#206157 FM Securities Investigations P1 1. · securities-related litigation and an array of federal criminal investiga-tions and prosecutions. Before joining Mayer Brown, he was a

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PLI’S COMPLETE LIBRARY OF TREATISE TITLES

ART LAWArt Law: The Guide for Collectors, Investors, Dealers & Artists

BANKING & COMMERCIAL LAWAsset-Based Lending: A Practical Guide to Secured FinancingDocumenting Secured Transactions: Effective Drafting and LitigationEquipment Leasing–Leveraged LeasingHillman on Commercial Loan DocumentationMaritime Law Answer Book

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BUSINESS, CORPORATE & SECURITIES LAWAccountants’ LiabilityAnti-Money Laundering: A Practical Guide to Law and ComplianceAntitrust Law Answer BookBroker-Dealer RegulationConducting Due Diligence in a Securities OfferingConsumer Financial Services Answer BookCorporate Compliance Answer BookCorporate Legal Departments: Practicing Law in a CorporationCorporate Political Activities DeskbookCorporate Whistleblowing in the Sarbanes-Oxley/Dodd-Frank EraCovered Bonds HandbookCybersecurity: A Practical Guide to the Law of Cyber RiskDerivatives Deskbook: Close-Out Netting, Risk Mitigation, LitigationDeskbook on Internal Investigations, Corporate Compliance, and White Collar IssuesDirectors’ and Officers’ Liability: Current Law, Recent Developments, Emerging IssuesDoing Business Under the Foreign Corrupt Practices ActEPA Compliance and Enforcement Answer BookExempt and Hybrid Securities OfferingsFashion Law and Business: Brands & RetailersFinancial Institutions Answer Book: Law, Governance, ComplianceFinancial Product Fundamentals: Law, Business, ComplianceFinancial Services Regulation DeskbookFinancially Distressed Companies Answer BookGlobal Business Fraud and the Law: Preventing and Remedying Fraud and CorruptionHedge Fund RegulationInitial Public Offerings: A Practical Guide to Going PublicInsider Trading Law and Compliance Answer BookInsurance and Investment Management M&A DeskbookInternational Corporate Practice: A Practitioner’s Guide to Global SuccessInvestment Adviser Regulation: A Step-by-Step Guide to Compliance and the LawLife at the Center: Reflections on Fifty Years of Securities RegulationMergers, Acquisitions and Tender Offers: Law and StrategiesMutual Funds and Exchange Traded Funds RegulationOutsourcing: A Practical Guide to Law and BusinessPrivacy Law Answer BookPrivate Equity Funds: Formation and OperationProskauer on Privacy: A Guide to Privacy and Data Security Law in the Information AgePublic Company Deskbook: Complying with Federal Governance & Disclosure

RequirementsSEC Compliance and Enforcement Answer BookSecurities Investigations: Internal, Civil and CriminalSecurities Law and Practice Handbook

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The Securities Law of Public FinanceSecurities Litigation: A Practitioner’s GuideSocial Media and the LawSoderquist on Corporate Law and PracticeSovereign Wealth Funds: A Legal, Tax and Economic PerspectiveA Starter Guide to Doing Business in the United StatesTechnology Transactions: A Practical Guide to Drafting and Negotiating Commercial

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LITIGATIONAmerican Arbitration: Principles and PracticeClass Actions and Mass Torts Answer BookElectronic Discovery DeskbookEssential Trial Evidence: Brought to Life by Famous Trials, Films, and FictionExpert Witness Answer BookEvidence in Negligence CasesFederal Bail and Detention HandbookHow to Handle an AppealMedical Malpractice: Discovery and TrialProduct Liability Litigation: Current Law, Strategies and Best PracticesSinclair on Federal Civil PracticeTrial Handbook

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SECURITIESINVESTIGATIONS

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Mayer Brown LLPSteven Wolowitz, Editor

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About the Editors

Richard M. Rosenfeld (editor and chapter 9) is co-leader of theSecurities Litigation & Enforcement group at Mayer Brown LLP. Hehas more than two decades of experience in the securities field,including more than a decade in high-level U.S. government regulatoryand enforcement positions. Most recently, he served as ChiefInvestigative Counsel over the TARP bailout program, followingnearly a decade in the Enforcement Division of the U.S. Securitiesand Exchange Commission where he ended his career investigatingand prosecuting complex multi-national securities fraud as the onlyinternationally based SEC Enforcement lawyer in London. In privatepractice, Richard represents financial institutions, funds, companies,and individuals in responding to investigations and subpoenas fromfederal and state regulators (SEC, CFTC, FINRA, CFPB, DOJ, etc.) andregularly advises on compliance, including policies and procedures,internal investigations, regulatory enforcement, and litigation.

Lee H. Rubin (editor and chapter 6) is a litigation partner in the PaloAlto, California office of Mayer Brown LLP. He has representedcompanies and board committees in conducting internal investiga-tions of alleged improper accounting and financial reporting practices.Lee has represented a number of companies and individuals insecurities-related litigation and an array of federal criminal investiga-tions and prosecutions. Before joining Mayer Brown, he was aDepartment of Justice prosecutor and an Assistant U.S. Attorney forthe District of Columbia.

Steven Wolowitz (editor and chapters 1 and 15) is a partner at MayerBrown LLP. An accomplished litigator whose practice focuses onfinancial services litigation, securities and commodities litigation,antitrust matters, and complex commercial cases, Steve representsinvestment banks, commercial banks, and corporations in majorlitigation, including class actions. In derivatives and futures litigation,he represents banks, FCMs, and institutional users of the markets incomplex cases involving derivatives, futures, foreign exchange, secur-itizations, hedge funds, mutual funds, asset management, insurance,and fixed income instruments. U.S. and foreign banks also rely on Stevein connection with disputes involving structured financial products,

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lender liability, equitable subordination, letters of credit, and opera-tional matters. In the area of enforcement and compliance, Steverepresents bank and corporate clients in SEC, DOJ, CFTC, and stateattorneys general investigations and proceedings. Steve also regularlyconducts international and domestic internal investigations andreports to Boards of Directors and Audit Committees for banks andcompanies in a variety of business sectors.

SECURITIES INVESTIGATIONS

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About the Contributors

Matthew J. Alexander (chapter 14) is a partner in Mayer Brown LLP ’sWashington, D.C. office. He focuses his practice on the counseling anddefense of corporations and individuals in a variety of enforcementmatters, including the Foreign Corrupt Practices Act, federal securitiesand anti-money laundering laws and regulations, the False ClaimsAct, insider trading laws, as well as advising clients with respect toembargoes administered by the U.S. Department of Treasury, Office ofForeign Assets Control. Matt has extensive experience in designing,managing, executing, and presenting global investigations beforenumerous enforcement authorities, including the DOJ, SEC, and theWorld Bank’s Integrity Vice Presidency. He received his J.D. in 2009from the Georgetown University Law Center.

James Ancone (chapter 10) is an associate in Mayer Brown’s New Yorkoffice and a member of the Litigation and Dispute Resolution practice.Mr. Ancone’s practice primarily consists of complex commerciallitigation, including the defense of securities class actions, shareholderderivative claims, and residential mortgage-backed securities litigation.Mr. Ancone served as a law clerk to U.S. District Judge Richard M.Berman in the Southern District of New York (2008–2009) and U.S.Magistrate Judge Henry B. Pitman in the Southern District of NewYork (2007–2008).

Marcus Christian (chapter 10) is a Washington, D.C. partner in MayerBrown’s Litigation & Dispute Resolution practice and White CollarDefense & Compliance group. Since joining Mayer Brown in 2013,Marcus has represented clients in matters involving the Foreign Cor-rupt Practices Act, OFAC sanctions, cyberfraud, cybersecurity, boardgovernance, and congressional investigations (among others). Pre-viously, he was the Executive Assistant U.S. Attorney at the U.S.Attorney’s Office for the Southern District of Florida, the third-highest-ranking position in one of America’s largest and busiest officesof federal prosecutors.

During Marcus’s career with Southern Florida’s U.S. Attorney ’sOffice, he held several roles, including serving as a deputy chief in theMajor Crimes Section, where he trained and supervised Assistant U.S.Attorneys, led the Identity Theft and Economic Crimes Task Force,

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and oversaw financial investigations in the Major Crimes Section. Asan Assistant U.S. Attorney, he prosecuted cases involving moneylaundering, healthcare fraud, mail fraud, wire fraud, national securityissues, and other matters.

Mark Compton (chapter 13) is a partner in the Financial ServicesRegulatory & Enforcement practice of Mayer Brown’s London office.The Legal 500 UK 2013 directory in 2015 and 2016 praised hispractical, user friendly and very clear advice on U.K. and EUlegislation, and acknowledged that he is “particularly well regardedregarding AML matters and economic sanctions” and is “extremelyknowledgeable in the commodity space.”

Mark advises a wide range of clients, including investment banks,insurers, commodity traders, brokers, pension funds, and hedge fundson all aspects of UK and EU financial services legislation andenforcement. Mark also counsels clients in the financial servicesindustry and multi-national companies operating in engineering,logistics, publishing, chemicals, mining, energy, pharmaceuticals,and telecommunications on anti-bribery legislation and systems andcontrols, anti-money laundering legislation, and economic sanctions.

Christopher S. Comstock (chapter 18) is an associate in the Chicagooffice of Mayer Brown’s Litigation & Dispute Resolution practice.Chris works primarily on consumer class action litigation, litigationinvolving communications companies and employment litigation.He represents clients in complex trials, appellate proceedings and inproceedings before federal and state regulatory agencies. In connectionwith this work, Chris has participated in jury trials and arbitrations,has briefed dispositive motions and argued before trial courts, andhas briefed appeals and argued before courts of appeal. Prior to joiningMayer Brown in 2010, Mr. Comstock worked as an attorney in theEmployment Litigation Division of the City of Chicago Departmentof Law.

Vincent J. Connelly (chapter 8) focuses his practice on trial work,including both criminal and civil litigation. His criminal trialexperience includes cases involving antitrust, securities, governmentcontract and program cases, RICO, commercial and financial frauds,FCPA, and public corruption. His civil litigation experience empha-sizes representing major corporations, officers, and board members infederal and state proceedings. He is a member of the American Collegeof Trial Lawyers.


