On April 4, FinCEN issued a proposed rule to amend the definitions of “broker or dealer in securities” and “broker-dealer” under the regulations implementing the BSA. Specifically, FinCEN proposed that the definitions be amended to “explicitly include funding portals that are involved in the offering or selling of crowdfunding securities pursuant to section 4(a)(6) of the Securities Act of 1933.” Intended to help prevent money laundering, terrorist financing, and other financial crimes, the amendments would require funding portals to implement policies and procedures reasonably designed to ensure compliance with the BSA requirements currently applicable to brokers or dealers in securities. Comments on the proposal are due by June 3, 2016.
On May 17, the SEC announced that a former company insider will receive between $5 million and $6 million for providing a “detailed tip” that led the agency to uncover securities violations. According to the SEC, without the whistleblower’s information, the violations would have been “nearly impossible” to detect. Since the SEC started its whistleblower program in 2011, the agency has awarded more than $67 million to 29 whistleblowers. The SEC’s most recent award is its third highest and follows a $3.5 million award announced last week.
On April 7, the SEC settled FCPA allegations with a Nevada-based operator of numerous hotel, resort, and casino properties in the United States and Asia. In a cease and desist order, the SEC found that the operating company violated the FCPA’s internal controls and books and records provisions related to activities in China and Macau. The SEC order alleged that the operating company made more than $62 million in payments to a consultant in Asia, without supporting documentation or appropriate authorizations, and at times continued to make payments to the consultant without being able to account for prior transfers.
The operating company consented to the SEC’s order without admitting or denying the charges and agreed to pay a $9 million dollar penalty. In addition to the penalty, the operating company agreed to obtain an independent monitor for two years to “review its FCPA-related internal controls, recordkeeping, and financial reporting policies and procedures and its ethics and compliance functions.”
Indiana Medical Device Manufacturer’s Deferred Prosecution Agreement with DOJ Extended for a Second Time
On March 25, an Indiana-based medical device manufacturer announced that the deferred prosecution agreement it entered into with the DOJ to settle FCPA charges in 2012 would be extended a second time. The company reported that the DOJ and SEC’s investigation into alleged misconduct in Brazil and Mexico, and into the company’s compliance program, was still ongoing.
The company settled FCPA charges with the DOJ and SEC in 2012 related to its conduct in Argentina, Brazil and China. As previously reported, the company disclosed in March 2015 that the deferred prosecution agreement it had agreed to as part of the settlement would be extended for one year because the company had discovered additional potential FCPA violations in Brazil and Mexico.
On March 23, the SEC announced that it settled FCPA allegations with a Switzerland-based pharmaceutical company, via a cease and desist order finding that the company violated the FCPA’s book and records and internal controls provisions related to activities in China. The SEC found that employees of two of the company’s Chinese subsidiaries gave money and gifts to Chinese health care providers at state-owned hospitals in order to boost sales. In some cases, the order found, the company’s employees created spreadsheets that linked payments to individual Chinese health care providers to increased sales of certain drugs and created a ranking system for the health care providers. Read more…