Posts Tagged ‘Securities and Exchange Commission’
Wednesday, September 29th, 2010

A former Securities and Exchange Commission lawyer is under consideration for the Utah U.S. Attorney nomination, the Salt Lake City Weekly reported.

Brent Baker (Parsons Behle & Latimer)

Brent Baker handled white-collar fraud cases during his 13 years at the SEC. He is currently a shareholder and member of the litigation department and securities litigation group at the law firm of Parsons Behle & Latimer in Salt Lake City. Read more about him here.

Baker declined comment to the news website, saying: “those kinds of decisions at the nomination process are left to the White House.” Scott Burns, a Republican and former county prosecutor from Iron County, Utah, is also reportedly under consideration for the U.S. Attorney post.

Utah Assistant U.S. Attorney David Schwendiman was once the leading candidate for the nomination. But the White House decided against nominating Schwendiman for the U.S. Attorney post last summer.

The White House and Rep. Jim Matheson (D-Utah), who recommended Schwendiman, have remained mum on why the Assistant U.S. Attorney did not get the nod.

Wednesday, September 22nd, 2010

A senior FBI official said Wednesday at a Senate hearing that the bureau will put one of its agents in a Securities and Exchange Commission office that handles tips, referrals and complaints sent to the federal regulatory agency.

FBI Assistant Director Kevin Perkins told members of the Senate Judiciary Committee that the bureau and the SEC recently agreed to put an FBI agent in the commission’s Office of Market Intelligence, as part of an effort to increase cooperation between the agencies on fighting financial fraud. Perkins joined Director Robert Khuzami of the SEC Division of Enforcement and Assistant Attorney General Lanny Breuer of the Justice Department Criminal Division to testify about their work to fight economic crimes since the enactment of the Fraud Enforcement and Recovery Act in May 2009.

“This cooperative effort on the part of both organizations will allow for much better coordination with regard to the referral of potential criminal activity in securities markets,” Perkins said.

Khuzami said the SEC is also offering new incentives to insiders who come forward with information about economic crimes.

The commission is offering reduced sanctions for company insiders who help with financial fraud investigations. The SEC is also creating a Whistleblower Office within the Office of Market Intelligence, which was established earlier this year. The Dodd-Frank Wall Street Recovery and Reform Act, which became law in July, gave the commission the ability to offer significant awards to whistleblowers of financial fraud.

“Those … two efforts should do a lot to get us earlier information on the inside while a scheme is unfolding,” Khuzami said. “That’s the best way to get as high up in the organization as we can.”

Sen. Ted Kaufman (D-Del.) in December at a similar hearing expressed frustration about the dearth of high-profile prosecutions tied to the 2008 financial meltdown. The senator reiterated his disappointment at the hearing Wednesday.

Breuer said the DOJ and its law enforcement partners are committed to fighting financial fraud at all levels. He said the DOJ has targeted “thousands” of fraudsters, including corporate executives in the last year.

“We have doubled our efforts to send a strong, deterrent message to would-be fraudsters by vigorously prosecuting these criminals and sending them to jail,” Breuer said.

Thursday, February 25th, 2010

Since arriving on the job last year, Securities and Exchange Commission head of enforcement Robert Khuzami has battened down the agency’s enforcement hatches in a much-publicized effort to prevent another Bernie Madoff-like scandal. An important sideline to Khuzami’s quest is the creation of five new investigative units, including a Foreign Corrupt Practices Act unit headed by longtime Associate Director Cheryl Scarboro.

The SEC’s FCPA practice has never lagged, necessarily—its handling of the oil for food scandal, for example, resulted in over $150 million settlements by a dozen companies. But the investigative unit introduces a new concept to what formerly was a highly regionalized squad of FCPA enforcers: a centralized braintrust in Washington that, according to Scarboro, will create a leaner, meaner enforcement team modeled heavily after that at the DOJ.

