The Antitrust Division's Corporate Lenience Program
April 30, 2007
Antitrust practitioners and companies worried about antitrust prosecution are weighing the significance of <i>Stolt-Nielsen S.A. v. United States</i>, 442 F.3d 177 (3d Cir. 2006), which held that the Department of Justice (DOJ) could still prosecute a company after it had been accepted into the Antitrust Division's Corporate Leniency Program. Under the Program, adopted in 1993, a company engaged in antitrust violations that qualifies for leniency will not be prosecuted, provided that it confesses its wrongdoing, agrees to cooperate in an investigation of co-conspirators, and makes restitution to victims of its illegal conduct. The Program offers protection from both criminal prosecution and treble damages in subsequent civil antitrust suits.
Customer Identification Programs
April 30, 2007
Section 326 of the USA PATRIOT Act requires financial institutions to implement a written Customer Identification Program (CIP) that is appropriate for the size and type of business and that includes minimum requirements. The CIP is intended to enable the institution to form a reasonable belief that it knows the true identify of each customer. The CIP must include account opening procedures that specify the identifying information to be obtained from each customer. It must also include reasonable and practical risk based procedures for verifying each customer's identity.
False Statements to Investigators and the Grand Jury
April 30, 2007
The recent conviction of I. Lewis Libby, former Chief of Staff to Vice President Cheney, provides another opportunity for corporate executives embroiled in government investigations to consider the pitfalls involved in interviews with the government or testimony before investigative bodies. Libby's conviction, though not stemming from a business crime investigation, nevertheless should serve as a reminder to potential witnesses that even otherwise innocent individuals often make things much worse by not being truthful with government agents or the grand jury.
In the Courts
March 26, 2007
Verdicts of interest to you and your practice.
Benchmarking Your Whistleblower Hotline
March 26, 2007
ABC Company was overconfident about the effectiveness of its hotline, which was producing only about 25% of the industry average call volume. XYZ Inc.'s hotline had a similar issue, generating only 15%. In both instances, using a breakthrough benchmarking study, we identified the low usage and recommended potential remediation steps.
Can Disclosure Set You Free?
March 26, 2007
The misappropriation theory of insider trading, which was first recognized by the Supreme Court in <i>United States v. O'Hagan</i>, 521 U.S. 642 (1997), establishes liability for individuals who are not typical 'insiders' of companies and also appears to offer such defendants a specific defense to insider trading charges. The O'Hagan Court based the misappropriation theory on a duty owed by the defendant to the source of non-public material information, rather than to the shareholders of the company whose stock was being traded. Because a defendant prosecuted under the misappropriation theory had a duty only to his source, the Court explained that a defendant's disclosure to the source of information prior to trading or tipping could neutralize the acts of deception necessary for a securities fraud claim.
Lessens for Counsel After Hewlett-Packard
March 26, 2007
Indictments and resignations following an internal investigation are not necessarily surprising. In the case of the Hewlett-Packard ('HP') investigation, however, it's the investigators who are in dire straits. In the months since HP publicly announced that it had conducted an internal investigation into news leaks by corporate directors, its Chairman and General Counsel have resigned, criminal charges have been filed against those involved in the investigation, and one person has pled guilty. HP exemplifies the pitfalls and problems that can result from an internal investigation itself, for both the company and its counsel. As one Congressman asked: 'Where were the lawyers? There were red flags waving all over the place,' but 'none of the lawyers stepped up to their responsibilities.'
