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Supreme Court Weighs in on Insider Trading in Salman v United States
In its first insider trading decision in nearly two decades, the US Supreme Court ruled unanimously to uphold an insider trading conviction of an individual who traded while aware of material non-public information received from a friend who received no financial benefit in exchange. Salman v. United States, No. 15-628, 2016 WL 7078448 (U.S. Dec. 6, 2016).
The defendant in Salman was convicted in 2013 for trading on confidential information obtained through his brother-in-law even though Salmon he gained no tangible financial benefit. The appeal thus presented the Justices with the central question of how to define a “personal benefit” garnered from insider information. In upholding Salman’s conviction, the Supreme Court affirmed that a user of financial tips breaches fiduciary duty with respect to “insider information” from a relative, whether or not the person giving the information receives a tangible financial benefit. In so holding, the Court also undercuts a narrower interpretation in a case decided by the Second Circuit in 2014 that held that the person who provides the tips must receive something of value in exchange for inside information given to family or friends.
FCPA Charges Added Against Macau Real Estate Developer and His Assistant
On November 22, the U.S. government filed a superseding indictment against a Macau real estate developer and his assistant in connection with their alleged involvement in an international bribery scheme. The superseding indictment included new charges that both men violated the FCPA in connection with alleged payments to then-UN ambassadors from Antigua and the Dominican Republic in exchange for official actions to benefit the defendants’ real estate company. The bribery charges contained in the original October 2015 indictment concerned only domestic bribery charges brought under 18 U.S.C. § 666, and not the FCPA.
It is not clear why the U.S. government chose to add the FCPA charges now as opposed to bringing them in the original indictment. First, there did not appear to be any FCPA jurisdictional hurdles in the original indictment. Moreover, one of the alleged bribe recipients named in both the original indictment and superseding indictment – the then-UN ambassador from Antigua – is and always was a “foreign official” under the FCPA. The UN has been designated a public international organization, and individuals associated with these organizations are “foreign officials” under the FCPA.
FCC Enforcement Chief Touts Global Anti-Robocall Push
In an official FCC blog post published November 21, FCC Enforcement Chief Travis LeBlanc re-emphasized the agency’s efforts to work with international law enforcement partners to target fraudsters who might otherwise be outside the FCC’s reach. As explained by Mr. LeBlanc:
“Unsolicited calls and text messages are more than just a nuisance these days. They are used to perpetrate criminal fraud, phishing attacks, and identity theft schemes all around the world. These calls often overwhelm facilities, including emergency or 911 call centers. Those responsible for sending unwanted calls and texts often operate from outside of the United States, too often allowing them to evade our enforcement. Indeed, it is very easy for these scammers to operate from multiple countries, hide their locations, change their phone numbers between calls, trick caller ID systems into displaying false or trusted numbers, increasingly demand payments in hard-to-trace forms such as cash or gift cards, and move quickly to avoid detection and prosecution in our increasingly mobile world.”
Earlier this year, the FCC signed a memorandum of understanding with members of the “Unsolicited Communications Enforcement Network,” a global network of law enforcement authorities and regulatory agencies that have agreed to share intelligence, identify common threats, learn from each other’s best practices and assist each other with investigations where permissible to combat unsolicited communications.
Trump Nominates Jeff Sessions to be Next Attorney General
On November 18, President-elect Donald Trump announced that he has chosen Sen. Jefferson Sessions (R-Ala.), to become the next U.S. Attorney General. Sessions served as the U.S. Attorney for the Southern District of Alabama for 12 years and was the state's attorney general for two years. Trump also announced his intent to nominate U.S. Rep. Mike Pompeo (R-Kan.) as Director of the CIA and Lt. Gen. Michael Flynn as Assistant to the President for National Security Affairs.