Cheryl Scarboro (SEC)

In a recent interview with Main Justice, Scarboro talked about centralization and other related topics.

Main Justice: Robert Khuzami recently explained that one reason he set up the FCPA investigative unit is because the agency needed to be more “proactive” in FCPA investigations. In your opinion, where were the lapses? How weren’t you being ‘proactive’?

Cheryl Scarboro: What I would say is that we have been proactive in the past in these investigations. For example, there have been several investigations that have resulted from our independent work—industry wide practices we’ve investigated and brought to resolution. The oil for food matter is a good example. There was $150 million in relief, settlements with a dozen companies.

But the new unit will give us the resources and the ability to do even more going forward. People on the ground will be focusing exclusively [on FCPA investigations], making them smarter about industry practices problem areas. We will be able to leverage resources and leads we get from others

There are ongoing investigations exactly like oil for food: not just concerning one company, but looking beyond into widespread practice in particular areas. I would expect filed cases in the short term, in a matter of months. These cases will be an illustration of what we’ve already been doing. But the new unit will allow us to do even more of it. We have areas and industries we are focusing on—pharmaceutical is one.

MJ: Can you give an example of how the ‘old’ FCPA strategy in action, and how it may have come up short?

CS: We’ve been very active and successful in this area already. There are some things the unit will allow us to do that will improve upon how we approach these complex cases, which are difficult to detect. Corruption itself is something that can have serious negative impacts here and abroad: the lack of a level playing field, the extortion of prices. I don’t like to characterize our work in terms of shortcomings, but rather, in terms of building upon what we’ve done in the past, and being quicker and smarter.

One basic principle: the people doing these cases will be focusing exclusively on them. They will really learn this area of the law, the mechanisms used to pay and conceal bribes, the problems and industries around world. Every time get we smarter on that, we are able to identify the next investigation that much quicker. There are lots of hurdles in conducting international investigations. Once you’ve done that once you’ll be able to do it much faster next time.

Beyond that, people become much more creative about their investigations as they become experts in that subject area. We will have a thinktank here of people working together who are able to share ideas easier, all focusing on the same goal. We’ll be able to share our concepts, ideas, findings…there are lots of different ways how having a group of people here [in Washington] looking at problems [in SEC regional offices] around the country will make us better at our job.

That said, I expect members of the unit will not just be here but in other regional offices, that I expect will continue to play a role in terms of investigating FCPA. But those will be coordinated here. The office itself will be centralized, in constant communication, collaborating on training and ideas, working on cases.

In the past, there was no one person who was aware of what everyone was investigating. That will change. I will be the point person for all investigations: which we do, how we do them, how we resolve them.

When a case is opened at a certain time involving a certain region or industry, there will be a mechanism for everyone else doing these kinds of cases to know about it, and leverage off it better by being more coordinated. Settlements, resolutions, approaches to investigating…all these will be more consistent. There will be a program in place to ensure that consistency, so we know what everyone else is doing. I’m not saying that didn’t happen before, but its easier to do with a dedicated group of people working together on a regular basis.

MJ: It sounds like you’re modeling the unit after the DOJ?

CS: We’re different organizations, we’re structured differently: DOJ uses prosecutors, FBI agents, focuses on criminal side, does all its work in DC. But yes, the DOJ has a centralized FCPA practice in one office, and there are great benefits. I think we’ll see similar benefits: a central place to go to report potential wrongdoing. There will be a wealth of knowledge people will gain by doing these through the unit. That’s something we’ve seen at DOJ. I expect to see similarities in terms of the benefits.

We have a close working relationship with DOJ. We investigate most FCPA cases jointly. If you were to look at an announcement of an FCPA settlement or the filing of an action, you’ll see DOJ and SEC announced on the same day. It’s not unusual for civil and criminal cases to be brought simultaneously. Global resolutions make a lot of sense. Companies under investigation take account of what each of us are doing and putting together a package simultaneously makes a lot of sense. I can’t get into the heads of defendants who come and say they want to get it all over with and settle at one time. But clearly, defendants report potential misconduct to both agencies at the same time. That’s just the way it works.