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Joseph De Simone (chapter 10) is a litigation partner in the New Yorkoffice of Mayer Brown LLP. He serves as the co-head of the firm’sSecurities Litigation and Enforcement Action Group. His practice isfocused primarily on securities and regulatory disputes, internalcorporate investigations, Sarbanes-Oxley compliance, complex arbitra-tions and general corporate litigation.

Greg Deis (chapter 5) is a former federal prosecutor whose practicefocuses on internal investigations white collar criminal defense andcomplex commercial litigation. Greg is an experienced trial lawyer,having tried many criminal and civil cases, most as first chair. He hasalso served as lead counsel in numerous criminal and civil appeals.

At the firm, Greg has conducted internal investigations on behalfof a variety of clients. Greg also regularly represents companies andsenior executives in criminal and regulatory investigations, includinginvestigations involving the FCPA, health care, federal securities laws,tax, money laundering, and environmental offenses. Prior to rejoiningMayer Brown, Greg served as an Assistant U.S. Attorney in Chicago,assigned to the Public Corruption section, where he prosecuted num-erous public officials and law enforcement officers with fraud, bribery,extortion, and tax offenses. In addition to his corruption experience,Greg investigated and prosecuted a wide range of federal criminal casesinvolving complex financial fraud, procurement fraud, money launder-ing, computer offenses, and international drug trafficking.

Greg joined the U.S. Attorney ’s Office after working at the firmfrom 2003–07. He has been an adjunct professor of criminal procedureand trial advocacy at DePaul University College of Law. Greg began hislegal career as a law clerk for the Honorable Deanell Reece Tacha, ChiefJudge of the U.S. Court of Appeals for the Tenth Circuit.

Robert E. Entwisle (chapter 1) is an associate in Mayer Brown’sChicago office. Bob’s practice focuses on a number of different areas,including antitrust and competition matters, regulatory and financialservices industry investigations, and complex commercial litigation.

Reginald R. Goeke (chapters 6 and 9) is a litigation partner in theWashington, D.C. office of Mayer Brown LLP. He has conductednumerous internal investigations involving alleged accounting mis-statements, misrepresentations to governmental agencies, optionbackdating, insider trading, and various alleged violations of securitieslaws. He has represented issuers and accountants in securities litigationmatters, and has represented companies and special litigation commit-tees in derivative lawsuits.


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Marcia E. Goodman (chapter 18) is a partner in Mayer Brown’sChicago office and co-leader of the U.S. Employment practice. Shedefends employers in federal and state whistleblower claims and othersignificant employment litigation brought by executives and byplaintiff classes. She is active in defending multi-national employers,including on cross-border disputes. In addition to defending litiga-tion, Marcia advises companies on how to deal with whistleblowerclaims by current employees, on compliance programs, and on theemployment aspects of internal investigations. Marcia has significantexperience representing employers before the Department of Labor,the EEOC, and state and federal trial level and appellate courts.She writes and speaks regularly on employment law developments,including whistleblower matters, retaliatory discharges, and socialmedia.

Laura R. Hammargren (chapter 18) is a partner in Mayer Brown’sLitigation & Dispute Resolution practice group. In her white collarand investigations practice, Ms. Hammargren represents corporationsand individuals in internal investigations or who are under inves-tigation by federal and state authorities for issues related to financialservices, healthcare, environmental issues, and Foreign CorruptPractices Act and False Claims Act violations. Her civil practicefocuses on complex commercial litigation and regulatory matters,particularly ERISA litigation and government enforcement actionsand SOX whistleblower proceedings.

Mark G. Hanchet (chapter 13) is a litigation partner in Mayer Brown’sNew York office. His practice focuses on financial services litigation,much of which is international in nature. He represents banks inconnection with cross-border litigation and in proceedings involvingattachments and injunctions concerning assets located in the UnitedStates and abroad. He also advises clients on a variety of issues relatingto international dispute resolution, including forum selection,jurisdiction, and service of process, and he is well-versed in navigatinginternational discovery and judgment enforcement issues. He serves asone of the firm’s group leaders for International Banking and FinancialServices Litigation.

Ethan A. Hastert (chapter 1) is a partner in Mayer Brown’s Chicagooffice. He has experience in areas including complex commerciallitigation, government and internal investigations, and electronicdiscovery. He is a member of Mayer Brown’s Electronic Discovery &Information Governance practice and has conducted internal investiga-tions for potential liability and violations of laws and/or regulations inconnection with inquiries from regulators, auditors, and plaintiffs.


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Christopher J. Houpt (chapter 15) is a litigation partner at MayerBrown LLP, where his practice focuses on litigation concerning secu-ritization, derivatives, and banking. After graduating cum laude fromHarvard Law School in 2005, where he was an editor on the Law Review,Chris served as a foreign law clerk to the Honorable Aharon Barak,President of the Supreme Court of Israel. Before law school, he was afinancial analyst at D.E. Shaw & Co. and Covad Communications.

Matthew D. Ingber (chapter 2) is one of the global practice leaders inMayer Brown’s Litigation & Dispute Resolution practice and a partnerin the New York office. He represents financial institutions, majorcorporations, insurance companies and individuals in complex,sensitive and high-profile litigation matters. Matthew conducts ageneral litigation practice before state and federal courts, with casesranging from complex commercial disputes to civil and criminalsecurities fraud actions and cutting-edge intellectual property matters.He performs internal corporate investigations on behalf of man-agement and audit committees, represents securitization trustees inresidential mortgage-backed securities matters, represents issuers andunderwriters in federal securities class actions and represents indi-viduals and corporations in connection with criminal and regulatoryinvestigations and related civil proceedings. Matthew has arguednumerous dispositive motions and appeals and has served as lead trialcounsel in several cases in federal and state courts.

Adam D. Kanter (chapter 11) is an associate in the firm’s Corporate &Securities practice group. He focuses his practice on counselingdomestic and non-U.S. investment advisers, investment companies,and other financial services firms. Prior to joining Mayer Brown,Adam worked at the Investment Adviser Association. He received hisJ.D. in 2008 from the George Washington University Law School.

Natalie K. Kissinger (chapters 7 and 8) is a litigation associate in theChicago office of Mayer Brown LLP. Her practice includes complexcommercial, toxic tort, and product liability litigation. She hasrepresented Fortune 100 companies at both the state and federal level.Ms. Kissinger graduated with honors from the University of ChicagoLaw School where she was a semifinalist in the Hinton Moot CourtCompetition.

Kelly B. Kramer (chapters 8 and 16) is a partner in Mayer BrownLLP’s Washington, D.C. office and is a co-leader of the firm’s WhiteCollar Defense & Compliance practice. A career defense attorney,he principally focuses on defending companies and individuals inwhite collar investigations and enforcement actions. In recent years,


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Kelly has represented companies and executives in dozens of financial,securities, tax, and antitrust investigations and enforcement proceed-ings involving the Department of Justice, the Securities and ExchangeCommission, the Financial Institution Regulatory Authority (FINRA),and state attorneys general. Kelly also regularly represents his clients inthe civil suits that routinely accompany such investigations, includingthe ongoing suits relating to financial institutions’ alleged failures todisclose risks associated with non-prime mortgages and related assets.Some of Kelly ’s other recent work has involved representing publicofficials, lobbyists, and companies in public corruption investigations.One of his more notable representations in this area is the ongoingdefense of Congressman Richard Renzi against honest services fraudand money laundering charges in Arizona. He has also representedsenior White House and Congressional staff from both parties in avariety of criminal and Congressional investigations. Kelly alsoregularly represents businesses and executives in connection withForeign Corrupt Practices Act investigations.

Many of Kelly ’s clients are based in Europe, Asia, and the Americas.In one case, he led a successful effort to dissolve restraining orders thathad been imposed against a Cayman Islands hedge fund in a case thatpresented a question of first impression concerning the scope of theUSA PATRIOT Act. Kelly ’s successful defense of that ruling in theD.C. Circuit has been closely watched by the legal media and inter-national criminal lawyers in the United States and abroad.

Lori E. Lightfoot (chapter 4) is a partner based in the Chicago office ofMayer Brown LLP. An experienced trial attorney, investigator, andcrisis manager, Lori has extensive experience in representing clientsin matters involving federal and state criminal violations, includingmail and wire fraud, tax prosecutions, perjury, and obstruction ofjustice. Lori has also litigated a range of commercial disputes concerningproducts liability, business torts, employment discrimination, individ-ual and putative class actions, and common law claims, among othermatters. She has also advised clients on a variety of matters, such asinternal compliance, risk management, corporate governance, ethics,and avoidance of and preparation for potential litigation. Lori also hasdirect experience in designing and implementing communicationsstrategies for clients, particularly as part of a crisis management strategy.

Both as a civil litigator and as Assistant U.S. Attorney in theCriminal Division of the U.S. Attorney ’s Office, Northern District ofIllinois, Lori has tried over twenty federal and state jury and benchtrials. She has also argued cases in state and federal appellate courts. Inaddition, Lori has considerable experience in instituting risk manage-ment and compliance policies for private sector and governmentalclients.


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Michael Martinez (chapter 5) is a partner in Mayer Brown’s New Yorkoffice and a member of the Litigation & Dispute Resolution andWhite Collar Defense & Compliance practices. Previously, he was theExecutive Assistant U.S. Attorney in the U.S. Attorney ’s Office forthe District of New Jersey, the office’s third-highest-ranking position.He was responsible for reorganizing, developing, and managing theoffice’s white collar programs, supervising 145 attorneys in all criminaland civil cases brought by the office, and coordinating with partnerinvestigative agencies and the U.S. Justice Department’s Civil Divisionin investigating and prosecuting white collar cases. Under Mike’sleadership, the office established its first stand-alone Health Care andGovernment Fraud Unit, which secured the convictions of more than150 defendants and recovered hundreds of millions of dollars insettlements, fines, and restitution. He played a key role in directingthe office’s investigations and prosecutions of health care fraud,securities fraud, government-contracting fraud, FCPA, FIRREA, andcybersecurity cases. During Mike’s eleven-year career with the U.S.Attorney’s Office, he successfully tried numerous cases, including thecase against Walter Forbes, former chairman of Cendant Corporation,which resulted in a twelve-year sentence for the largest accountingfraud of the 1990s. Mike is also an experienced appellate attorney,having briefed or argued dozens of cases before the U.S. Court ofAppeals for the Third Circuit. Earlier in his career, Mike clerked forThe Honorable Samuel A. Alito, Jr. in the U.S. Court of Appeals for theThird Circuit.

