Posts Tagged ‘Non-prosecution agreement’

2014 Mid-Year Update on Corporate Non-Prosecution and Deferred Prosecution Agreements

Posted by Joseph Warin, Gibson, Dunn & Crutcher LLP, on Wednesday July 16, 2014 at 9:02 am
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Editor’s Note: Joseph Warin is partner and chair of the litigation department at the Washington D.C. office of Gibson, Dunn & Crutcher. The following post and is based on a Gibson Dunn client alert; the full publication, including footnotes and appendix, is available here.

As the debate continues over whether and how to punish companies for unlawful conduct, U.S. federal prosecutors continue to rely significantly on Non-Prosecution Agreements (“NPAs”) and Deferred Prosecution Agreements (“DPAs”) (collectively, “agreements”). Such agreements have emerged as a flexible alternative to prosecutorial declination, on the one hand, and trials or guilty pleas, on the other. Companies and prosecutors alike rely on NPAs and DPAs to resolve allegations of corporate misconduct while mitigating the collateral consequences that guilty pleas or verdicts can inflict on companies, employees, communities, or the economy. NPAs and DPAs allow prosecutors, without obtaining a criminal conviction, to ensure that corporate wrongdoers receive punishment, including often eye-popping financial penalties, deep reforms to corporate culture through compliance requirements, and independent monitoring or self-reporting arrangements. Although the trend has been robust for more than a decade, Attorney General Eric Holder’s statements in connection with recent prosecutions of financial institutions underscore the dynamic environment in which NPAs and DPAs have evolved.

…continue reading: 2014 Mid-Year Update on Corporate Non-Prosecution and Deferred Prosecution Agreements

2013 Mid-Year Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

Posted by Joseph Warin, Gibson, Dunn & Crutcher LLP, on Wednesday July 24, 2013 at 9:20 am
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Editor’s Note: Joseph Warin is partner and chair of the litigation department at the Washington D.C. office of Gibson, Dunn & Crutcher. The following post and is based on a Gibson Dunn client alert; the full publication, including footnotes and appendix, is available here.

Deferred Prosecution Agreements (“DPAs”) and Non-Prosecution Agreements (“NPAs”) (collectively, “agreements”) continue to be a consistent vehicle for prosecutors and companies alike in resolving allegations of corporate wrongdoing. In the two decades since their emergence as an alternative to the extremes of indictment and outright declination, DPAs and NPAs have risen in prominence, frequency, and scope. Such agreements are now a mainstay of the U.S. corporate enforcement regime, with the U.S. Department of Justice (“DOJ”) leading the way, and the U.S. Securities and Exchange Commission (“SEC”) recently expanding its use of this tool. These types of agreements have achieved official acceptance as a middle ground between exclusively civil enforcement (or even no enforcement action at all) and a criminal conviction and sentence. With the United Kingdom’s recent enactment of its own DPA legislation, the trend toward use of these alternative means for resolving allegations of corporate wrongdoing is poised to continue.

…continue reading: 2013 Mid-Year Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

SEC Announces First Non-Prosecution Agreement in an FCPA Matter

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Saturday May 11, 2013 at 10:06 am
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Editor’s Note: The following post comes to us from Colleen P. Mahoney, partner and head of the Securities Enforcement and Compliance practice at Skadden, Arps, Slate, Meagher & Flom, and is based on a Skadden Arps client alert by Ms. Mahoney, Charles F. Walker, and Erich T. Schwartz.

On April 22, the U.S. Securities and Exchange Commission (SEC) announced its first non-prosecution agreement (NPA) with a company in a matter involving alleged violations of the U.S. Foreign Corrupt Practices Act (FCPA). [1] The SEC entered into the agreement with Ralph Lauren Corporation (Lauren), resolving allegations that Lauren violated the FCPA when its Argentine subsidiary allegedly paid bribes to government and customs officials to improperly secure the importation of Lauren’s products into Argentina. The NPA in this case resulted from Lauren’s prompt self-reporting and extensive cooperation. Prior to the Lauren NPA, the SEC seemed to provide limited credit to public companies for cooperation in FCPA investigations.
Time will tell whether the Lauren NPA is a harbinger of a new approach.

…continue reading: SEC Announces First Non-Prosecution Agreement in an FCPA Matter

2012 Year-End Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday January 18, 2013 at 9:10 am
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Editor’s Note: The following post comes to us from Joseph Warin, partner and chair of the litigation department at the Washington D.C. office of Gibson, Dunn & Crutcher, and is based on a Gibson Dunn client alert by Mr. Warin and Jeremy Joseph. The full publication, including footnotes and appendix, is available here.

