Corruption Crime & Compliance – Détails, épisodes et analyse

A New York federal district judge handed down a significant decision dismissing much of the SEC's securities fraud enforcement action against SolarWinds arising from its claims relating to SolarWinds' cybersecurity policies and disclosure of a significant cyberattack against the SolarWinds' network. In this episode of Corruption, Crime, and Compliance, Michael Volkov discusses the significant dismissal of most of the SEC's securities fraud claims against SolarWinds by a New York federal district court. The case highlights the ongoing challenges in balancing cybersecurity disclosures with regulatory requirements, and the implications this ruling might have for future SEC enforcement actions.



You’ll hear him discuss:

• Judge's Decision: The court ruled that the SEC's claims were overly reliant on hindsight and speculation, particularly regarding SolarWinds’ early-stage disclosure during the investigation of cyber incidents.
• Pre- and Post-Sunburst Disclosures: While the court upheld charges related to SolarWinds' pre-Sunburst cybersecurity statements, it dismissed the SEC’s claims about the company’s post-Sunburst disclosures, finding them not misleading under the circumstances.
• Internal Controls vs. Cybersecurity: The court rejected the SEC's attempt to apply internal accounting controls provisions to cybersecurity policies, marking a significant limitation on the SEC's enforcement scope.
• Implications for SEC's Approach: This decision contradicts the SEC's previous stance in cases like R.R. Donnelly, potentially influencing future SEC actions regarding cybersecurity and internal controls.
• Broader Impact: The ruling may affect how cybersecurity risks are reported and how companies manage their disclosure obligations, particularly in light of potential appeals and further litigation by the SEC.

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

Have you heard of the recent controversies around Boeing 737 MAX and its safety? Have you wondered what is being done about the concerns around it? In this episode of Corruption, Crime, and Compliance, Michael Volkov delves into the latest developments in the Boeing 737 MAX case, highlighting the recent plea agreement proposed by the Department of Justice (DOJ). The Boeing 737 MAX case took another dramatic turn. On July 24, 2024, the Department of Justice filed with the United States District Court for the Northern District of Texas a proposed plea agreement with Boeing. Under the Plea Agreement, Boeing will plead guilty to the original Information filed in 2021 with the Deferred Prosecution Agreement ("DPA"). The discussion focuses on Boeing's alleged failure to implement adequate compliance measures, leading to significant risks and violations, and the ongoing legal and ethical implications of the case. Tune in to hear a detailed analysis of the complexities and legal ramifications of Boeing’s recent plea agreement and what it means for corporate compliance and accountability.

You’ll hear him talk about:

• Certification Issues: Boeing failed to ensure its 737 MAX certifications were accurate, risking false certifications to the FAA.
• DOJ Plea Deal: Boeing agreed to plead guilty to conspiracy to defraud the U.S., facing opposition from victims' families who find the resolution insufficient. The plea agreement, which has been filed under Federal Rule Criminal Procedure 11(c)(1)(C), requires the Court to approve and accept the deal. The Court can reject the plea deal and require the parties to renegotiate the terms.
• Victims’ Rights: The proposed resolution has been controversial because of the opposition of the families of the victims, who have opposed the plea agreement and general disposition of DOJ's investigation and prior resolutions as insufficient to vindicate the public interest and their rights as victims of Boeing's malfeasance
• Compliance Failures: Boeing breached its DPA by not implementing effective compliance controls, particularly in safety and quality processes.
• Independent Monitor: Boeing will be monitored for three years and must invest $455 million in compliance and safety improvements.
• Ongoing Challenges: Boeing’s anti-fraud measures still have gaps, with broader implications for industries where safety is critical.

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

With the beginning of the “New FCPA” era coined by DOJ’s Deputy Attorney General Lisa Monaco, we now need to focus on third-party risk and sanctions enforcement. The law, the practice, and the risks are important and not just the same as FCPA legal requirements. As we embark on a new criminal enforcement era surrounding sanctions violations, companies have to address this issue and do it correctly. 

In this episode, Michael Volkov takes a comprehensive look at third-party risks from the distribution and supply sides and outlines appropriate strategies to manage these risks.