Brian J. Massengill (chapter 17) is a partner at Mayer Brown LLP anda co-leader of the firm’s Professional Liability practice group. Brianhas represented accounting firms in numerous matters includingsecurities class actions and related shareholder derivative suits, andtrials and arbitrations. He has also represented accounting firms andengagement partners in SEC and PCAOB investigations, and stateaccountancy board proceedings. Brian also consults with accountingfirms on risk issues.

Brian is a CPA and worked for eight years with a nationalaccounting firm prior to attending The University of Chicago lawschool. Prior to joining Mayer Brown in 1996, he was Law Clerk toThe Honorable Frank H. Easterbrook, U.S. Court of Appeals for theSeventh Circuit.

Justin A. McCarty (chapters 16 and 17) is a partner at Mayer BrownLLP. He graduated with honors from the University of Iowa College ofLaw, where he served as a senior editor on the Iowa Law Review. He isa co-leader of Mayer Brown’s professional liability action group and

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focuses his practice on representing accounting firms and auditors incivil litigation around the country and regulatory matters before theSEC and PCAOB.

William Michael, Jr. (chapters 7 and 14) is a partner and Co-Chair ofMayer Brown’s White Collar Defense & Compliance practice and alsothe firm’s Global Anti-Corruption practice. He is an experienced trialattorney with more than 100 trials in state and federal courts. Bill isalso a member of the American College of Trial Lawyers, representingthe top 1% of the trial lawyers in the country. He represents bothindividuals and corporations in the following matters: Foreign Cor-rupt Practices Act, UK Bribery Act and other anti-corruption matters;internal investigations; antitrust, health care, securities and tax fraud;false claims act matters and environmental offenses. Additionally, Billhas extensive government experience. He served more than ten yearswith the Department of Justice as an Assistant United States Attorneyin the Southern District of Florida, including as Deputy Chief andhead of a branch office. He also served as an Assistant United StatesAttorney in the District of Minnesota.

Stephanie M. Monaco (chapter 11) is a partner in Mayer Brown’sCorporate Practice, Investment Management Group. She advisesinvestment management firms, investment companies, broker-dealers,and hedge funds across a broad range of investment managementproducts. Formerly an attorney with the U.S. Securities and ExchangeCommission, Stephanie brings a deep understanding of the regulatoryenvironment to counseling clients on issues of compliance andproduct development. Stephanie joined Mayer Brown in 2005. Shealso worked with the SEC’s Division of Investment Management, first inthe Division’s Chief Counsel’s Office (1983–1986) and, later, in theDivision’s Office of Investment Company Regulation (1988–1991).

Richard E. Nowak (chapter 18) is a Litigation & Dispute Resolutionassociate in Mayer Brown’s Chicago office. He has significant trialexperience in both state and federal courts and his practice also includesarbitration and mediation. Richard is focused on employment-relatedissues and consumer class actions, including claims brought under theAmericans with Disabilities Act, Employee Retirement Income SecurityAct (ERISA), Fair Credit Reporting Act, Fair Labor Standards Act,National Labor Relations Act, and related state and federal discrimina-tion and consumer protection laws. Richard also assists clients withinternal investigations and provides advice on a variety of internal policyand procedural issues, including electronic discovery, bring your owndevice (BYOD), employee monitoring, social media, and other privacyconcerns.


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Jerome J. Roche (chapter 12) is a Financial Services Regulatory &Enforcement partner in Mayer Brown’s Washington, D.C. office. Hehas extensive experience counseling clients regarding U.S. regulationof securities, commodities, and derivatives transactions. According toChambers USA, clients say that he “provides a highly specialized andkeen level of advice” and is “very good at recognizing ways of solvingthings more elegantly.” Clients consider him to be “a very strongcounselor who brings a highly pragmatic approach to complex issues”and “very knowledgeable about pretty much all aspects of broker-dealerregulations.” His “ability to cut right to the heart of an issue” isparticularly regarded by commentators, as is his cross-border exper-tise. Jerome has been selected by his peers for inclusion in The BestLawyers in America in the practice area of Banking and Finance Lawsince 2013. He also received a Martindale-Hubbell peer review ratingof AV-Preeminent.

Matthew Rossi (chapter 9) is a partner in Mayer Brown’s Washington,D.C. office and co-head of the firm’s Securities Litigation & Enforce-ment group. His practice includes representing investment advisers,private funds, registered investment companies, and their affiliates inSEC, FINRA, and state securities examinations, investigations, andenforcement actions. He also counsels clients on compliance issues,including those relating to the Investment Advisers Act, ForeignCorrupt Practices Act, and high frequency trading. Before joining MayerBrown LLP, he served in the SEC’s Enforcement Division as AssistantChief Litigation Counsel, where he represented the Commission as leadcounsel in enforcement actions against investment advisers, theiraffiliates, and large financial institutions, including several high-profilefraud and compliance investigations and litigations. Matt also servedas Senior Counsel in the Enforcement Division’s Asset ManagementUnit, a specialized unit that investigates misconduct by investmentadvisers, private funds, and registered investment companies. Hefurther served on a joint task force to revise procedures for the SEC ’sOffice of Compliance Inspections and Examinations. Prior to joiningthe SEC, Matt was a litigation partner at another large internationallaw firm, where he led internal investigations spanning multiplecountries, primarily concerning securities fraud and the Foreign Cor-rupt Practices Act. He also litigated cases in the federal courts.

Nina Ruvinsky (chapter 4) is a Litigation & Dispute Resolution asso-ciate in Mayer Brown’s Chicago office. She represents national andmultination corporations in complex litigation including mattersinvolving internal investigations and government inquiries, commer-cial disputes in highly regulated industries under federal statute,antitrust litigation and investigations, false advertising claims under

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the Lanham Act, and a variety of employment litigation and advisorymatters.

Prior to joining the firm in 2013, Nina received her J.D. cum laudefrom the University of Michigan, where she served as the ManagingEditor of the University of Michigan Journal of Law Reform, a studentattorney with the Michigan Unemployment Insurance Project, andchair of the Education Law and Policy Society. She also served as aJudicial Intern to the Honorable David D. Noce, Magistrate Judge forthe United States District Court for the Eastern District of Missouri.

Colleen Snow (chapter 14) is an associate in Mayer Brown LLP ’sWhite Collar Defense & Compliance practice in Washington, D.C. Shefocuses her practice on the counseling and defense of corporations andindividuals in Foreign Corrupt Practices Act enforcement matters.Colleen is a cum laude graduate of Tulane University Law School, whereshe received her J.D. in 2014.

Richard A. Spehr (chapter 2) is managing partner of Mayer Brown’sNew York office. He is an experienced trial lawyer whose practicefocuses on complex commercial litigation, including federal and statesecurities laws, internal investigations, SEC investigations, deriva-tives, banking, and financial services. Rich’s clients include AmericanInternational Group (AIG), Bank of America, BMW Financial Services,Ally Bank, and The Hong Kong & Shanghai Banking Corpora-tion (HSBC).

Daniel L. Stein (chapter 3) is a partner in Mayer Brown’s New Yorkoffice and a member of the Litigation & Dispute Resolution practice.He leads the firm’s global Regulatory & Investigations group and isa co-leader of the White Collar Defense & Compliance group. Danfocuses his practice on representing and counseling financial servicesfirms. He has extensive experience in regulatory enforcement, govern-ment and internal investigations, white collar criminal defense andcomplex civil litigation. He counsels corporate and individual clientsin a range of complex issues, including U.S. Securities Exchange Com-mission and Financial Industry Regulatory Authority investigationsand enforcement actions. Prior to joining Mayer Brown, Dan was Chiefof the Criminal Division for the United States Attorney ’s Office forthe Southern District of New York (SDNY). He assumed that positionin July 2015, after serving as Chief Counsel to the U.S. Attorney sinceJuly 2014.

Laurence A. Urgenson (chapter 14) is a partner in Mayer Brown’sWashington, D.C. office and a co-leader of the firm’s Global Anti-Corruption & FCPA practice. He has represented corporate and

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individual clients in FCPA and anti-corruption matters worldwide fornearly four decades. As noted in Chambers, Larry is “a brilliant lawyerand a leading light at the FCPA Bar.” (Chambers USA 2016). Larry“has distinguished himself as an outstanding FCPA practitioner . . . .he has a terrific boardroom presence and a practical approach todealing with issues and governments around the world.” (ChambersGlobal 2015). Larry was named a Benchmark Litigation Star in 2014,2015, 2016, and 2017 and was recognized nationally as one of eightFCPA Masters at the Main Justice Best FCPA Lawyers Client ServiceAwards in 2013. He is a sought-after writer and speaker on white collarmatters and is currently the Chairman of the Board of Editors of theBusiness Crimes Bulletin.

Prior to joining private practice, Larry held key leadership positionsat the U.S. Department of Justice (DOJ). As the DOJ’s Acting DeputyAssistant Attorney General, he primarily supervised the Fraud Section,General Litigation and Legal Advice Section, and Office of Policy andManagement Analysis. He also served as the DOJ’s Chief of the FraudSection for the Criminal Division, where he advised U.S. Attorneys onwhite collar crime issues, and oversaw the FCPA Unit. Earlier in hiscareer, Larry served as a Chief Assistant U.S. Attorney for the EasternDistrict of New York. Larry received the Attorney General’s Award forDistinguished Service and the Edmund J. Randolph Award for Out-standing Service.

