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Financial Services Law Insights and Observations


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  • UK-based Manufacturer Settles FCPA Charges As Part of $800 Million Global Bribery Investigation Resolution

    Federal Issues

    On January 17, a UK-based manufacturer and distributor for the civil aerospace, defense aerospace, marine, and energy sectors worldwide, agreed to pay nearly $170 million to the DOJ to resolve charges that it conspired to violate the anti-bribery provisions of the FCPA around the world. The settlement with the DOJ (via a three-year deferred prosecution agreement (DPA)), was a fraction of the company's $800 million global resolution in connection with bribes paid to government officials in exchange for government contracts in China, India, Indonesia, Malaysia, Nigeria, Russia, Thailand, Brazil, Kazahkstan, Azerbaijan, Angola, and Iraq.

    In addition to settling with the DOJ, the company resolved charges with the UK SFO by entering into a DPA and agreeing to pay a fine of $604,808,392.  The company entered into a leniency agreement with the Brazilian Ministério Público Federal (MPF) and agreed to pay a penalty of $25,579,170.

    According to the DPA Statement of Facts, the company admitted that between 2000 and 2013, it conspired to violate the anti-bribery provisions of the FCPA by paying more than $35 million in bribes to foreign officials in exchange for confidential information and/or government contracts.  Many of these contracts benefited RRESI, the company’s indirect U.S. subsidiary.  The company made the majority of the bribes by inflating commission payments to third-party intermediaries, who then paid part of the commission as bribes to government officials.

    The DOJ lauded the company’s cooperation in its investigation and as a result, the company received a 25 percent reduction from the low end of the U.S. Sentencing Guidelines fine range due.  However, the DOJ refused to award the company any voluntary disclosure credit.  The DOJ has been transparent that it only will award voluntary disclosure credit when the disclosure occurs prior to an imminent threat of disclosure or government investigation. Here, that test was not satisfied because the company did not disclose the conduct until after media reports and the related SFO inquiry began.

    Federal Issues Criminal Enforcement FCPA DOJ Bribery DPA UK Serious Fraud Office

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  • Medical Device Company Reaches Second FCPA Settlement in the Span of Five Years

    Federal Issues

    On January 18, a Texas-based medical device company admitted wrongdoing and agreed to pay approximately $6 million to the SEC to settle FCPA books and records and internal controls charges in connection with improper payments made by its Brazilian subsidiary to doctors through third parties. In related non-FCPA proceedings, the company also agreed to pay a $8.25 million penalty to resolve various accounting violations. Each of the four former executives consented to accounting-related SEC orders without admitting or denying the findings. Filing of each can be found here, here, here, and here.

    According to the Administrative Order Instituting Cease-and-Desist Proceedings, the company’s Brazilian subsidiary employed third-party commercial representatives and distributors to make improper payments to doctors employed at government-owned hospitals to induce them to use the company’s products, thereby increasing sales.  The company also improperly recorded revenue, leading to the related accounting charges.

    In settling with the SEC, The company has now resolved two separate FCPA cases in the span of five years.  In 2012, the company resolved FCPA actions with both the SEC and DOJ in connection with bribes paid to Mexican officials by its Mexican subsidiary.  Given the prior corruption and internal controls issues, the SEC found that the company failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances to detect and prevent such payments.  The company agreed to hire a compliance consultant for one year.

    Federal Issues Securities FCPA SEC

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  • D.C. Circuit Grants PHH Request to Respond to Solicitor General's Brief

    Federal Issues

    Over the objections of the CFPB, the D.C. Circuit today granted the request of PHH Corp. to file a supplemental brief responding to arguments in support of en banc review that were raised for the first time in a brief filed by the U.S. Solicitor General on the December 22, 2016.  PHH’s supplemental brief is due on or before January 27, 2017.  For additional background, please see our summaries of the panel decision, the CFPB’s petition for rehearing, and the D.C. Circuit’s order directing PHH to respond and the Solicitor General to provide views.

    Federal Issues Consumer Finance CFPB PHH v. CFPB RESPA Mortgages Litigation

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  • CFPB Announces Leadership Changes

    Federal Issues

    On January 6, the CFPB announced several leadership changes. Specifically, Leandra English is returning to the CFPB to serve as the Chief of Staff; Jerry Horton will serve as the CFPB's Chief Information Officer; Paul Kantwill will serve as the Bureau's Assistant Director for Servicemember Affairs; John McNamara will serve as Assistant Director of Consumer Lending, Reporting, and Collections Markets; and Elizabeth (Eli) Reilly will serve as the CFPB's Chief Financial Officer.

    Federal Issues Consumer Finance CFPB

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  • Rep. Wilson Introduces Bill to Delay Fiduciary Rule

    Federal Issues

    On January 6, Rep. Joe Wilson (R-S.C.) introduced the Protecting American Families’ Retirement Advice Act, a bill that would delay by two years the effective date of the Department of Labor’s “fiduciary rule.” As discussed previously on InfoBytes, the fiduciary rule—which is presently set to take effect in April 2017—expands the definition of “investment advisor” to include a “wider array of advice relationships,” thereby imparting new standards on financial advisors and brokers handling retirement accounts. In a statement, Rep. Wilson described the Fiduciary Rule as “one of the most costly, burdensome regulations to come from the Obama Administration.” Wilson’s proposed legislation seeks to delay the rule’s implementation in order to “giv[e] Congress and President-elect Donald Trump adequate time to re-evaluate.”

