Public Policy Bulletin

Public Policy Bulletin

A Washington insider's view on policy and politics.

$55 million in Fines for FCPA Violations; Clinical Diagnostic and Life Science Research Company Self-Disclosed Misconduct

Posted in Foreign Affairs / Defense
Mike GillEdward GoetzCari Stinebower

On November 3rd, the Securities and Exchange Commission (SEC) charged Bio-Rad Laboratories, a clinical diagnostic and life science research company, based in California with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand in order to win business.  The company agreed to pay $40.7 million in disgorgement and prejudgment interest to the SEC.

In a parallel action, the U.S. Department of Justice (DOJ) announced the company will pay $14.35 million in criminal fines for falsifying its books and records and failing to implement adequate internal controls in connection with sales it made in Russia.  The department entered into a non-prosecution agreement with the company due, in large part, to Bio-Rad’s self-disclosure of the misconduct and full cooperation with the department’s investigation.

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Crowell Attorneys’ Views on Swap Margin Rules Featured in Law360

Posted in Financial Services
Richard HolbrookJenny E. CieplakEric Edwards

In September, the Federal Reserve and other prudential regulations and the CFTC re-proposed regulations to implement Dodd-Frank Act requirements for the margining of uncleared swaps—in some cases making significant changes to previous proposals made in 2011. The new rules raise a number of issues that Chief Compliance Officers need to understand, and Crowell & Moring attorneys Richard Holbrook, Jenny Cieplak, and Eric Edwards have authored an article in Law360 that provides an introduction to the new rules and suggests some questions CCOs need to be able to answer about their operations. The article covers when and with which counterparties margin must be posted, how margin is calculated, and what the new regulations may mean for the murky issue of cross-border application. The authors warn “these regulations may significantly reshape the market for uncleared swaps by making trading in them increasingly regulated and much more expensive.”

Click to access the PDF, “Proposed Margin Rules For Uncleared Swaps Will Be Costly.”

Commerce Department Schedules ‘Advisory Committee on Supply Chain Competitiveness’ Meeting for Sept. 10th and 11th

Posted in Commodities
Edward Goetz

The next meeting of the Commerce Department’s ‘Advisory Committee on Supply Chain Competitiveness‘ is scheduled for September 10th (1 – 3 pm) and 11th (9 am – 4 pm) in Washington, D.C.  Both meetings are open to the public on a first-come, first-served basis.  Interested parties who wish to submit written comments for consideration by the Committee in advance of the meeting should do so by emailing supplychain@trade.gov no later than September 3rd.

Under consideration are major-competitiveness related topics, including trade and competitiveness; freight movement and policy; information technology and data requirements; regulatory issues; and finance and infrastructure.

The purpose of the Committee is to advise the Secretary of Commerce on the necessary elements of a supply chain that supports U.S. export growth and national economic competitiveness.

The final agenda will be posted here at least one week prior to the meeting.

Advisory Committee meetings such as this one provide industry direct contact with government officials who understand their issues and concerns.  Crowell recommends interested clients take advantage of this opportunity and reminds them that Crowell’s attorneys are available to advise and assist them in how to best advocate their positions on supply chain matters.

Treasury Proposes New Transparency Rule to Identify “Beneficial Owners” of Accounts – Comments Due October 3rd

Posted in Financial Services
Cari StinebowerEdward Goetz

The Financial Crimes Enforcement Network (“FinCEN”), published a Notice of Proposed Rulemaking (“NPR”) to amend the Bank Secrecy Act (“BSA”) with a new Customer Due Diligence (CDD) requirement for certain Financial Institutions (“FI”) to identify and verify the identity of beneficial owners of legal entity customers.  This long-awaited NPR is the result of the Announced Notice of Proposed Rulemaking, published on February 29, 2012, and subsequent industry sector round tables in order to strike a balance between law enforcement’s desire for additional beneficial ownership information and a reasonable burden on financial institutions to collect and maintain additional beneficial ownership information.  Treasury Secretary Jack Lew acknowledged the NPR sounds very technical, but that it is necessary because “banks and brokerages often do not know the identity of the people behind the businesses that open accounts.”  He added, “This makes it easier for financial criminals, terrorist financiers, and sanctions busters to move and launder their dirty money through anonymous shell companies, front companies, and other types of legal entities.”  This NPR is the result of much outreach with the private sector through industry round tables and is intended to establish a single set of requirements rather than leaving the CDD process up to individual industry sectors to develop and define.

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OFAC Changes Its Mind on Aggregate SDN Ownership

Posted in Foreign Affairs / Defense
Cari StinebowerDj Wolff

On August 13, 2014, the Office of Foreign Assets Control (“OFAC”) updated its 2008 guidance regarding how to treat entities potentially owned or controlled by Specially Designated Nationals (“SDNs”).  While the new guidance confirms several longstanding OFAC positions, it also reverses OFAC’s recent guidance with respect to how to address the aggregation of SDN ownership interests in an entity.

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FinCEN Updates List of Jurisdictions with Anti-Money Laundering and Counter – Terrorist Financing Deficiencies

Posted in Financial Services, Foreign Affairs / Defense
Edward Goetz

The Financial Crimes Enforcement Network (“FinCEN”), on August 5, 2014, updated its list of jurisdictions with Anti-Money Laundering (“AML”) and Counter-Terrorist Financing (“CTF”) deficiencies.  U.S. Financial Institutions (“FI”) should review this update to ensure their compliance programs are adequate when conducting transactions in the identified countries.

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Defense Panel Calls for Base Closures, Shifting DoD Budget to Boost Active Duty Force, R&D and Procurement

Posted in Foreign Affairs / Defense
Edward Goetz

A congressionally mandated report from the National Defense Panel, 10 members appointed by the House and Senate Armed Services Committee, paints a gloomy picture of the impact of current force cuts and advocates for base closures, reducing the growth in military health care spending, and cutting DoD civilian and contractor positions.  The panel believes the cost savings from these politically unpopular measures should then be funneled into reversing investment shortfalls in military readiness and present and future capabilities.

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Treasury Secretary Lew Calls for Retroactive Legislation to End Corporate Inversions

Posted in Budget / Appropriations / Taxes, Financial Services, Foreign Affairs / Defense
Edward Goetz

In a Washington Post op-ed this week, Treasury Secretary Jack Lew appeals to Congress to eliminate the practice of inversion, whereby a U.S. company acquires a foreign company and then uses its foreign address to claim tax status outside the United States.  Secretary Lew notes that many recent media articles have reported a significant number of deals of this type are in the works.

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SEC Charges Smith & Wesson with FCPA Violations; Company Agrees to Pay $2 million in Fines

Posted in Financial Services, Foreign Affairs / Defense
Edward Goetz

On July 28th, the Securities and Exchange Commission (SEC) charged Smith & Wesson Holding Corporation with violating the Foreign Corrupt Practices Act (FCPA) when employees and representatives of the U.S.-based parent company authorized and made improper payments to foreign officials in an attempt to win firearm contracts involving military and law enforcement agencies overseas.  The company agreed to pay $107,852 in disgorgement, $21,040 in prejudgment interest, and a $1.906 million penalty.  Smith & Wesson consented to the order without admitting or denying the findings.

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