Charles J. Weinstein (chapter 12) is an associate in Mayer BrownLLP ’s Washington, D.C. office and a member of the ConsumerFinancial Services group. His practice focuses on federal and stateregulatory compliance and enforcement matters with an emphasis onmoney services businesses, payment system providers, and mortgageand consumer lending. Charles also has experience representing bro-kerage firms and registered representatives in FINRA and SEC regu-latory investigations and disciplinary proceedings, as well as FINRAarbitrations.

Guy Wilkes (chapter 13) is a partner in Mayer Brown’s London office.He has considerable experience in the financial services sector andfront-line knowledge of regulatory investigations and enforcementactions, having led several high-profile Financial Conduct Authority(FCA) cases involving the UK’s largest financial institutions. Hisinvestigations involve a wide range of matters, including anti-moneylaundering and anti-bribery controls, conflicts of interest, suitability ofinvestment advice, treatment of customers, client asset rules, listingsrule breaches, market misconduct and personal culpability ofindividuals.

xix(Securities Investigations, Rel. #7, 8/17)


Prior to joining Mayer Brown, Guy headed an FCA Enforcementdepartment where he led on a variety of investigations, working closelywith both UK and international regulators. As a member of the FCA’ssenior leadership team, Guy had responsibility for developing FCAenforcement strategy, especially in relation to financial crime and anti-money laundering where he chaired the FCA’s cross-divisional workinggroup. He also set up and ran the FCA’s internal expert group forinvestigations against senior individuals.

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Table of Chapters

Chapter 1 Overview of Federal, State and SRO SecuritiesEnforcement Efforts: Strategies for Responding toMultiple Investigations and Related Actions

Chapter 2 Civil Enforcement of Federal SecuritiesLaws—Substantive Violations

Chapter 3 Criminal Statutes Charged in Securities Cases

Chapter 4 Organizational Sentencing Guidelines

Chapter 5 The Role of Corporate Internal Investigations

Chapter 6 Conducting Internal Investigations

Chapter 7 Attorney-Client and Work Product Considerationsin Internal Investigations

Chapter 8 Defending Federal Grand Jury Investigations

Chapter 9 Defending an SEC Investigation

Chapter 10 Cooperation in SEC and DOJ Cases

Chapter 11 The SEC’s Office of Compliance Inspections andExaminations

Chapter 12 FINRA Investigations

Chapter 13 Cross-Border Regulation of the Financial Markets

Chapter 14 Enforcement of the Foreign Corrupt Practices Actand Other Anti-Bribery Laws

Chapter 15 Dealing with Parallel Actions

Chapter 16 Representing Individuals in Securities Investigations

Chapter 17 Communicating with the Company’s Auditor in aSecurities Investigation

Chapter 18 Employment Issues in Securities Investigations

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(Securities Investigations, Rel. #7, 8/17)

Table of Contents

About the Editors ...........................................................................vii

About the Contributors..................................................................ix

Table of Chapters..........................................................................xxi

Preface to Second Edition.........................................................xliii

Chapter 1 Overview of Federal, State and SROSecurities Enforcement Efforts: Strategies forResponding to Multiple Investigations andRelated Actions

Steven Wolowitz, Ethan A. Hastert &Robert E. Entwisle

§ 1:1 Overview........................................................................... 1-2§ 1:2 SEC Enforcement ............................................................. 1-5§ 1:3 Self-Regulatory Organizations .......................................... 1-6

§ 1:3.1 Generally ................................................................... 1-6§ 1:3.2 FINRA ....................................................................... 1-6§ 1:3.3 PCAOB ...................................................................... 1-7

§ 1:4 State Regulation ............................................................... 1-8§ 1:5 Criminal Prosecution ..................................................... 1-10

Chapter 2 Civil Enforcement of Federal SecuritiesLaws—Substantive Violations

Richard A. Spehr & Matthew D. Ingber

§ 2:1 Introduction: Recent Civil Enforcement........................... 2-2§ 2:2 SEC Enforcement of Securities Regulations ..................... 2-3§ 2:3 The Securities Act of 1933............................................... 2-3

§ 2:3.1 Generally ................................................................... 2-3§ 2:3.2 Section 12.................................................................. 2-3§ 2:3.3 Section 17.................................................................. 2-5

§ 2:4 Securities Exchange Act of 1934 ...................................... 2-6§ 2:4.1 Generally ................................................................... 2-6§ 2:4.2 Section 10(b).............................................................. 2-6

[A] Generally ................................................................... 2-6[B] Rule 10b-5 ................................................................. 2-8

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§ 2:4.3 Section 13—Reporting Requirements ........................ 2-9§ 2:4.4 Section 14(e) ............................................................ 2-12

§ 2:5 Sarbanes-Oxley Act of 2002 ........................................... 2-13§ 2:6 The Dodd-Frank Act of 2010 ......................................... 2-13§ 2:7 Other Securities Regulations .......................................... 2-14

§ 2:7.1 Investment Advisers Act of 1940 ............................ 2-14§ 2:7.2 Investment Company Act of 1940 .......................... 2-15§ 2:7.3 Insider Trading Sanctions Act of 1984 .................... 2-16§ 2:7.4 Insider Trading Securities Fraud Enforcement

Act of 1988.............................................................. 2-16§ 2:7.5 Stop Trading on Congressional Knowledge

(STOCK) Act of 2012 .............................................. 2-17§ 2:7.6 Recent Insider Trading Cases .................................. 2-17

§ 2:8 Extraterritorial Application of U.S. Securities Laws ....... 2-25§ 2:9 Aiding and Abetting Liability Under

the Securities Laws......................................................... 2-29§ 2:10 Remedies Available to the SEC ...................................... 2-32

§ 2:10.1 Judicial Remedies .................................................... 2-32§ 2:10.2 Monetary Penalties .................................................. 2-33§ 2:10.3 Disgorgement .......................................................... 2-34§ 2:10.4 Officer and Director Bars......................................... 2-35§ 2:10.5 Cease-and-Desist Orders ......................................... 2-37§ 2:10.6 Section 15(c)(4) Orders ............................................ 2-39§ 2:10.7 Administrative Fines ............................................... 2-39§ 2:10.8 Company Controls .................................................. 2-42§ 2:10.9 Bonus Forfeiture ...................................................... 2-42

§ 2:11 Fair Funds....................................................................... 2-43

Chapter 3 Criminal Statutes Charged in SecuritiesCases

Daniel L. Stein

§ 3:1 Introduction ..................................................................... 3-1§ 3:2 Securities Act and Exchange Act Violations ..................... 3-3

§ 3:2.1 Generally ................................................................... 3-3§ 3:2.2 Section 10(b) and Rule 10b-5 of the

Exchange Act ............................................................. 3-4§ 3:2.3 Section 13 of the Exchange Act............................... 3-11§ 3:2.4 Sections 5 and 17(a) of the Securities Act ............... 3-13

§ 3:3 Title 18 Violations.......................................................... 3-14§ 3:3.1 Conspiracy............................................................... 3-14§ 3:3.2 Fraud Statutes.......................................................... 3-16

[A] Mail and Wire Fraud ............................................... 3-16[B] Bank Fraud .............................................................. 3-20


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[C] Sarbanes-Oxley Additions to Fraud Statutes inTitle 18.................................................................... 3-20

§ 3:3.3 Obstruction of Justice Statutes ................................ 3-22§ 3:3.4 Theft of Government Property ................................ 3-25

Chapter 4 Organizational Sentencing Guidelines

Lori E. Lightfoot & Nina Ruvinsky

§ 4:1 Important Considerations Regarding “Sentencing”of Business Organizations ................................................ 4-1

§ 4:2 Organizational Guidelines: A Brief History...................... 4-4§ 4:3 Guidelines Implications for Securities Law Violations..... 4-7

§ 4:3.1 Generally ................................................................... 4-7§ 4:3.2 Restitution................................................................. 4-8§ 4:3.3 Fines .......................................................................... 4-9§ 4:3.4 Other Remedial Orders............................................ 4-10

§ 4:4 Diminished Impact of Organizational Guidelines ......... 4-10§ 4:4.1 Impact of Booker on Organizational Guidelines ..... 4-11§ 4:4.2 Increasing Emphasis on Pre-Charge Negotiations:

What Constitutes Cooperation? .............................. 4-12[A] Historical Use of DPAs and NPAs........................... 4-15

§ 4:5 Rise of Deferred and Non-Prosecution Agreements ....... 4-24§ 4:6 Conclusion ..................................................................... 4-29

Chapter 5 The Role of Corporate Internal Investigations

Greg Deis & Michael Martinez

§ 5:1 Overview........................................................................... 5-2§ 5:2 The Constituencies for an Internal Investigation ............ 5-3§ 5:3 Statutory Provisions Implicating Internal Investigations....5-5

§ 5:3.1 Generally ................................................................... 5-5§ 5:3.2 The Sarbanes-Oxley Act ............................................ 5-5

[A] Generally ................................................................... 5-5[B] Duties of the Audit Committee................................. 5-5[C] Duties of the Chief Executive Officer and

Chief Financial Officer .............................................. 5-6[D] Duties of Auditors ..................................................... 5-7[E] Duties of Lawyers ...................................................... 5-8

§ 5:3.3 Duties with Respect to Employees ............................ 5-9§ 5:4 SEC Guidance Relating to Internal Investigations ......... 5-10

§ 5:4.1 The Seaboard Report ............................................... 5-10§ 5:4.2 Principles for Imposing Monetary Penalties ............ 5-13§ 5:4.3 The SEC’s “Cooperation Initiative” ........................ 5-14

[A] Generally ................................................................. 5-14


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[B] Cooperation Tools ................................................... 5-15[C] SEC’s Use of DPAs and NPAs................................. 5-16

§ 5:4.4 Waiver of Privilege and Work Product Protection ......5-17[A] Generally ................................................................. 5-17[B] Confidentiality Agreements and Collateral

Proceedings .............................................................. 5-18§ 5:4.5 The Benefits of a Robust Internal Investigation...... 5-19

§ 5:5 Department of Justice Guidance Relating toInternal Investigations.................................................... 5-19

§ 5:5.1 Generally ................................................................. 5-19§ 5:5.2 The Filip Memorandum.......................................... 5-20§ 5:5.3 The DOJ and the SEC Resource Guide to the

