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  • Historic Penalties For Cryptocurrency Exchange’s AML-Related Violations

    On November 21, 2023, the Cayman Islands registered cryptocurrency exchange, Binance Holdings Limited (the “Company”), pled guilty to criminal violations related to allegedly failing to register as a money transmitting business (“MTB”), failing to maintain an effective anti-money laundering program, and violations of the International Emergency Economic Powers Act (“IEEPA”).  In connection with its plea agreement with the Department of Justice, the Company agreed to pay $4.3 billion in penalty, including $1.8 billion as a criminal fine and $2.5 billion in disgorgement.  The Company’s founder also pled guilty to similar AML violations and agreed to resign as the Company’s Chief Executive Officer.
  • DOJ Announces Safe Harbor For Companies That Self-Disclose Misconduct Discovered During M&A

    On October 4, 2023, Deputy Attorney General Lisa O. Monaco announced a Department of Justice-wide safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions.  During her remarks at the Society of Corporate Compliance and Ethics’ 22nd Annual Compliance and Ethics Institute, the Deputy Attorney General said that the Safe Harbor provides companies with the presumption that the DOJ will decline criminal prosecution when they voluntarily self-disclose misconduct by companies they are acquiring or have recently acquired.
  • Sterling Bancorp Pleads Guilty To Criminal Securities Fraud

    On March 15, 2023, the Department of Justice (“DOJ”) announced that Michigan-based bank Sterling Bancorp, Inc. (“Sterling”) agreed to plead guilty to securities fraud for allegedly filing false statements relating to its 2017 initial public offering (“IPO”) and 2018 and 2019 annual financial reports. As part of its guilty plea, Sterling agreed to pay fines totaling $69 million, including $27.2 million in restitution to non-insider stockholders.
  • U.S. Investment Firm Enters $6 Billion Parallel Resolutions With DOJ And SEC Over Allegations Of Fraudulent Conduct By Employees And Related Control Failures

    On May 17, 2022, the U.S. Department of Justice (“DOJ”) and the U.S. Securities and Exchange Commission (“SEC”) announced parallel resolutions with a registered investment advisor (the “Advisor”), resolving criminal and civil securities fraud allegations concerning three portfolio managers’ concealment of downside risks associated with the Advisor’s trading strategy, “Structured Alpha,” and the failure to implement an adequate control function in the Advisor’s Structured Products Group.  United States v. AllianzGlobal Investors U.S. LLC, No. 1:22-cr-00279 (S.D.N.Y); Securities and Exchange Commission v. Tournant, Taylor, and Bond-Nelson, No. 1:22-cv-04016 (S.D.N.Y.).  Three related indictments of former portfolio managers of the Advisor whose conduct contributed to the Advisor’s settlement were also unsealed.  United States v. Gregoire Tourant, No. 22-cr-00276 (S.D.N.Y.); United States v. Trevor Taylor, No. 22-cr-00149 (S.D.N.Y.); United States v. Stephen Bond-Nelson, No. 22-cr-00137 (S.D.N.Y.).
  • U.S. Attorney General Announces Task Force To Target Russian Sanctions And Additional Resources For White Collar Enforcement

    U.S. Attorney General Merrick Garland made two announcements this week related to the enforcement of white-collar crime by both individuals and corporations.  First, on March 2, 2022, Attorney General Garland announced the launch of Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing sanctions, export restrictions, and economic countermeasures imposed against Russia in response to its military invasion of Ukraine.  Second, on March 4, 2022, the Attorney General discussed additional resources that the Department of Justice (“DOJ”) would devote to the prosecution of white-collar crime.
  • Second Circuit Reverses Conviction Of Two Traders Accused Of LIBOR Rigging Scheme, Finding Insufficient Evidence Of False Or Fraudulent Statements

    On January 27, 2022, the United States Court of Appeals for the Second Circuit reversed the convictions of two former traders convicted of wire fraud and conspiracy to commit wire and bank fraud, part of the widely-publicized series of prosecutions for allegedly manipulating the London Interbank Offered Rate (“LIBOR”).  US v. Connolly, No. 19-3806, 2022 WL 244669 (2d Cir. Jan. 27, 2022).  The Court held that although the government had offered evidence that the former traders had sought to impact LIBOR through their submissions, the government had failed to offer sufficient evidence that they did so through fraud.  Because the LIBOR instructions with which the submitters were required to comply called for a hypothetical rate at which the submitting bank could borrow funds, the Court held that if the rate submitted was one a bank could request, be offered, and accept, the submission, irrespective of its motivation, would not be false.  And, in this case, the Court found that there was no evidence that the submitted rates were false under that standard.  Thus, even if the conduct could be perceived as dishonorable, the Court held that the convictions had to be reversed.
  • DOJ Announces Major Policy Changes To How It Investigates And Prosecutes Corporate Crime, Signaling A Return To Tougher Enforcement And Individual Accountability