Former Oil Company Employee Admits to Paying Bribe for Libyan Government Contract
As a follow up to its March 2016 reporting involving a Monaco oil company’s bribery scandal, the Huffington Post recently published an interview with a former employee of the Monaco-based company who has admitted to paying bribes to a manager in Libya’s state-owned oil company in order to win a government contract. The individual, a former manager at the Monaco-based company, told the Huffington Post and the Australian newspaper, The Age,that in the summer of 2009 he was summoned to a meeting with a production manager from a subsidiary company of the Libyan National Oil Company. At the meeting, the Libyan company's production manager provided the individual with details relating to an upcoming bid for a $45 million Libyan government contract. Huffington Post reports that the individual contacted the father and two sons who ran the Monaco-based oil company. That afternoon, another manager from the Monaco-based company met with the individual at a company staffhouse, to deliver an envelope full of cash, which the individual delivered to the manager of the Libyan subsidiary company. A few days later, the individual who had delivered the cash resigned. It is unclear whether the Monaco-based company ever won the contract though the manager told the individual that “he expected a 5-10 percent kickback ― about $2-4 million ― if the [Monaco-based company] won the contract.” According to the interview, the individual who resigned has recently been cooperating with U.S., U.K., Australian, and Canadian law enforcement authorities. The individual’s former employer has denied his allegations and denies paying bribes to foreign officials in order to win deals for its multinational clients. For further coverage of this story, visit FCPA Scorecard Blog.
Sports Marketing Executive Pleads Guilty in FIFA Investigation
On October 20, the DOJ announced that a former president of a soccer event management company pleaded guilty to racketeering conspiracy and wire fraud conspiracy charges. His guilty plea came in response to allegations that, as the company’s former president, he negotiated and made bribe payments totaling more than $14 million on behalf of the company to a high ranking soccer official in exchange for media and marketing rights to international soccer tournaments and matches. As part of the plea, the company's former president agreed to forfeit approximately half a million dollars and could be sentenced to a maximum of 20 years for each count.
The guilty plea came as part of the U.S. government’s investigation into corruption in international soccer. It follows guilty pleas from the soccer event management company itself, its international parent company, and the parent company’s owner, in connection with related charges brought by the DOJ.
Previous FCPA Scorecard coverage of the FIFA investigation can be found here.
New York Hedge Fund Enters Into Fourth-Largest FCPA Enforcement Action of All Time
On September 29, a New York-based publicly-traded hedge fund agreed to pay approximately $412 million to the DOJ and SEC to resolve related criminal and civil charges of violating the FCPA in connection with the bribery of high-level government officials across Africa. This is the fourth-largest FCPA enforcement settlement of all time, and the first time a hedge fund has been held accountable for violating the FCPA. In the criminal case, the hedge fund entered into a three-year deferred prosecution agreement (DPA) to resolve charges of conspiracy to violate the FCPA, falsification of books and records, and failure to implement adequate internal controls. The hedge fund agreed to pay a criminal penalty of approximately $213 million, and to retain a compliance monitor for three years. The DPA’s Statement of Facts describes bribes paid to government officials in the Democratic Republic of Congo (Congo) and Libya to help the hedge fund obtain special access and preferential prices for investment opportunities in government controlled-mining sectors in Congo, and secure an investment from the Libyan Investment Authority, Libya’s sovereign wealth fund. In parallel proceedings, the hedge fund agreed to pay $199 million to the SEC and entered into an Administrative Order Instituting Cease-and-Desist Proceedings to settle the FCPA civil charges. The SEC’s allegations covered Libya, Chad, Niger, and the Congo, and alleged that the fund used intermediaries, agents, and business partners to corruptly influence foreign officials. The Order found that the hedge fund executives ignored red flags and corruption risks and permitted the corrupt transactions to proceed. Both the fund’s CEO and CFO agreed to settle related allegations, without admitting or denying the findings. The CEO agreed to pay nearly $2.2 million to the SEC in the settlement, and a penalty will be assessed against the CFO at a future date.