FCPA ....................................................................... 5-22§ 5:5.4 DOJ’s Corporate Compliance Counsel.................... 5-23§ 5:5.5 Information Relevant to Earning Cooperation

Credit ...................................................................... 5-24[A] Generally ................................................................. 5-24[B] “Relevant Facts”....................................................... 5-25[C] “Core” Privileged Information ................................. 5-26

§ 5:5.6 The Yates Memorandum......................................... 5-26§ 5:5.7 Deferred and Non-Prosecution Agreements in

Criminal Actions..................................................... 5-27[A] Generally ................................................................. 5-27[B] Deutsche Bank AG .................................................. 5-28[C] Lending Processing Services Inc. ............................. 5-29

§ 5:5.8 Independent Corporate Monitors ............................ 5-30[A] Generally ................................................................. 5-30

§ 5:5.9 Federal Sentencing Guidelines................................. 5-32§ 5:6 FINRA Guidance As It Relates to Internal

Investigations ................................................................. 5-34§ 5:6.1 Generally ................................................................. 5-34§ 5:6.2 The Benefits of “Extraordinary Cooperation”.......... 5-35§ 5:6.3 What Is “Extraordinary Cooperation”?.................... 5-36

[A] Generally ................................................................. 5-36[B] Self-Reporting of Violations ..................................... 5-36[C] Extraordinary Steps to Correct Deficient

Procedures and Systems .......................................... 5-37[D] Extraordinary Remediation to Customers ............... 5-37[E] Providing Substantial Assistance to FINRA

Investigations........................................................... 5-37§ 5:7 State Investigations and Internal Investigations ............ 5-38

§ 5:7.1 The Martin Act ....................................................... 5-38§ 5:7.2 Martin Act Investigations........................................ 5-39

§ 5:8 Conclusions—The Role of the Internal Investigation ......5-39


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Chapter 6 Conducting Internal Investigations

Lee H. Rubin & Reginald R. Goeke

§ 6:1 Overview........................................................................... 6-2§ 6:2 Initiating an Investigation................................................ 6-3

§ 6:2.1 Events Triggering an Investigation............................. 6-3§ 6:2.2 Selecting the Oversight Committee........................... 6-5§ 6:2.3 Retention of Counsel................................................. 6-8§ 6:2.4 Scope of Investigation................................................ 6-9§ 6:2.5 Document Preservation ........................................... 6-11

§ 6:3 Gathering Relevant Facts................................................ 6-12§ 6:3.1 Planning Phase ........................................................ 6-12§ 6:3.2 Data Collection ....................................................... 6-14§ 6:3.3 Document Review and Organization....................... 6-15§ 6:3.4 Witness Interviews .................................................. 6-16

[A] Timing and Order of Interviews .............................. 6-16[B] Interview Documents .............................................. 6-17[C] Interviewing Former Employees .............................. 6-17[D] Witness Warnings .................................................... 6-17[D][1] Upjohn Warning.................................................. 6-17[D][2] Zar Warning ........................................................ 6-19[D][3] Separate Counsel Warning .................................. 6-20[E] Note-Taking and Interview Memoranda.................. 6-21

§ 6:4 Managing External Constituents.................................... 6-22§ 6:4.1 Disclosure Requirements ......................................... 6-23§ 6:4.2 Auditors ................................................................... 6-24§ 6:4.3 The Government ..................................................... 6-26§ 6:4.4 Board Members ....................................................... 6-26§ 6:4.5 Insurance Carriers ................................................... 6-27

§ 6:5 Presenting the Investigation’s Findings .......................... 6-29§ 6:5.1 Forms of Reports ..................................................... 6-29§ 6:5.2 Contents of a Written Report .................................. 6-31

Chapter 7 Attorney-Client and Work ProductConsiderations in Internal Investigations

William Michael, Jr. & Natalie K. Kissinger

§ 7:1 Overview........................................................................... 7-2§ 7:2 The Attorney-Client Privilege........................................... 7-2

§ 7:2.1 Elements Generally ................................................... 7-2§ 7:2.2 Application to Internal Investigations ....................... 7-6

§ 7:3 The Work Product Doctrine ............................................. 7-7§ 7:3.1 Elements Generally ................................................... 7-7§ 7:3.2 Application to Internal Investigations ....................... 7-9


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§ 7:4 Self-Evaluative Privilege .................................................. 7-10§ 7:5 Safeguarding the Attorney-Client Privilege and

Work Product Protection During InternalInvestigations—Specific Applications ............................. 7-11

§ 7:5.1 Investigation by Independent Counsel .................... 7-11§ 7:5.2 Employee Interviews................................................ 7-13§ 7:5.3 Former Employee Interviews ................................... 7-17

§ 7:6 Waiver and Exceptions: General Principles .................... 7-17§ 7:6.1 Waiver of Attorney-Client Privilege ......................... 7-17§ 7:6.2 Waiver of Work Product Material ............................ 7-19§ 7:6.3 “Crime-Fraud” Exception to Privilege ...................... 7-19§ 7:6.4 Extent of Waiver ...................................................... 7-20

[A] Partial Waiver........................................................... 7-20[B] Successors in Interest .............................................. 7-21

§ 7:6.5 Corporate Clients and Authority to Waive .............. 7-21§ 7:6.6 Waiver Issues Concerning Investigative Reports...... 7-23

§ 7:7 Intentional Selective Waiver of the Attorney-ClientPrivilege and Work Product Protection........................... 7-25

§ 7:7.1 Selective Waiver of Attorney-Client Privilege........... 7-25§ 7:7.2 Selective Waiver of Work Product Protection........... 7-28

§ 7:8 Federal Rule of Evidence 502.......................................... 7-29§ 7:9 Cooperation with Government Investigations and

Disclosure of Protected Material .................................... 7-35§ 7:9.1 Background: Government Requests for

Privilege Waivers...................................................... 7-35§ 7:9.2 Recommendations ................................................... 7-37

Chapter 8 Defending Federal Grand Jury Investigations

Vincent J. Connelly, Kelly B. Kramer &Natalie K. Kissinger

§ 8:1 The Role of the Grand Jury.............................................. 8-2§ 8:2 The Role of the Prosecutor............................................... 8-3§ 8:3 Constitutional and Statutory Authority and

Guidelines ........................................................................ 8-4§ 8:4 Composition of the Grand Jury ....................................... 8-4

§ 8:4.1 Generally ................................................................... 8-4§ 8:4.2 Qualifications ............................................................ 8-5§ 8:4.3 Challenges to the Grand Jury.................................... 8-5

§ 8:5 The Grand Jury ’s Term .................................................... 8-6§ 8:6 The Participants ............................................................... 8-6§ 8:7 Secrecy Requirement ........................................................ 8-7§ 8:8 Powers and Limitations.................................................... 8-9

§ 8:8.1 Generally ................................................................... 8-9§ 8:8.2 The Grand Jury Subpoena......................................... 8-9


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§ 8:8.3 Issuing Subpoenas ..................................................... 8-9§ 8:8.4 Service of the Grand Jury Subpoena ........................ 8-10§ 8:8.5 Limitations on the Use of the Subpoena Power ...... 8-11§ 8:8.6 Evidentiary Rules ..................................................... 8-12

§ 8:9 Returning an Indictment................................................ 8-13§ 8:10 Handling the Investigation............................................. 8-13

§ 8:10.1 Determining Governmental Interest ....................... 8-13§ 8:10.2 Invoking the Privilege Against Self-Incrimination .....8-15

[A] Generally ................................................................. 8-15[B] Incriminating Testimony ......................................... 8-16[C] Incriminating Documents ....................................... 8-17[D] Privilege Does Not Apply to Corporations .............. 8-18

§ 8:10.3 Immunity ................................................................ 8-19[A] Generally ................................................................. 8-19[B] Advantages of Immunity ......................................... 8-19

§ 8:11 Responding to a Subpoena for Documents .................... 8-20§ 8:11.1 Generally ................................................................. 8-20§ 8:11.2 The Document Hold Memo.................................... 8-20§ 8:11.3 The Scope of the Subpoena ..................................... 8-21

[A] Generally ................................................................. 8-21[B] Negotiating with the Prosecution ............................ 8-21[C] Motion to Quash..................................................... 8-22

§ 8:11.4 Records Witness ...................................................... 8-23§ 8:11.5 Reviewing the Documents....................................... 8-23

§ 8:12 Responding to a Subpoena for Testimony ...................... 8-23§ 8:12.1 Preparation .............................................................. 8-24§ 8:12.2 Advice to the Witness.............................................. 8-24§ 8:12.3 Testifying ................................................................. 8-25

[A] Generally ................................................................. 8-25[B] Advice of Rights....................................................... 8-26

§ 8:12.4 Debriefing ................................................................ 8-26§ 8:12.5 Aftermath ................................................................ 8-27

§ 8:13 Conclusion ..................................................................... 8-28

Chapter 9 Defending an SEC Investigation

Reginald R. Goeke, Richard M. Rosenfeld &Matthew Rossi

§ 9:1 Overview of an SEC Investigation.................................... 9-2§ 9:2 Initial Stages of an Investigation ...................................... 9-5

§ 9:2.1 Early Contacts with Enforcement Division ............... 9-5[A] Market Intelligence and Whistleblower Program....... 9-5[B] The Investigation Begins ........................................... 9-8

§ 9:2.2 The Decision Whether to Cooperate....................... 9-11§ 9:2.3 Public Disclosure and Trading Restrictions ............. 9-18


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§ 9:3 Document Production and Testimony ........................... 9-19§ 9:3.1 Staff Requests for Documents and

Other Records.......................................................... 9-19§ 9:3.2 Interaction with Other Counsel .............................. 9-22§ 9:3.3 Preparation for Investigative Testimony .................. 9-23§ 9:3.4 Conduct of Investigative Testimony ........................ 9-24§ 9:3.5 Subpoena Enforcement ............................................ 9-27§ 9:3.6 Ongoing Attention to the Cooperation and

Seaboard Process...................................................... 9-29§ 9:3.7 Foreign Assistance ................................................... 9-30