• Epsilon Electronics serves as a stark reminder of the financial consequences of non-compliance. The company faced an OFAC enforcement action due to a shipment to Iran, resulting in a staggering penalty of over $4 million.
• Apollo Aviation Group settled with OFAC for $210,600 for leasing aircraft engines which ultimately ended up being placed in to aircraft of a prohibited entity, Sudan Airways, violating sanctions regulations.
• ELF Cosmetics settled with OFAC for $996,000 for importing false eyelash kits containing materials sourced from North Korea, highlighting supply chain due diligence failures.
• The ELF Cosmetics case underscores the crucial role of supply chain due diligence in preventing sanctions violations. Instead of sticking their heads in the sand, companies must undertake basic supply chain due diligence when sourcing products from regions close to high-risk countries or regions.
• “Reason to know” is now the key phrase guiding the New FCPA era. OFAC does not need to prove goods ultimately end up in a sanctioned country. When you see red flags, you must resolve them or they could be considered a “reason to know” in OFAC’s eyes.
• Seven essential elements to boost your compliance program and effectively mitigate third-party sanctions risks include risk assessment, varying levels of due diligence, end-user documentation, monitoring, training, and red flag identification.

Resources

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

The Justice Department ended its FCPA enforcement drought by announcing its first corporate settlement in 2022. In a parallel action, the SEC announced its settlement with Stericycle for $28 million for FCPA violations. The SEC’s settlement was its second with a company for 2022 (the first was KT Corp.).

Under the settlement, Stericycle resolved investigations being conducted by the Department of Justice, the Securities and Exchange Commission and Brazil. Stericycle agreed to enter into a three-year deferred prosecution agreement and pay more than $84 million. Stericycle will pay $52.5 million in criminal penalties, $28 million to the SEC in civil penalties and disgorgement, and approximately $9.3 million to Brazilian authorities. DOJ agreed credit up to one-third of the criminal penalty against fines the company pays to Brazil authorities.

Significantly, the DPA requires Stericycle to obtain an independent compliance monitor for a two-year period and then submit a self-report for the rest of the DPA term. 

Stericycle is a global waste management company which is headquartered in Illinois. In its factual admission, Stericycle admitted a wide ranging scheme involving payment of bribes to foreign officials in Brazil, Mexico and Argentina. In total, Stericycle paid approximately $10.5 million in bribes to foreign officials in Brazil, Mexico and Argentina to secure business contracts from which Stericycle profited by at least $21.5 million.

In this Episode, Michael Volkov reviews the Stericycle FCPA enforcement action.

In this Episode Tom Fox and Mike Volkov review recent DOJ trial successes and stumbles -- Tom and Mike review DOJ trial strategy, successes and failures and approach of the antitrust division.

OFAC recently announced a settlement with OFAC for $78,750 for violations of the Ukraine-Russia Sanctions Program. The enforcement action provides important reminders relating to compliance with various "deby" maturity restrictions and how OFAC construes this restriction.

In this Episode, Michael Volkov reviews OFAC's enforcement action against S&P Global.

The SEC is a very busy agency. While promising more aggressive enforcement of securities rules, the SEC has issued two set of comprehensive rule amendments. The first proposes new rules governing cyber incident reporting, disclosures and governance. In the second major policy action, the SEC issued its long-awaited rules governing climate change and greenhouse gas emissions.

in this Episode, Michael Volkov reviews the two proposals.

The Antitrust Division’s Assistant Attorney General Jonathan Kanter promised a new era in antitrust enforcement. He won bi-partisan support from both Republicans and Democrats. Across the antitrust field, he promised aggressive merger enforcement, civil enforcement against digital markets, and constraint of market power in numerous industries. AAG Kanter promised a new approach and he is delivering.

In this Episode, Michael Volkov reviews two recent speeches and enforcement efforts by DOJ's Antitrust Division.

In another indication of DOJ's aggressive approach to enforcement of sanctions against Russia, DOJ announced the indictment of a TV producer for violations of the Crimea-Related Russian sanctions program. As outlined in the indictment, Jack Hanick, a former Fox News executive, was indicted for a sanctions violations stemming from his long-time relationship with a prohibited Russian oligarch (Specially Designated National) relating to the creation and promotion of the Russian Television Network.

In this Episode, Michael Volkov reviews DOJ's indictment and the facts surrounding Hanick's conduct.

The continuing crisis in Ukraine has resulted in additional sanctions and export controls. It is hard to keep up with new developments each day. In recent steps, the United States has adopted a comprehensive set of export controls and implemented a ban on import of Russian oil, gas and coal.

In this Episode, Michael Volkov reviews the recent changes to the Russia sanctions and export controls.