    Federal Issues Banking President-Elect Congress Fiduciary Rule Agency Rule-Making & Guidance

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  • Trump Announces CFPB Transition Team

    Federal Issues

    On January 5, 2016, the Trump Transition team announced the names of the four individuals assigned to lead the President-elect’s CFPB “Landing Team.” Generally, each landing team is tasked with collect information on each agency—ranging from the agency's budget and policies to the status of various rulemakings and the current administration's priorities—all with the overarching purpose of facilitating an orderly transfer of power at the federal financial regulators. The CFPB Landing Team includes:

    • Paul Atkins, former GOP Commissioner for the SEC and current CEO of Patomak Global Partners LLC, which provides consulting services concerning financial services industry matters, regulatory compliance, risk and crisis management, public affairs, independent reviews, litigation support, and strategy.
    • Kyle Hauptman, Senior Development Manager and occasional writer about financial & political issues for the American Enterprise Institute (AEI), member of the SEC’s Advisory Committee on Small and Emerging Companies, and former chief economic adviser on the issues of Financial Markets, Housing to the Romney For President (RFP) campaign.
    • Consuala “CJ” Jordan, a public relations executive and Republican political consultant who is currently CEO of The Jordan Management Group, LLC, a full service Government Relations and Public Affairs Firm, specializing in strategic business development.
    • Julie B. Lindsay, Managing Director and General Counsel of Capital Markets and Corporate Reporting at Citigroup Inc., and former Counsel to Commissioner Glassman at the SEC.


    Federal Issues Consumer Finance CFPB SEC President-Elect Agency Rule-Making & Guidance

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  • GAO Issues Report on TARP Housing Programs

    Federal Issues

    On January 11, the GAO announced the release of its report providing an update on the status and condition of Treasury’s TARP-funded housing programs as of October 31, 2016. According to the report, Treasury had disbursed nearly 60 percent or $22.6 billion of the $37.51 billion assigned to TARP for the purpose of helping struggling homeowners avoid foreclosure. The report also notes that the GAO’s latest review yielded no new recommendations and that only five of the 29 recommendations GAO has previously made related to the TARP-funded housing programs remain open or not fully implemented. The report states that the GAO will continue to monitor and assess the status of these recommendations.

    Federal Issues Mortgages Department of Treasury TARP GAO

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  • FTC Chief Ramirez Announces Resignation

    Federal Issues

    On January 13, the FTC announced that Chairwoman Edith Ramirez will be stepping down effective February 10. Chairwoman Ramirez was appointed by President Barack Obama and has served as a commissioner since April 2010. She became chairwoman in March 2013, after former FTC Chairman Jon Leibowitz resigned. Her departure means that President-elect Donald Trump will have the chance to fill three vacancies at the agency.

    Federal Issues FTC President-Elect Agency Rule-Making & Guidance Trump Obama

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  • European Commission Publishes Draft ePrivacy Regulation

    Federal Issues

    Commission announced the release of its Proposal for a Regulation of the European Parliament and of the Council on Privacy and Electronic Communications (Proposed Regulation), which is set to repeal Directive 2002/58/EC (ePrivacy Directive). The Proposed Regulation— as discussed previously on InfoBytes—is intended to update the current rules to keep up with technical developments and adapting them to the General Data Protection Regulation (GDPR). Among other things, the Proposed Regulation will expand the scope of the ePrivacy rules to include internet-based voice and internet-messaging services, and to cover the content of communications, including metadata such as the time and location of a call. Furthermore, with regards to cookies, the Proposed Regulation does not require the consent of the user for non-privacy intrusive cookies, which either improve internet experience or measure the number of visitors to a specific website. The proposed Regulation also includes an opt-in requirement for telemarketing calls, unless national laws provide the recipient with a right to object. The Proposed Regulation also contains language extending the remedies currently provided under the GDPR. Once passed, the Proposed Regulation would become effective on May 25, 2018. Links to other related documents and information may be accessed through the following links:

    1. Proposal for a Regulation of the European Parliament and of the Council
    2. Ex-post REFIT evaluation of the ePrivacy Directive 2002/58/EC
    3. Executive summary of the ex-post REFIT evaluation
    4. Impact Assessment - part 1
    5. Impact Assessment - part 2
    6. Impact Assessment - part 3
    7. Summary of the Impact Assessment

    Federal Issues International GDPR Privacy/Cyber Risk & Data Security

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  • CFPB Publishes Rule Implementing Civil Penalty Inflation Adjustments

    Federal Issues

    On January 12, the CFPB published a final rule adjusting upward the maximum amount of each civil penalty within its jurisdiction, as required by provisions of the Inflation Adjustment Act and OMB Guidance. As explained in the rule, the new penalty amounts for 2017 are calculated by multiplying the corresponding 2016 penalty by a “cost-of-living adjustment” multiplier—which for 2017 has been set by the OMB at 1.01636—and then rounding to the nearest dollar. The new penalty amounts apply to civil penalties assessed after January 15, 2017.

    Federal Issues Consumer Finance CFPB

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