§ 9:4 The Wells Process and Possible Settlement.................... 9-30§ 9:4.1 The Staff ’s Wells Notice.......................................... 9-30§ 9:4.2 The Wells Submission ............................................. 9-31§ 9:4.3 Settlement Discussions ........................................... 9-33

§ 9:5 Transitioning to Litigation ............................................. 9-38§ 9:5.1 Civil Actions in U.S. District Court........................ 9-38§ 9:5.2 SEC Administrative Proceedings ............................. 9-40

§ 9:6 Conclusion ..................................................................... 9-46

Chapter 10 Cooperation in SEC and DOJ Cases

Joseph De Simone, Marcus Christian &James Ancone

§ 10:1 Overview......................................................................... 10-2§ 10:2 Cooperating with the SEC: Lessons from the

Years Since the Seaboard Report..................................... 10-5§ 10:2.1 Generally ................................................................. 10-5§ 10:2.2 Selected SEC Enforcement Actions After

Seaboard .................................................................. 10-9[A] Generally ................................................................. 10-9[B] Xerox ..................................................................... 10-10[C] Dynegy................................................................... 10-11[D] Homestore ............................................................. 10-11[E] Lucent Technologies .............................................. 10-12[F] Banc of America Securities LLC ............................ 10-13[G] Gemstar-TV Guide International, Inc. .................. 10-14[H] Royal Ahold ........................................................... 10-15[I] Putnam Fiduciary Trust Company ........................ 10-16[J] American International Group (AIG) .................... 10-17[K] KLA-Tencor Corporation........................................ 10-17[L] Aspen Technology, Inc. .......................................... 10-18[M] General Reinsurance Corporation ......................... 10-18[N] State Street Bank and Trust Company .................. 10-19[O] Carter ’s.................................................................. 10-20


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[P] Tenaris ................................................................... 10-21[Q] Fannie Mae and Freddie Mac ................................ 10-22[R] Amish Helping Fund ............................................. 10-23[S] Ralph Lauren Corporation..................................... 10-24[T] PBSJ Corporation................................................... 10-25[U] Nortek, Inc. ........................................................... 10-26

§ 10:2.3 Summary of Lessons Learned and GuidanceGoing Forward....................................................... 10-27

§ 10:3 Cooperating with the Department of Justice:Lessons from the Years Since the ThompsonMemorandum............................................................... 10-29

§ 10:3.1 Generally ............................................................... 10-29§ 10:3.2 Selected Enforcement Actions Since the

Release of the Thompson, McNulty, Filip, andYates Memoranda .................................................. 10-33

[A] Generally ............................................................... 10-33[B] Agreements Governed by the Thompson

Memorandum........................................................ 10-34[B][1] Banco Popular de Puerto Rico ........................... 10-34[B][2] Bank of New York ............................................. 10-35[B][3] Symbol Technologies, Inc.................................. 10-36[B][4] Bristol-Myers Squibb ......................................... 10-37[B][5] Computer Associates......................................... 10-37[B][6] Riggs Bank......................................................... 10-38[C] Agreements Governed by the McNulty

Memorandum........................................................ 10-40[C][1] El Paso Corporation .......................................... 10-40[C][2] Baker Hughes .................................................... 10-41[D] Agreements Governed by the Filip

Memorandum........................................................ 10-42[D][1] Fiat S.p.A. ......................................................... 10-42[D][2] UBS AG............................................................. 10-43[D][3] General Reinsurance Corporation..................... 10-44[D][4] Wachovia Bank, N.A. ........................................ 10-45[D][5] Tyson Foods, Inc. .............................................. 10-46[D][6] Biomet............................................................... 10-47[D][7] Barclays Bank PLC ............................................ 10-48[D][8] Hewlett-Packard ................................................ 10-49[D][9] SunTrust Mortgage Inc...................................... 10-50[E] Agreements Governed by the Yates

Memorandum........................................................ 10-51[E][1] Swisher Hygiene, Inc......................................... 10-51[E][2] North American Health Care Inc. .................... 10-52

§ 10:3.3 Summary of Lessons Learned and GuidanceGoing Forward....................................................... 10-53

§ 10:4 Conclusion ................................................................... 10-55


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Chapter 11 The SEC’s Office of ComplianceInspections and Examinations

Stephanie M. Monaco & Adam D. Kanter

§ 11:1 Overview......................................................................... 11-2§ 11:1.1 Authority ................................................................. 11-3§ 11:1.2 Organization............................................................ 11-4

[A] Investment Adviser/Investment ExaminationProgram ................................................................... 11-5

[B] Broker-Dealer and Exchange ExaminationProgram ................................................................... 11-5

[C] Clearance and SettlementExamination Program.............................................. 11-6

[D] FINRA and Securities Industry OversightExamination Program.............................................. 11-6

[E] Technology Controls Program ................................. 11-6[F] Office of Risk and Strategy ...................................... 11-6[G] Office of Chief Counsel ........................................... 11-6[H] Steering Committees ............................................... 11-6

§ 11:2 Overview of Examinations ............................................. 11-7§ 11:2.1 Types of Exams........................................................ 11-8

[A] “Sweep” Exams........................................................ 11-8[B] For-Cause Exams ..................................................... 11-8[C] Risk-Based Exams.................................................... 11-9[D] “Presence” Exams .................................................... 11-9[E] Never-Before Examined Advisers Initiative............ 11-10[F] Never-Before Examined Investment

Companies Initiative ............................................. 11-10[G] Oversight Exams.................................................... 11-10

§ 11:2.2 Process................................................................... 11-11[A] Before the Visit ...................................................... 11-11[B] On-Site Visit .......................................................... 11-12[C] Exit Interviews/Closure Notification ..................... 11-13[D] Post-Examination .................................................. 11-13

§ 11:3 Strategies for a Successful Examination ....................... 11-14§ 11:3.1 Pre-Exam Communications .................................. 11-14§ 11:3.2 The Examination................................................... 11-14§ 11:3.3 Document Production and Requests for

Extensions ............................................................. 11-16§ 11:4 Keeping Abreast of Current Trends .............................. 11-16

§ 11:4.1 Common Deficiencies in CompliancePrograms................................................................ 11-17

§ 11:4.2 Current OCIE Examination Initiatives ................. 11-19[A] Protecting Retail Investors..................................... 11-19


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[B] Focusing on Senior Investors andRetirement Investments ........................................ 11-20

[C] Market-Wide Risks ................................................ 11-21[D] Other Initiatives .................................................... 11-22

§ 11:4.3 Historical Registrant-Specific ExaminationPriorities ................................................................ 11-22

[A] Broker-Dealers ....................................................... 11-22[B] Investment Advisers/Investment Companies ........ 11-23

Chapter 12 FINRA Investigations

Jerome J. Roche & Charles J. Weinstein

§ 12:1 Introduction ................................................................... 12-2§ 12:2 FINRA Background ........................................................ 12-3§ 12:3 Violations of FINRA and NASD Rules........................... 12-6

§ 12:3.1 Generally ................................................................. 12-6§ 12:3.2 Investigation of Violations....................................... 12-7

[A] Office of Fraud Detection and MarketIntelligence .............................................................. 12-7

[B] Examinations As Sources of Investigation............... 12-8[B][1] Generally ............................................................. 12-8[B][2] Routine Examinations......................................... 12-9[B][3] For-Cause Examinations ..................................... 12-9[B][4] Market Regulation Examinations...................... 12-10[C] Sweeps ................................................................... 12-10[D] Referrals As Sources of Investigations ................... 12-11[E] Insider Trading Investigations ............................... 12-12[F] Investigative Powers of FINRA .............................. 12-12[F][1] Use of FINRA Rule 8210 to Obtain

Documents and Testimony ............................... 12-12[F][2] “On the Record” Testimony .............................. 12-13[G] Wells Submissions ................................................. 12-14

§ 12:3.3 Disciplinary Proceedings........................................ 12-15[A] Generally ............................................................... 12-15[B] Sanctions and Penalties for Violations .................. 12-17[C] Cooperation ........................................................... 12-18

Chapter 13 Cross-Border Regulation of the FinancialMarkets

Mark G. Hanchet, Mark Compton & Guy Wilkes

§ 13:1 Overview......................................................................... 13-2§ 13:2 The SEC—U.S. Cross-Border Securities Regulation

and Enforcement ............................................................ 13-3


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§ 13:2.1 Generally ................................................................. 13-3§ 13:2.2 Cross-Border Cooperation and Domestic Law ........ 13-4§ 13:2.3 Formal Mechanisms of Cooperation ....................... 13-5

[A] Multilateral Organizations ...................................... 13-5[B] Bilateral Arrangements ............................................ 13-9[B][1] Memoranda of Understanding ............................ 13-9[B][2] Bilateral Dialogues ............................................ 13-12

§ 13:2.4 Informal Mechanisms of Cooperation................... 13-13§ 13:2.5 Cross-Border Enforcement Issues .......................... 13-14

[A] Obtaining Testimony and Evidence ....................... 13-14[B] Cross-Border Enforcement Cooperation, by the

Numbers................................................................... 13-15§ 13:2.6 Enforcement Issues................................................ 13-15

[A] Insider Trading ...................................................... 13-15[B] Securities Fraud ..................................................... 13-16[C] Market Manipulation ............................................ 13-17[D] FCPA ..................................................................... 13-18

§ 13:2.7 Cross-Border Regulatory Cooperation ................... 13-19§ 13:2.8 Obstacles to Cross-Border Securities Regulation .....13-20

§ 13:3 U.K. Financial Conduct Authority—An EURegulator ’s Approach to Cross-Border Regulation ....... 13-23

§ 13:3.1 Background and Approach to Regulation .............. 13-23§ 13:3.2 Enforcement Policy, Powers, and Procedures......... 13-25

[A] Authority to Investigate and Prosecute.................. 13-25[B] Investigative and Enforcement Process.................. 13-27

§ 13:3.3 Cross-Border Cooperation and Collaborationin Investigations and Enforcement........................ 13-29

[A] Methods of Cross-Border Cooperation .................. 13-29[B] FSA v. Amro International SA and Creon

