In Securities and Exchange Commission v. Jarkesy, No. 22-859, 2024 WL 3187811 (U.S. June 27, 2024), the United Stated Supreme Court (Roberts, C.J.) held that when the Securities and Exchange Commission (“SEC”) seeks civil penalties against a defendant for securities fraud, the Seventh Amendment of the United States Constitution entitles the defendant to a trial by jury. This decision was based upon the Court’s interpretation that the SEC’s antifraud provisions replicate common law fraud, and thus actions for violations of these provisions implicate the Seventh Amendment right. The Court determined that the “public rights” exception, which allows certain matters to be resolved outside of Article III courts without a jury, does not apply in this context because the action does not fall within the distinctive areas involving governmental prerogatives traditionally resolved without Article III adjudication. This ruling curtails the SEC’s authority to impose penalties for fraud, and could potentially affect the enforcement capabilities of agencies enforcing federal law.Continue Reading Supreme Court Limits SEC’s Enforcement Power to Penalize Fraud

A recent Ninth Circuit opinion instills the importance of raising an often overlooked defense in federal fraud cases: that the defendant’s misrepresentation did not affect the “nature of the bargain.” In United States v. Milheiser, the panel recently vacated six defendants’ convictions for mail fraud, holding that merely lying to influence a transaction does not rise to the level of fraud. Instead, a “lie must go to the nature of the bargain” to support a conviction.Continue Reading The Ninth Circuit Holds That a Lie Must Go to the Nature of the Bargain to Support Fraud Conviction

Over the last several years, the Securities and Exchange Commission (“SEC”) has been laser-focused on the use of so-called “off-channel communications” in the financial services industry. On the theory that employees’ use of personal devices and platforms (such as WhatsApp) to communicate about business violates the “books and records” requirements applicable to financial institutions, the regulator has conducted intrusive and extensive investigations. To respond to the SEC, many companies have required employees to have their personal cell phones copied and reviewed. Continue Reading What Private Equity Firms Need to Know About the Ongoing SEC Investigation of “Off-Channel” Communications

Just one day after Deputy Attorney General Lisa Monaco announced the U.S. Department of Justice’s (“DOJ’s” or “Department’s”) whistleblower pilot program on March 8, 2024, the DOJ’s Criminal Division highlighted its plans to apply the program in its fight against global corruption. Specifically, the Criminal Division described its plan to apply the new whistleblower initiatives to Foreign Corrupt Practices Act (“FCPA”) cases as part of its overarching priority of targeting the “most complex financial crimes and having the greatest possible impact on corporate conduct.”[1]Continue Reading DOJ Plans to Apply the New Whistleblower Rewards Pilot Program to FCPA Cases

While most legal conferences may not be newsworthy, the American Bar Association’s National Institute on White Collar Crime is an exception. Indeed, the federal government’s chief law enforcers seem to treat this particular conference like tech companies treat industry conventions or product launches: a one-stop press tour/coming-out party held to unveil their next big initiative or program in the presence of hundreds of eager and invested onlookers. In this case, though, the onlookers just happen to be members of the national white collar defense bar.Continue Reading DOJ Pilot Program for Whistleblower Rewards: The Latest Unveiling from the ABA’s National Institute on White Collar Crime

In a landmark unanimous ruling late last week, Murray v. UBS Securities, LLC, et al. 601 U. S. ____ (2024), the U.S. Supreme Court held that whistleblowers do not need to prove their employer acted with “retaliatory intent” to be protected under the Sarbanes-Oxley Act. Instead, all whistleblower plaintiffs need to prove is that their protected activity was a “contributing factor” in the employer’s unfavorable personnel action. Continue Reading U.S. Supreme Court Endorses Low Burden of Proof for Whistleblowers

In 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF or Strike Force), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant, and program funding at all levels of government—federal, state and local. The PCSF is a constellation of partnerships among the Antitrust Division of the U.S. Department of Justice, multiple U.S. Attorneys’ Offices around the country, the Federal Bureau of Investigation (FBI), and the Inspectors General for multiple federal agencies working together to crack down on unlawful anticompetitive activities in the public procurement process. As we have previously discussed,[i] the PCSF has been steadily growing its footprint and focus since its inception in November 2019. Now four years in, the Strike Force continues to add new partners at the Federal, State and global level, boasting of more than 30,000 government officials trained in detection and prosecution of procurement offenses. The Strike Force touts its growing ranks of trained eyes and ears on the ground anywhere government funds are spent. The PCSF is sending an increasingly aggressive enforcement message that should put those engaged with government contracts, federal funds, and procurement officials on high alert.Continue Reading Aggressive Procurement Collusion Enforcement Risk Remains High for 2024

The United States Department of the Treasury has announced that it is working to address what it perceives as money laundering risks associated with investment advisers. Specifically, the agency asserts that absent consistent and comprehensive anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) obligations, corrupt officials and other illicit actors may invest ill-gotten gains in the U.S. financial system through hedge funds and private equity firms. Treasury indicated its intention to issue a proposal in the first quarter of 2024 that would apply Bank Secrecy Act (“BSA”) AML/CFT requirements, including suspicious activity report obligations, to certain investment advisers. Continue Reading Treasury Announces Renewed Push for Investment Adviser AML Rules in Q1 2024

On December 13, 2023, CoinList Markets LLC (“CoinList”) agreed to pay $1,207,830 pursuant to a settlement agreement with the Office of Foreign Assets Controls (“OFAC”) in connection with allegations that the San Francisco based virtual currency exchange violated OFAC’s Russia/Ukraine sanctions by allowing users in Crimea, an embargoed country, to open accounts on its platform.Continue Reading Sanctions Enforcement in the Cryptocurrency Industry Continues to be a Focus

On December 14, 2023, with bipartisan support, Congress passed the Foreign Extortion Prevention Act (“FEPA”), making it a federal crime for any foreign government official to demand, receive, or agree to receive a bribe from a U.S. company or individual, or any person while in United States territory in exchange or in connection with obtaining or retaining business. The legislation is part of the National Defense Authorization Act, and is anticipated to be signed into law by President Biden. Considered by the law’s authors to be one of “the most sweeping and consequential foreign bribery laws in nearly half a century,” FEPA has “the potential to help root out foreign corruption at its source.”[1]Continue Reading Corrupt Foreign Leaders Now on the Hook for Bribery Charges: Congress Passes the Foreign Extortion Prevention Act

Written by Paul Desmond in the key of E-flat minor and performed by the Dave Brubeck Quartet using a funky quintuple (5/4) time, “Take Five” is and was the biggest selling jazz single of all time. But it is also slang for exercising one’s Fifth Amendment privilege against self-incrimination. Because many civil lawyers ask when and how to invoke the privilege, we thought we would take a stab at answering some of the not-so-obvious questions that often arise.Continue Reading “Take Five” – A Guide to Invoking the Fifth Amendment in Civil Cases