“Over the last decade, DPAs [Deferred Prosecution Agreements] have become a mainstay of white collar criminal law enforcement,” Lanny Breuer, the head of the U.S. Department of Justice’s Criminal Division, declared on September 13, 2012. Corporate Deferred Prosecution Agreements (“DPAs”) and Non-Prosecution Agreements (“NPAs”) (collectively, “agreements”) have, in Mr. Breuer’s words, ameliorated the “stark choice” that prosecutors faced: either to employ “the blunt instrument of criminal indictment” that he likened to using “a sledgehammer to crack a nut” or to “walk away” and decline prosecution outright. Mr. Breuer declared that DPAs and NPAs “have had a truly transformative effect on . . . corporate culture across the globe” resulting in “unequivocally[] far greater accountability for corporate wrongdoing–and a sea change in corporate compliance efforts.” Mr. Breuer’s comments are timely, coming in a year during which such agreements yielded a record level of monetary penalties and related payments totaling nearly $9.0 billion and are increasingly used to resolve front-page criminal matters.

This client alert, the ninth in our series of biannual updates on DPAs and NPAs, (1) summarizes the DPAs and NPAs from 2012, (2) considers detailed remarks from leading enforcement officials with the U.S. Department of Justice (“DOJ”) and the U.S. Securities and Exchange Commission (the “SEC”) regarding settlement agreements, (3) examines compliance measures presented in recent non-FCPA agreements as examples of DOJ-endorsed good practices in various industries, and (4) looks across the Atlantic to evaluate the United Kingdom’s prospective use of DPAs.

…continue reading: 2012 Year-End Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday July 26, 2012 at 9:10 am
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Editor’s Note: The following post comes to us from Joseph Warin, partner and chair of the litigation department at the Washington D.C. office of Gibson, Dunn & Crutcher, and is based on a Gibson Dunn memorandum by Mr. Warin and Jeremy Joseph. The full memo, including footnotes and appendix, is available here.

Deferred Prosecution Agreements (“DPAs”) and Non-Prosecution Agreements (“NPAs”) (collectively, “agreements”) in recent years have become a primary tool of the U.S. Department of Justice (“DOJ”) for resolving allegations of corporate criminal wrongdoing. Since 2000, DOJ entities have entered into 230 reported agreements with corporate entities, extracting a total of $31.6 billion in fines, penalties, forfeitures, and related civil settlements. The U.S. Securities and Exchange Commission (“SEC”), which announced the adoption of DPAs and NPAs as part of its Cooperation Initiative in January 2010, has since entered into three NPAs without monetary penalties and one DPA, which included disgorgement. With these agreements, companies obtain finality and closure and agree not to commit further legal violations and to undertake specific cooperation and compliance obligations in exchange for DOJ or the SEC agreeing to forgo enforcement action. In the DOJ context, the two agreement types differ in one material respect: for DPAs, DOJ files a criminal information in federal court, while NPAs generally are not filed in court.

During the last 12 years, DOJ and the SEC have employed DPAs and NPAs in some of the most high-profile cases and continue to turn to them in cases where they believe criminal conduct may have occurred but for a variety of reasons, including a company’s extensive cooperation, internal management shakeups, or the grave risk of collateral consequences to the corporate entity, a conviction through a guilty plea would not be equitable. In the final analysis, DOJ’s increasing reliance on DPAs and NPAs demonstrates its recognition that they are precision instruments to resolve allegations of corporate wrongdoing. The SEC, which recently embraced DPAs and NPAs, and the United Kingdom, which appears to be in the process of doing so, recognize that these agreements can be fine-tuned to help reward cooperation and mitigate collateral consequences.

…continue reading: Update on Corporate Deferred Prosecution and Non-Prosecution Agreements

Give Credit Where Credit Is Due

Posted by Benjamin W. Heineman, Jr., Harvard Law School Program on Corporate Governance and Harvard Kennedy School of Government, on Tuesday May 29, 2012 at 8:48 am
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Editor’s Note: Ben W. Heineman, Jr. is a former GE senior vice president for law and public affairs and a senior fellow at Harvard University’s schools of law and government. This post is based on an article that appeared in Corporate Counsel.

Federal enforcement authorities should give much more systematic credit to effective corporate compliance programs when making decisions about criminal prosecutions, including nonprosecution or deferred prosecution agreements, and when deciding the scope of civil and administrative settlements.