Management SA ....................................................... 13-31§ 13:3.4 Restrictions on Cooperation—Confidentiality

of Information Provided to the FCA and LegalPrivilege ................................................................. 13-34

§ 13:3.5 Cross-Border Collaboration ................................... 13-35§ 13:4 Looking Ahead and Conclusion ................................... 13-36

Appendix 13A Cooperative Arrangements Between theSEC and Foreign Regulators ...................... App. 13A-1


xxxiv

Chapter 14 Enforcement of the Foreign Corrupt PracticesAct and Other Anti-Bribery Laws

William Michael, Jr., Laurence A. Urgenson,Matthew J. Alexander & Colleen Snow

§ 14:1 Overview......................................................................... 14-3§ 14:2 Legal Elements ............................................................... 14-5

§ 14:2.1 Anti-Bribery and Accounting Provisions.................. 14-5[A] Anti-Bribery Provisions............................................ 14-5[B] Accounting Provisions ............................................. 14-5

§ 14:2.2 Jurisdiction Pursuant to the FCPA .......................... 14-6[A] Anti-Bribery ............................................................. 14-6[A][1] Issuers ................................................................. 14-6[A][2] Domestic Concerns............................................. 14-6[A][3] Persons Other Than Issuers or Domestic

Concerns ............................................................. 14-7[B] Scope of the Term “Foreign Officials”...................... 14-8

§ 14:2.3 Facilitation Payments ............................................ 14-11§ 14:2.4 Affirmative Defenses ............................................. 14-12§ 14:2.5 Statute of Limitations............................................ 14-13§ 14:2.6 DOJ Opinion Process ............................................ 14-14§ 14:2.7 Penalties ................................................................ 14-15§ 14:2.8 Consultants, Agents, and Other Third-Party

Intermediaries: Managing the Risks of Liabilityfor the Conduct of Others Under a WillfulBlindness Theory................................................... 14-17

§ 14:3 Mergers & Acquisitions................................................ 14-20§ 14:4 FCPA Enforcement Activity and Developments........... 14-21

§ 14:4.1 Whistleblower Rules Underthe Dodd-Frank Act............................................... 14-21

§ 14:4.2 Review of Enforcement Actions............................. 14-22[A] Generally ............................................................... 14-22[B] Some Significant Cases Brought by the DOJ

and the SEC .............................................................14-23[B][1] Braskem, S.A. .................................................... 14-23[B][2] JPMorgan .......................................................... 14-24[B][3] VimpelCom....................................................... 14-25[B][4] Alstom SA......................................................... 14-26[B][5] Avon Products Inc. ............................................ 14-27[B][6] Archer Daniels Midland.................................... 14-28[B][7] Weatherford International ................................. 14-29[B][8] Siemens AG ...................................................... 14-29[B][9] BAE Systems PLC ............................................. 14-30[B][10] Diebold Inc........................................................ 14-31[B][11] Marubeni Corporation ...................................... 14-32


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[B][12] Johnson & Johnson........................................... 14-33[B][13] BizJet International Sales and Support Inc. ...... 14-34[B][14] The Gabon “Sting” Prosecutions....................... 14-35[C] SEC Enforcement Actions Taken

Without the DOJ ................................................... 14-36[C][1] Eastern Europe .................................................. 14-36[C][2] Asia/South Asia ................................................. 14-37[C][3] South America .................................................. 14-39[C][4] Africa/Middle East ............................................. 14-40

§ 14:4.3 Trends.................................................................... 14-41[A] Individual Enforcement and the Yates Memo ....... 14-41[B] A Voluntary Disclosure Renaissance? DOJ’s

Enforcement Plan and Pilot Program .................... 14-43[C] Global Enforcement and Cooperation Remain

on the Rise as the UK Bribery Act Heats Up ........ 14-45[D] Unexpected Enforcers: Brazil and

Operation Lava Jato............................................... 14-48[E] The World Bank As an Anticorruption Agent....... 14-49[F] Judicial Scrutiny of Deferred Prosecution

Agreements............................................................ 14-49[G] Jurisdiction Over Foreign Nationals ...................... 14-50[H] Control Person Liability ........................................ 14-52[I] Sovereign Wealth Funds and the Financial

Services Industry ................................................... 14-53§ 14:5 Overview of FCPA Compliance Practice....................... 14-54

§ 14:5.1 Generally ............................................................... 14-54§ 14:5.2 Sources of Guidance .............................................. 14-55

§ 14:6 Conclusion ................................................................... 14-61

Chapter 15 Dealing with Parallel Actions

Steven Wolowitz & Christopher J. Houpt

§ 15:1 Introduction: Types of Parallel Actions........................... 15-2§ 15:2 Statutes of Limitations ................................................... 15-6§ 15:3 Use of Information Across Proceedings.......................... 15-8

§ 15:3.1 Disclosure of DOJ Involvement .............................. 15-8§ 15:3.2 Discovery ................................................................. 15-8§ 15:3.3 Sharing of SEC Investigative Material ................... 15-10§ 15:3.4 Access to SEC Files and FOIA Requests................ 15-11§ 15:3.5 Requesting Information from Government

Investigations ........................................................ 15-12§ 15:3.6 Grand Jury Secrecy and Criminal Procedure

Rule 6(e)(3) ............................................................ 15-13§ 15:3.7 Remedies for Government Misconduct ................. 15-14


xxxvi

§ 15:4 Waiver of Privilege ........................................................ 15-16§ 15:4.1 Generally ............................................................... 15-16§ 15:4.2 Waiver Demands by the SEC and DOJ ................. 15-16

[A] The Legislative Response—The FinancialServices Regulatory Relief Act and the ProposedAttorney-Client Privilege Protection Act................ 15-17

[B] The DOJ’s Revised Approach—The Filip Memo.....15-18[C] The SEC ................................................................ 15-20

§ 15:4.3 Scope of the Waiver ............................................... 15-21§ 15:4.4 Potential Waiver Assertions by

Defendants—SEC v. Gupta ................................... 15-23§ 15:5 Fifth Amendment Considerations................................ 15-24§ 15:6 Stays of Parallel Proceedings......................................... 15-25§ 15:7 Proceedings to Block Agency Actions—Gupta v. SEC.....15-28

§ 15:7.1 Subject Matter Jurisdiction and AdministrativeAdjudication .......................................................... 15-30

§ 15:8 Effects on Later Proceedings ......................................... 15-33§ 15:8.1 Disclosure of Evidence at Trial .............................. 15-33§ 15:8.2 Settlement Agreements.......................................... 15-33§ 15:8.3 Disclosure of Facts Underlying SEC

Settlements............................................................ 15-35§ 15:8.4 Collateral Estoppel................................................. 15-37

Chapter 16 Representing Individuals in SecuritiesInvestigations

Kelly B. Kramer & Justin A. McCarty

§ 16:1 Overview......................................................................... 16-3§ 16:2 Types of Investigations ................................................... 16-4

§ 16:2.1 Generally ................................................................. 16-4§ 16:2.2 SEC Investigations................................................... 16-4

[A] Generally ................................................................. 16-4[B] Matters Under Inquiry ............................................ 16-4[C] Informal Investigations............................................ 16-5[D] Formal Investigations .............................................. 16-6

§ 16:2.3 Criminal Investigations........................................... 16-7§ 16:2.4 Corporate Internal Investigations............................ 16-8

§ 16:3 Status of the Individual .................................................. 16-9§ 16:3.1 Generally ................................................................. 16-9

Figure 16-1 The Spectrum of Culpability ................................. 16-10§ 16:3.2 Determining the SEC ’s Perspective ....................... 16-10§ 16:3.3 Is There a Parallel Criminal Investigation?........... 16-12

[A] Generally ............................................................... 16-12[B] “Subjects” and “Targets” ........................................ 16-13[C] “Non-Subject” Letters ............................................ 16-13

(Securities Investigations, Rel. #7, 8/17) xxxvii

Table of Contents

§ 16:3.4 Interacting with Other Private Counsel ................ 16-14[A] Generally ............................................................... 16-14[B] Counsel for the Corporation ................................. 16-14[C] Counsel for Other Individuals............................... 16-18[D] Joint Defense Agreements ..................................... 16-18

§ 16:4 Investigation................................................................. 16-20§ 16:4.1 Generally ............................................................... 16-20§ 16:4.2 Client Interviews ................................................... 16-20§ 16:4.3 Witness Interviews ................................................ 16-22§ 16:4.4 Document Review ................................................. 16-23§ 16:4.5 Precedent Sources .................................................. 16-23

§ 16:5 Process Violations......................................................... 16-23§ 16:5.1 Generally ............................................................... 16-23§ 16:5.2 False Statements and Perjury ................................ 16-24§ 16:5.3 Obstruction of Justice............................................ 16-25§ 16:5.4 Zar Warnings ......................................................... 16-26§ 16:5.5 Reporting Obligations Under SEC Professional

Conduct Rules ....................................................... 16-27§ 16:6 Production of Documents ............................................ 16-28

§ 16:6.1 Document Preservation ......................................... 16-28[A] Maintain Record of Legal Advice ........................... 16-28[B] Maintain Record of All Steps Taken ...................... 16-28[C] Third Parties.......................................................... 16-29

§ 16:6.2 Personal Versus Corporate Records ....................... 16-29§ 16:6.3 Objections to Subpoenas ....................................... 16-30§ 16:6.4 Doe Immunity....................................................... 16-32§ 16:6.5 Preserving the Confidentiality of Documents

Produced to the Government ................................ 16-33[A] Generally ............................................................... 16-33[B] Grand Jury Proceedings ......................................... 16-34[C] SEC Enforcement Investigations ........................... 16-35

§ 16:7 Testimony..................................................................... 16-36§ 16:7.1 Generally ............................................................... 16-36§ 16:7.2 Right to Representation......................................... 16-36§ 16:7.3 Privileges................................................................ 16-38

[A] Generally ............................................................... 16-38[B] Fifth Amendment .................................................. 16-39[C] Attorney-Client...................................................... 16-42