    On October 28, 2021, at the American Bar Association’s National Institute on White Collar Crime, Deputy Attorney General Lisa O. Monaco announced revisions to the Department of Justice’s policies, all designed to strengthen DOJ’s response to corporate crime.  Deputy AG Monaco outlined major policy changes focused on individual accountability, when cooperation credit will be given to corporations, how corporations’ prior history of misconduct will be evaluated, and when corporate monitors will be imposed.  Deputy AG Monaco said these changes were just the beginning of DOJ’s efforts to further incentivize corporations to embrace a culture of compliance, and she also announced the creation of a new DOJ Advisory Group that will focus on additional potential policy shifts.  Both were also discussed in DOJ’s Memorandum published the same day, titled “Corporate Crime Advisory Group and Initial Revisions to Corporate Criminal Enforcement Policies.”
  • Department Of Justice Announces Enhanced Efforts Towards White-Collar Crime Enforcement And Creation Of National Cryptocurrency Enforcement Team

    In back-to-back speeches last week, senior Department of Justice (“DOJ”) officials emphasized that the Department would devote additional resources and attention to white-collar enforcement actions, with a specific focus on enforcement in the cryptocurrency space.  These initiatives, which contemplate additional corporate enforcement actions, reflect a break from the prior administration’s criminal enforcement priorities, which tended to focus on immigration and violent crime offenses.
  • DOJ And SEC File Securities Fraud Charges Against Founder Of Company Acquired By A SPAC

    On July 29, 2021, the Department of Justice (“DOJ”) announced the unsealing of a criminal indictment against Trevor Milton, the founder, former CEO, and former Chairman of Nikola Corporation, a company that went public in March 2020 through a merger with a special purpose acquisition company (“SPAC”), for allegedly knowingly misleading investors about the company’s ability to build electric and hydrogen-powered vehicles and other green technology.  The SEC filed a parallel civil action against Milton based on the same facts.
  • Supreme Court Resolves Circuit Split On Meaning Of “Exceeding Authorized Access” In The Computer Fraud And Abuse Act

    On June 3, 2021, the United States Supreme Court’s decision in Van Buren v. U.S. clarified a controversial provision in the Computer Fraud and Abuse Act (the “CFAA”), which imposes civil and criminal liability on anyone who “intentionally accesses a computer without authorization or exceeds authorized access,” and thereby obtains computer information.  18 U. S. C. §1030(a)(2).  The Court held that “an individual ‘exceeds authorized access’ when he accesses a computer with authorization but then obtains information located in particular areas of the computer—such as files, folders, or databases—that are off limits to him” and rejected the prosecution’s broader reading of the CFAA.  In doing so, the Court resolved a circuit split.
  • UK Court Orders Aerospace Corporation Subsidiary To Pay £30 Million In Saudi Corruption Case

    On April 28, 2021, an Airbus subsidiary was ordered to pay more than £30 million ($41 million) after pleading guilty to one count of corruption for bribing senior Saudi Arabian officials between 2008 and 2010 in relation to a defense contract between the UK and Saudi Arabia for communications and electronic warfare equipment.  Last year, Airbus entered into one of the largest corporate resolutions in history with the UK Serious Fraud Office (“SFO”), the French Parquet National Financier (“PNF”), and the US Department of Justice (“DOJ”), settling allegations of bribery and corruption for a total payment of €3.598 billion plus interest and costs.  See Airbus Agrees Record-Breaking €3.6 Billion Settlement To Avoid Prosecution.  This year’s resolution, while far smaller, is yet another reminder that, even with the increasing global coordination among enforcement agencies, individual agencies will often resist resolving all open issues at a given moment.
  • Supreme Court Vacates And Remands Blaszczak Insider Trading Decision, Providing Opportunity For Further Clarity By Second Circuit


    On January 11, 2021, the Supreme Court vacated the Second Circuit’s decision in United States v. Blaszczak, 947 F.3d 19 (2d Cir. 2019), remanding the case to the Second Circuit for consideration in light of the Court’s decision in Kelly v. United States, 140 S. Ct. 1565 (2020).  In Kelly, the Supreme Court overturned the convictions of two New Jersey public officials in the Bridgegate scandal, holding that while the conduct at issue may have constituted an abuse of power, it did not amount to a violation of either the federal wire fraud statute or a violation of the federal program fraud statute because the object of the scheme was the implementation of a regulatory object, rather than to obtain money or property.  This may lead the Second Circuit to reverse or at least modify its December 2019 decision affirming convictions in Blaszczak, a decision that caused concern over its potentially significant expansion of insider trading liability.
  • Energy Company Agrees To Pay Over $150 Million To DOJ, CFTC, And Foreign Regulator To Resolve Coordinated FCPA Allegations

