 3, 2020).

Insiders Tsao, Soltes and Kahn Share Insights on Investigations

While there is no shortage of legal textbooks on most legal topics, practical knowledge can be hard to come by, especially when it comes to modern corporate criminal investigations and prosecutions, which is an area unlike others. “You can’t go to the common law and read judicial opinions to figure out this area of practice,” Leo Tsao, a partner at Paul Hastings, told the Anti-Corruption Report. He and two of his colleagues, Dan Kahn, a partner at Davis Polk and former Chief of the Fraud Section at the DOJ, and Eugene Soltes, a professor at Harvard Business School, have a written a new book designed to fill that gap in knowledge and practice. The Anti-Corruption Report spoke to Kahn, Soltes and Tsao, who was Principal Deputy Chief of the DOJ’s Money Laundering and Asset Recovery Section, about the highlights of the book, as well as their take on current enforcement trends and the all-important topic of data analytics. See “Dan Kahn Reflects on the DOJ’s Compliance Evolution” (May 25, 2022).

Anti-Corruption Day Video Spotlight: Sub-Saharan Africa, E.U. and U.K.

Political upheaval and economic pressures increased bribery risks in 2022, Benjamin S. Haley, a partner at Covington in South Africa, and Tapan Debnath, head of integrity, regulatory affairs and data privacy - process automation at Swiss-based ABB, told the Anti-Corruption Report. Editor-in-Chief Rebecca Hughes Parker spoke to Haley (video here) and Debnath (video here) as part of our virtual trip around the world commemorating International Anti-Corruption Day 2022 in partnership with the American Conference Institute. See “ABB Settles With Multiple Authorities for Its Third FCPA Strike” (Dec. 7, 2022).

Top FCPA Officials Discuss the State of Compliance and Advise on Negotiations, Presentations and When to Cooperate

Overzealous advocacy and going over the heads of line prosecutors may backfire during an SEC or DOJ presentation, top FCPA officials said at the recent ACI FCPA conference during a town hall presentation. The DOJ, SEC and FBI officials shared their tips for presenting to and negotiating with the government as well as their insights on the timing of cooperation, and they discussed the state of compliance programs today, including the hot topic of messaging apps. See “Staying Ahead of the New U.S. Anti-Corruption Strategy” (Mar. 2, 2022).

2022 FCPA Year in Review: Clawbacks, Messaging Apps and More Enforcement to Come

In recent remarks reflecting on 2022 and what is ahead for corporate FCPA enforcement, top SEC and DOJ officials spoke generally to their investigative and prosecutorial successes and priorities, but also hinted at what they foresee from their respective departments and how companies should be preparing. Topics tracked with Deputy Attorney General Lisa Monaco’s revised policy on corporate enforcement, including: clawbacks of executive compensation, the use of data analytics in effective programs, employee use of personal devices and third-party messaging apps, individual prosecution, multilateral cooperation, monitors, CCO certifications, speedy self-disclosure, corporate recidivism, cooperation, and interagency partnerships. The Anti-Corruption Report also spoke with members of the defense bar about their take on enforcement trends. See “Revised Monaco Memo Affects Compensation, Clawbacks and Monitorships” (Oct. 26, 2022).

Anti-Corruption Day Video Spotlight: Mexico and Brazil

To commemorate International Anti-Corruption Day on December 9, 2022, ACR’s Global Editor-in-Chief Rebecca Hughes Parker took a virtual trip around the world, discussing hot compliance and enforcement topics with experts in a series of five interviews in partnership with American Conference Institute. This article features a Brazilian perspective from Fabiana Leschziner, EVP, GC and CCO at manufacturing giant Embraer, SA (video here) and a Mexican perspective from Luis Dantón Martínez Corres, a partner at LEC Mexico (video here).

DOJ, Private Practitioners and Past Monitors Discuss Best Practices and Trends in Corporate Monitorships

Far from its reputation as a punitive option, a corporate monitorship might be one of the best things to happen to a company ordered to make corrective investments to resolve criminal charges, according to monitoring experts who spoke at a recent panel discussion hosted by the Women’s White Collar Defense Association. “You are not going to hide those problems,” said Pam Davis, a partner at Winston & Strawn and a three-time FCPA government monitor. “So why not just run it at the beginning of the three years and have them help you work on it to get to the company to a point where the compliance program is right and you will end up being perceived as a company that wants to improve?” she asked. Davis was joined by Lisa Miller, Deputy Assistant Attorney General for Fraud and Appellate Sections, Criminal Division at the DOJ, Crystal Jezierski, former senior vice president of global ethics at Walmart and now senior managing director at Guidepost Solutions, Michele Edwards, a partner at StoneTurn, and Kristin Koehler, a partner at Sidley. The panel discussed the newest DOJ guidance on monitors and best practices for working with a monitor. See "Making the Most of a Monitorship" (Feb. 5, 2020).

Addressing the Apparent Asymmetry Between Corporate Criminal Enforcement Actions in the U.K. and the U.S.

Since the 2014 introduction of deferred prosecution agreements in the U.K., U.K. prosecutors have enjoyed a key additional corporate criminal enforcement tool which has brought the U.K. closer to the U.S. model. Yet nearly a decade on, there remains a perception of a continuing and marked asymmetry between the U.K. and U.S. systems when it comes to their use of available corporate criminal enforcement tools. In a guest article, Albert Stieglitz of Alston & Bird and Allison Clare KC of  Red Lion Chambers discuss the approaches in both regions and how to close the gap. See “Broadening Corporate Criminal Liability in England and Wales” (Jul. 21, 2021).