That is the fundamental conclusion of a recent report from an advisory group constituted in November 2011 to assess the effectiveness of the Federal Sentencing Guidelines for Organizations (FSGO) 20 years after publication by the U.S. Sentencing Commission. Organized by the Ethics Resource Center, the advisory group was composed of law enforcement officials, judges, prosecutors, academics, and compliance experts from companies and law firms. It focused on corporations, not other entities covered by the FSGO (such as unions or pension funds). (Disclosure: I was on the advisory group and approved the final report but was not involved in decisions about scope or in drafting.)

The advisory group faced a fundamental paradox at the outset. In response to the elements of a good compliance program outlined in the FSGO (and elements drawn from numerous other sources), many corporations have established strong compliance and ethics programs during the past 20 years. Yet few corporations received credit under the Sentencing Guidelines because there were so few corporate convictions as more and more corporate criminal investigations were settled outright or resolved with nonprosecution or deferred prosecution agreements (NPAs and DPAs).

…continue reading: Give Credit Where Credit Is Due

The SEC’s First Deferred Prosecution Agreement

Posted by Wayne M. Carlin, Wachtell, Lipton, Rosen & Katz, on Tuesday June 14, 2011 at 9:10 am
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Editor’s Note: Wayne Carlin is a partner in the Litigation Department at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton firm memorandum by Mr. Carlin, Theodore A. Levine, John F. Savarese, David B. Anders and Joshua A. Naftalis.

The SEC recently announced its first use of a deferred prosecution agreement, one of the initiatives announced in January 2010 (and discussed in our previous memo here) to encourage greater cooperation in enforcement investigations.  See SEC Press Release.  The announcement of this agreement with Tenaris S.A. follows the agency’s first non-prosecution agreement in December 2010 with Carter’s Inc. (and discussed in our previous memo here).

Tenaris, a manufacturer of steel pipe products, is incorporated in Luxemburg and has American Depository Receipts listed on the New York Stock Exchange.  Tenaris allegedly bribed Uzbekistan government officials in bidding for government pipeline contracts, and made almost $5 million in profits from the contracts.  A world-wide internal investigation triggered by other matters and conducted by outside counsel revealed Foreign Corrupt Practices Act violations in Uzbekistan.  The company self-reported to the SEC and the Department of Justice, cooperated with the government and undertook extensive remediation efforts.

…continue reading: The SEC’s First Deferred Prosecution Agreement

The SEC’s First Non-Prosecution Agreement

Posted by Wayne M. Carlin, Wachtell, Lipton, Rosen & Katz, on Thursday January 20, 2011 at 9:39 am
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Editor’s Note: Wayne Carlin is a partner in the Litigation Department at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton firm memorandum by Mr. Carlin, Theodore A. Levine and David B. Anders.

The SEC yesterday announced its first use of a non-prosecution agreement, one of the new investigative tools that the agency unveiled nearly a year ago. The SEC simultaneously filed an enforcement action against a former sales executive of Carter’s, Inc. See SEC v. Elles, Civ. Action No. 1:10-CV-4118 (N.D. Ga.). The Commission did not bring any enforcement action against the company.

At first blush, this appears to be the sort of case in which the SEC historically would likely have brought charges against a public company. According to the complaint, the executive granted and concealed substantial unauthorized discounts to the company’s largest customer. By misrepresenting the facts and creating false documents, the executive allegedly caused the company to delay recognizing these discounts until later periods, thereby inflating the company’s reported earnings in the earlier periods. When the company discovered the scheme, it conducted an internal investigation, self-reported the matter to the SEC and ultimately restated its financial statements covering a five-year period.

…continue reading: The SEC’s First Non-Prosecution Agreement

DOJ Establishes Guidelines For Corporate Monitors

Posted by Andrew Tuch, co-editor, HLS Forum on Corporate Governance and Financial Regulation on Saturday April 26, 2008 at 2:12 pm
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Editor’s Note: This post is by John Savarese of Wachtell, Lipton, Rosen & Katz.

My colleague David B. Anders and I have written a memorandum commenting on the guidance recently provided by the Acting Deputy Attorney General Craig S. Mortford concerning principles that DOJ will now consider when negotiating and finalizing monitor provisions for deferred prosecution arrangements. The DOJ guidance addresses, among other matters, possible criteria for monitor selection, the independent nature of the monitor, procedures for resolving disputes over the monitor’s suggestions, and ways to determine the appropriate terms of any monitorship.

The memorandum is available here.

 
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