§ 16:7.4 Immunity .............................................................. 16-42§ 16:7.5 Use Immunity: “Queen for a Day” ....................... 16-44§ 16:7.6 Obtaining the Transcript ....................................... 16-44

§ 16:8 Cooperation.................................................................. 16-45§ 16:8.1 Generally ............................................................... 16-45

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§ 16:8.2 Corporate-Government Cooperation:Employee Beware................................................... 16-46

§ 16:8.3 Types of Cooperation............................................. 16-49§ 16:8.4 Securing Cooperation Benefits............................... 16-50

§ 16:9 Legal Fees ..................................................................... 16-52§ 16:9.1 Indemnification and Advancement of Fees ........... 16-52§ 16:9.2 Insurance Coverage ............................................... 16-53

§ 16:10 Charging Your Client ................................................... 16-54§ 16:10.1 Indictment............................................................. 16-55§ 16:10.2 The Wells Process.................................................. 16-56§ 16:10.3 Settling with the SEC ............................................ 16-59

§ 16:11 Available Sanctions Against Individuals....................... 16-61§ 16:11.1 Cease-and-Desist Orders ....................................... 16-61§ 16:11.2 Financial Remedies: Disgorgement and Fines ....... 16-61

[A] Disgorgement ........................................................ 16-61[B] Fines ...................................................................... 16-62

§ 16:11.3 Director and Officer Bars....................................... 16-64§ 16:11.4 Criminal Penalties................................................. 16-64

[A] Imprisonment........................................................ 16-64[B] Financial Sanctions ............................................... 16-65

Chapter 17 Communicating with the Company’sAuditor in a Securities Investigation

Brian J. Massengill & Justin A. McCarty

§ 17:1 Introduction ................................................................... 17-1§ 17:2 Reasons for Disclosures to the Company ’s Auditor....... 17-2

§ 17:2.1 Management Representations in the AuditProcess..................................................................... 17-3

§ 17:2.2 Investigations Initiated by the Company ’sAuditor .................................................................... 17-5

§ 17:2.3 Obtaining Information and Assistance from theAuditor .................................................................... 17-7

§ 17:3 Work Product Protection and Waiver ............................. 17-7§ 17:3.1 Generally ................................................................. 17-7§ 17:3.2 Disclosure to the Company ’s Auditor Does Not

Typically Constitute Waiver..................................... 17-8[A] Cases Following Merrill Lynch............................... 17-10[B] The Deloitte Case Finds No Waiver ...................... 17-11

§ 17:4 Waiver of Attorney-Client Privilege .............................. 17-15§ 17:5 Practical Precautions to Protect Against Waiver ........... 17-16

(Securities Investigations, Rel. #7, 8/17) xxxix

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Chapter 18 Employment Issues in Securities Investigations

Marcia E. Goodman, Laura R. Hammargren,Christopher S. Comstock & Richard E. Nowak

§ 18:1 Overview......................................................................... 18-3§ 18:2 Investigative Techniques in the Workplace..................... 18-3

§ 18:2.1 Generally ................................................................. 18-3§ 18:2.2 Monitoring Employee Computer, Phone, Email,

and Social Media Usage .......................................... 18-3[A] Generally ................................................................. 18-3[B] Electronic Communications Privacy Act ................. 18-5[B][1] Generally ............................................................. 18-5[B][2] The Consent Exception....................................... 18-8[B][3] Business Extension Exception ............................. 18-9[B][4] The Service Provider Exception......................... 18-11[C] State Statutory Considerations.............................. 18-12[D] State Common Law Invasion of Privacy Claims... 18-13[E] Social Media Monitoring ....................................... 18-16[F] Practical Tips for Electronic Monitoring................ 18-21

§ 18:2.3 Video Surveillance ................................................. 18-21§ 18:2.4 Polygraph Tests ...................................................... 18-26§ 18:2.5 The Use of Pretext ................................................ 18-27

§ 18:3 The Effect of the Fair Credit Reporting Act UponWorkplace Investigations.............................................. 18-28

§ 18:3.1 Generally ............................................................... 18-28§ 18:3.2 Consumer Report Versus Investigative

Consumer Report .................................................. 18-29§ 18:3.3 FACTA Investigations into Employee

Misconduct............................................................ 18-30§ 18:3.4 Non-FACTA Investigations ................................... 18-30§ 18:3.5 Adverse Action Procedures .................................... 18-32§ 18:3.6 Employers’ Certifications to Consumer

Reporting Agencies ................................................ 18-33§ 18:3.7 Risks of Noncompliance........................................ 18-33§ 18:3.8 State and Local Laws ............................................. 18-34

§ 18:4 The Employee’s Duty to Cooperate ............................. 18-35§ 18:4.1 Generally ............................................................... 18-35§ 18:4.2 The Government’s Perspective on Cooperation ......18-35§ 18:4.3 Representation of the Employee ............................ 18-36§ 18:4.4 Employee Representation Rights ........................... 18-38

[A] Weingarten Rights ................................................. 18-38[B] Investigative Interviews in the Non-Union

Workplace .............................................................. 18-39§ 18:5 Indemnification and Advancement of Attorneys’

Fees During an Investigation........................................ 18-41§ 18:5.1 Generally ............................................................... 18-41

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§ 18:5.2 As Set Forth by the Documents ConcerningCorporate Governance........................................... 18-41

§ 18:5.3 As Set Forth by State Statutes ............................... 18-42§ 18:5.4 As Potentially Limited by Sarbanes-Oxley............. 18-44§ 18:5.5 Prosecutorial Considerations ................................. 18-46

§ 18:6 Termination or Suspension of Employees forWrongdoing .................................................................. 18-49

§ 18:7 Protection of Whistleblowers from Retaliation............. 18-51§ 18:7.1 Whistleblower Protection Under the

Sarbanes-Oxley Act................................................ 18-51§ 18:7.2 Covered Employers ................................................ 18-52§ 18:7.3 Covered Employees................................................ 18-54

[A] Employees Based Outside of the United States ..... 18-56[B] Employers Based Outside of the United States ..... 18-57[C] Independent Contractors ....................................... 18-58[D] Security Analysts ................................................... 18-58

§ 18:7.4 Protected Activity .................................................. 18-59§ 18:7.5 Remedies ............................................................... 18-63§ 18:7.6 Individual Liability ................................................ 18-65§ 18:7.7 Whistleblower Protection Under the

Dodd-Frank Act ..................................................... 18-66§ 18:7.8 Compliance Programs ........................................... 18-71

Appendices

Appendix A The Thompson Memorandum ..................... App. A-1

Appendix B The McNulty Memorandum......................... App. B-1

Appendix C1 Remarks by Deputy Attorney General—Revisions to Corporate ChargingGuidelines ...................................................App. C1-1

Appendix C2 Press Release—Revisions to CorporateCharging Guidelines....................................App. C2-1

Appendix C3 Department of Justice CorporateCharging Guidelines....................................App. C3-1

Appendix D The Seaboard Report .....................................App. D-1

Appendix E Recommended Practices .................................App. E-1

Table of Authorities .....................................................................T-1

Index ................................................................................................ I-1

(Securities Investigations, Rel. #7, 8/17) xli

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Preface to Second Edition

Chances are good that the reader ’s employer or client has been, is,or will be the subject of a securities-related investigation. In the wakeof the credit crisis, it seems that there are few, if any, governmentalagencies that have not promised to exact retribution on financialinstitutions and corporations by investigating more frequently, enfor-cing more aggressively, and punishing more severely. Today, some saythat the effectiveness of the agencies charged with regulating thesecurities markets appears to be measured not by the efficiency andpreeminence of the financial markets, but by a scorecard touting thenumber of investigations launched, the amount of fines collected, andthe years of incarceration obtained. In this highly charged environ-ment, it is critical to be in a position to anticipate the course of agovernment investigation and the motivations of all the various“stakeholders” who have an interest in the outcome of the investiga-tion. In the current climate of aggressive government investigationand prosecution of alleged business misconduct, it is therefore moreimportant than ever to have the expertise, judgment, and experience toconduct internal investigations and respond to investigations broughtby the federal government, state attorneys general, and regulators inthe United States, United Kingdom, Europe, and Asia.

This book is intended to be a reference source for practitioners whoneed to know not only the most recent law governing internal, civil,and criminal investigations involving potential violation of the secu-rities laws, but also the nuances and practical tips that can only beshared by lawyers deeply experienced in such investigations. Theauthors contributing to this treatise have collectively handled hun-dreds of securities law investigations and proceedings, ranging frominternal investigations of minor problems identified by robust corpo-rate compliance programs to high-profile criminal prosecutions. Theirexperience and guidance is set forth in these pages.

Many of the issues that practitioners face in securities investiga-tions, however, are not susceptible to an easy answer, and the judg-ment of even experienced counsel may differ about how to resolve, orrespond to, particular situations. We believe that among the greatestvalues of this treatise are the authors’ shared insights and judgmentsin addressing the complex and ever changing securities enforcementlandscape. We encourage readers to use the cross-references providedand to otherwise explore the multiple perspectives offered on a varietyof issues and situations in the different chapters of this treatise.

(Securities Investigations, Rel. #7, 8/17) xliii

In today ’s environment, moreover, securities investigations usuallydo not arise in isolation. Increasingly, individuals and institutions findthemselves facing parallel proceedings. Accordingly, we also discuss inthis book the considerations and strategies for practitioners whenfaced with intersecting regulatory proceedings, criminal investigationsand civil litigation.

Another phenomenon—the globalization of commerce—has beenmirrored by an increasing globalization of regulation and cooperationamong international authorities. It is therefore not only advisable, butnecessary, for lawyers to understand such matters as the extent towhich countries are participating in cross-border regulatory efforts,and the reach of anticorruption laws in the United States and abroad.This book has chapters devoted to those topics.

Of course, companies and their decision-makers have responsibili-ties not only to investors and the markets, but also to others such ascustomers and employees. The practitioner needs to understand thescope of, and the considerations for dealing with, one’s duties to theseconstituencies in connection with securities-related investigations.This book includes chapters on those topics as well.

Steven WolowitzRichard M. Rosenfeld

Lee H. Rubin

Mayer Brown LLP

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