NewAge Looks to Complete Winddown Following Sale in Chapter 11, Caused in Part by FCPA Investigation Expenses

FCPA investigations often have significant repercussions beyond the ultimate fines and penalties, such as collateral litigation and investigation costs. Health and nutritional products NewAge cited its FCPA investigation as one of the factors contributing to its bankruptcy. Its FCPA issues arose in a familiar context – after a merger. In partnership with our sister product Debtwire, this article summarizes the current state of the Chapter 11 case.  See “Herbalife Nutrition Sheds $123 Million to Resolve FCPA Problems in China” (Sep. 16, 2020).

Revised Monaco Memo Affects Compensation, Clawbacks and Monitorships

It might be said that there is a little something for everyone in the latest DOJ revisions to its corporate enforcement policies. Deterrents, incentives and, perhaps, an added measure of fairness are embedded in provisions like those addressing clawbacks and compensation systems as well as monitorships. “No one should have a financial interest to look the other way or ignore red flags,” Monaco said last month at a speech accompanying the release of a revised memo. At the same time, the DOJ appears to acknowledge that some aspects of its own methods of doing business could be improved. The monitor provisions in the new memo” confirm what many have been saying for some time: that there is a real need to improve the way monitors are selected and operate. This message seems to have been received, and that is an important takeaway,” said Lucinda Low, a partner at Steptoe. This is the third of the Anti-Corruption Report’s series on Monaco’s speech and the Revised Monaco Memo. The first installment addressed the highlights of the new policy, and the second focused on the impact on deal making and strategy. See our four-part series on the (first) Monaco Memo: “A Roll Back on Individuals and Cooperation” (Jan. 19, 2022); “A Shift in the Monitorship Cost/Benefit Analysis” (Feb. 2, 2022); “Considering All Prior Misconduct” (Feb. 16, 2022); and “The Corporate Crime Advisory Group” (Mar. 2, 2022).

How the Revised Monaco Memo Alters Deal Making and Strategy

The latest DOJ revisions to its corporate criminal enforcement policies, with their emphases on individual accountability and voluntary disclosure, may speed up investigations but could slow down resolutions, some practitioners predicted. The DOJ’s “goal of resolving corporate and individual resolutions in parallel will significantly change the time frame for corporate resolutions, and likely mean that corporate resolutions will not be able to be reached as quickly as they have been in the past – not that they have always been quick to begin with,” said Lucinda Low, a partner at Steptoe. This second installment of a two-part series on Monaco’s speech and the Revised Monaco Memo discusses strategies for weighing if, when and how to disclose to prosecutors in this enforcement environment. The first article addressed the highlights of the new policy. See our four-part series on the (first) Monaco Memo: “A Roll Back on Individuals and Cooperation” (Jan. 19, 2022); “A Shift in the Monitorship Cost/Benefit Analysis” (Feb. 2, 2022); “Considering All Prior Misconduct” (Feb. 16, 2022); and “The Corporate Crime Advisory Group” (Mar. 2, 2022).

SEC Action and Commissioner Peirce’s Statement Shed Light on CCO Liability

Although SEC Commissioners and staff members have issued informal guidance on when a CCO can be held personally liable for a compliance failure, considerable uncertainty remains, compounded by the often-limited information provided in SEC settlement orders. A recently settled enforcement proceeding against an investment adviser and its CCO involved what appears to be a relatively egregious case of a CCO who allegedly repeatedly failed to enforce the firm’s compliance policies with respect to its representatives’ outside business activities. The proceeding prompted a statement from Commissioner Hester M. Peirce, who parsed the settlement order through the lens of the CCO liability framework proposed by the Compliance Committee of the New York City Bar Association. This article reviews the alleged compliance failures, the terms of the resolution and Peirce’s observations, with additional commentary from Morgan Lewis partners. See “FINRA Clarifies Stance on CCO Supervisory Liability” (May 25, 2022).

Dealing With the SFO After Its “Fundamental Failures”

An independent review of the U.K.’s Serious Fraud Office (SFO) criticizing a number of the office’s missteps may have left some wondering whether and to what extent the office has been hobbled by the review’s release. It was triggered by the SFO’s behavior in the Unaoil case, chronicles the SFO’s performance in its pursuit of Ziad Akle, an individual associated with Unaoil. The review, authored by Sir David Calvert-Smith, identifies poor recordkeeping, disclosure failings, and inadequate case resourcing as well as distrust between the case team and senior management. The SFO’s performance in recent times seems to have been something less than stellar, with the overturning of Akle’s conviction, as well as convictions for Paul bond and Stephen Whitely in the Unaoil matter. What this bodes for its own future could depend on its willingness and ability to make meaningful change in a relatively short period of time. Regardless of whether the SFO can do that, the defense bar is likely to be a bit more empowered than it once was in its dealings with the SFO. See “SBM Offshore Reaches FCPA Settlement After a Reopened DOJ Investigation” (Dec. 13, 2017) and “Petrobras and Unaoil Investigations Collide in Individual Prosecutions in the U.S. and U.K.” (Nov. 29, 2017).