    On December 3, 2020, the U.S. Department of Justice (“DOJ”) announced that a Texas-based subsidiary of the Swiss energy trading company (“the Company”) had entered into a deferred prosecution agreement (“DPA”) pursuant to which it agreed to pay $135 million to resolve allegations that it conspired to violate the Foreign Corrupt Practices Act (“FCPA”) and to end a parallel investigation in Brazil.  The Company also agreed to pay more than $28 million to the Commodity Futures Trading Commission (“CFTC”) for related matters, in the first coordinated resolution between the DOJ and the CFTC in an FCPA matter. 
  • Supreme Court Overturns Third Circuit, Throws Out Bridgegate Convictions

    On May 7, 2020, the U.S. Supreme Court unanimously overturned a ruling from the United States Court of Appeals for the Third Circuit that upheld the convictions of two former New Jersey officials who were part of the 2013 “Bridgegate” scandal to realign lanes to the George Washington Bridge (“GWB”).  Kelly v. United States, No. 18-1059, 588 U.S. __, 2020 WL 2200833 (2020).  Writing for a unanimous court, Justice Kagan wrote that while the conduct at issue may have constituted an abuse of power, it did not amount to a violation of either the federal wire fraud statute or a violation of the federal program fraud statute because the object of the scheme was the implementation of a regulatory object, rather than to obtain money or property.
  • Second Circuit Reverses $18.5 Million Restitution Order For Lack Of Proximate Cause

    On December 3, 2019, the Second Circuit affirmed the convictions of two defendants for wire fraud and conspiracy to commit wire and bank fraud, but reversed the District of Connecticut’s order that defendants pay $18.5 million in restitution to the U.S. Department of Agriculture (“USDA”).  United States v. Calderon, No. 17-1956, 2019 WL 6482379 (2d Cir. Dec. 3, 2019). 
  • Second Circuit Amends Martoma And Reaffirms, But Arguably Still Weakens, Newman’s “Meaningfully Close Personal Relationship” Test In Insider Trading Cases Involving Tips

    On June 25, 2018, a divided three-judge panel of the Second Circuit amended its decision in United States v. Martoma. We previously reported on the facts of Martoma and the panel’s original decision, which held that the Supreme Court abrogated the “meaningfully close personal relationship” test articulated in United States v. Newman. See Shearman & Sterling LLP: Government/Regulatory Enforcement, Divided Second Circuit Panel Abandons Relationship Test From Landmark Newman Decision in Upholding Insider Trading Conviction (Aug. 29, 2017). The panel’s amended opinion, in contrast, holds that Newman’s “meaningfully close personal relationship” test is still valid for determining whether an insider tipper received a personal benefit (and thus breached a fiduciary duty), but also holds that the test will be satisfied upon a showing that (1) the “tipper and tippee shared a relationship suggesting a quid pro quo” or (2) “the tipper gifted confidential information with the intention to benefit the tippee.” United States v. Martoma, No. 14-3599, Dkt. No. 226 (2d Cir. June 25, 2018), at 5-6.

  • Seventh Circuit Upholds First Spoofing Conviction Against High-Frequency Trader

    On August 7, 2017, the Seventh Circuit upheld the conviction of Michael Coscia, founder of Panther Energy Trading LLC, for a market manipulation tactic known as “spoofing,” under Section 6c(a)(5)(C) and 13(a)(2) of the Commodity Exchange Act.  United States v. Coscia, No. 16-cr-3017 (7th Cir. Aug. 7, 2017).  Coscia’s conviction is the first of its kind under this statute, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 and prohibits “bidding or offering with the intent to cancel the bid or offer before execution.”  The Seventh Circuit rejected Coscia’s claim that the statute was unconstitutionally vague and found that Coscia’s conviction was supported by sufficient evidence. 

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  • DOJ And SEC File Parallel Criminal And Civil Insider Trading Charges Against Scientist Who Conducted Internet Searches On How To Avoid SEC Detection

    On July 12, 2017, both the Department of Justice (“DOJ”) and Securities and Exchange Commission (”SEC”) filed insider trading charges against a research scientist who allegedly traded upon confidential information obtained from his wife.  See Press Release, Manhattan U.S. Attorney And FBI Assistant Director Announce Insider Trading Charges Against Spouse Of Lawyer At International Law Firm, Rel. No. 17-213 (July 12, 2017), https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-and-fbi-assistant-director-announce-insider-trading-charges-0; Press Release, SEC Files Inside Trading Charges Against Research Scientist Aiming to Avoid SEC Detection, Rel. No. 2017-125 (July 12, 2017), https://www.sec.gov/news/press-release/2017-125.  The DOJ’s criminal complaint includes two securities fraud charges and one wire fraud charge, see United States v. Yan, 17-mag-5156 (July 12, 2017), while the SEC’s complaint charges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 14(e) of the Exchange Act and Rule 14e-3 thereunder.  SEC v. Yan et al., 17-cv-05257 (S.D.N.Y. July 12, 2017).