10b5-1 Plan Abuse
The latest hot topic in corporate executive abuses may be manipulation of trades under prearranged trading plans established pursuant to Rule 10b5-1. Little has been said about the red flags that could indicate abuse of 10b5-1 plans. This article attempts to offer some practical guidance to corporate counsel to ensure that their 10b5-1 plans steer clear of SEC enforcement scrutiny.
Pensions and Restitution
Being a white-collar defendant is very expensive. Just the cost of putting up a serious defense is more than most business executives can bear, and whether companies must pay their ex-employees' legal fees has been hotly litigated in the much discussed KPMG tax shelter case in the Southern District of New York. Meanwhile, an important <i>en banc</i> decision of the Ninth Circuit addresses the financial impact on individuals at the other end of the criminal process: whether pension trust funds may be reached to satisfy a criminal judgment of restitution.
Rita v. U.S.
Two-and-a-half years ago, the Supreme Court ruled in the remedial portion of its bifurcated decision in U.S. v. Booker, 543 U.S. 220 (2005), that the system of federal Sentencing Guidelines established by the Sentencing Reform Act of 1984 could pass constitutional muster only if the Guidelines were treated as having advisory, rather than mandatory, effect. But Booker left open the question of how much weight the now advisory Guidelines should henceforth be given in a district court's sentencing calculus. Last November, the Supreme Court granted writs of certiorari in two cases ' <i>Rita v. United States</i>, and <i>Claiborne v. United States</i>, that seemed likely to resolve this question.
'Swift' Prosecutions of Corporations and Executives
Last month, the Department of Justice (DOJ) celebrated the five-year anniversary of the Corporate Fraud Task Force with a press release and a party at which then-Attorney General Alberto Gonzales, in a prepared statement, hailed significant changes in the way white-collar cases have been prosecuted. Gonzales praised the Task Force's role in breaking 'large investigations into smaller, less complex pieces,' and bringing those cases faster. But expedited investigations mixed with quick charging decisions have not been a reliable recipe for success.
Attorney General Gonzales Resigns
Attorney General Alberto Gonzales ' the nation's troubled top law enforcement officer ' ended speculation Monday and resigned after a months-long standoff with the Democratic-controlled Congress over his candor on several major issues, most notably the handling of the firing of at least eight U.S. attorneys.
Procurement Fraud Enforcement
In Part One of this article, we discussed the fact that each year, the federal government spends several hundred billion dollars to obtain goods and services from corporations and other non-governmental agencies. And we warned that, via new national legislation and investigative initiatives, the attention of Capitol Hill and federal law enforcement offices nationwide is keenly focused on the prevention, detection and punishment of procurement fraud. We discussed recent scandals and prosecutions, the increase in Civil False Claims Act Qui Tam cases, and other things that can take an unwary governmental contractor unawares. We conclude herein with other areas of concern.
Compliance Lessons from the Chiquita Case
In March of this year, Chiquita Brands agreed to pay a $25 million criminal fine for payments it made to a paramilitary group in Colombia. The payments were made by the Colombian subsidiary of Chiquita in order to protect the company's employees from threatened violence. Unfavorable press coverage emphasized payments by Chiquita to a 'terrorist group' and downplayed the threats made to Chiquita, which prompted it to make the payments in the first place.
New Standards for Brady and Giglio Disclosures
For the past five years, the white-collar criminal-defense bar has been working to enhance the obligations of federal prosecutors to disclose exculpatory and impeaching information under <i>Brady v. Maryland</i>, 373 U.S. 83 (1963), <i>Giglio v. United States</i>, 405 U.S. 150 (1972), and their progeny. In the past few months, those efforts have begun to bear significant fruit.
New IRS Whistleblower Program
Caution ' an employee of your company may go to work for the IRS. Well, not in the traditional way. In the Tax Relief and Health Care Act of 2006 ('the Act'), effective Oct. 20, 2006, Congress amended ' 7623 of the Internal Revenue Code, substantially enhancing the IRS's informant or whistleblower program.