MJ: What kind of cooperation do you have with foreign regulators?

CS: It’s a good relationship. Obviously it depends. Siemens is great example in which we worked well with our German criminal counterpart and brought what I thought was a strong global resolution that resolved things here and abroad at the same time. That’s something we’d like to do more of. There are many ongoing investigations in which we’re working with foreign regulators. We have MOU’s [memorandum of understandings] with a number of countries, enabling us to gather bank records. We have other countries focusing hard on the enforcement of anti-bribery laws, providing assistance when needed. There are about 38 countries that are part of OECD [the Organization for Economic Cooperation and Development]. We work closely with them. Certain countries we want to step up in terms of enforcement efforts. I won’t go into detail, but countries are at varying stages in terms of enforcement and we will continue to encourage them to do more.

MJ: Can you give an example of the new strategy in action? Have changes borne fruit yet?

CS: Well, staffing of unit is still underway. It’s oo early to state changes. I expect it will happen very soon. Interviews are ongoing over the next couple months We’re interviewing a mix of internal and external prospects. I expect to go to outside and get experts in this area.

MJ: What about the new deferred prosecution and non-prosecution agreements—which appear modeled after those at DOJ—and the new standards for cooperation from individuals, or “Seaboards”?

CS: We want to have an array of possible outcomes depending on different factors, like the level of cooperation provided [by a company]. This policy will give us even more options as it relates to that.

As for the Seaboards, they are offer more flexibility in terms of resolutions with individuals, and also in the gathering of evidence of misconduct and the incentives to do this.

In next month, I do expect announcements of cases that fit what I’m talking about.

Friday, August 21st, 2009
B. Todd Jones (Robins, Kaplan, Miller & Ciresi)

B. Todd Jones (Robins, Kaplan, Miller & Ciresi)

Minnesota U.S. Attorney B. Todd Jones intends to name as his deputy a prosecutor who clashed with Rachel Paulose, the brash young Bush administration official who once ran the office, a person familiar with his plans told Main Justice today.

Assistant U.S. Attorney John Marti, a line prosecutor in the office, also served as Paulose’s First Assistant. But she demoted him in April 2007 after he reported her for mishandling classified documents. Paulose’s 20-month tenure marked a period of intense turmoil in the Minneapolis-based office, and she became a symbol of the Bush Justice Department’s tendency to promote prosecutors based on ideology instead of competence.

Rachel Paulose (USDOJ)

Rachel Paulose (DOJ)

The U.S. Office of Special Counsel, an executive branch agency that deals with whistle-blower cases, determined last year that Paulose retaliated against Marti. ”Based on considerable evidence of intent, animus, and motive, OSC concluded that Ms. Paulose constructively demoted” Marti for reporting her conduct to Justice Department officials, according to a news release announcing the findings.

The Justice Department reached an agreement with Marti after the OSC investigation. He was given back pay and a lump-sum payment for damages. The department also agreed to remove any negative references from his personnel records.

Two other lawyers in the office resigned their management positions in protest of her policies and management style, and more threatened to defect if Paulose remained at her post. She resigned as U.S. Attorney in November 2007 after spending less than 20 months as Minnesota’s top federal prosecutor. Paulose was appointed by then-U.S. Attorney General Alberto Gonzales as an interim U.S. Attorney, at the age of 32. The Senate later confirmed her in December 2006.

Her predecessor, Tom Heffelfinger, was on a list of U.S. Attorneys slated for firing compiled by Kyle Sampson, Gonzales’ chief of staff. Heffelfinger, however, resigned before the firings.

Paulose is now a senior trial counsel in the Securities and Exchange Commission’s Miami regional office. Read Main Justice’s report about her new gig here.

Jones, a former Minnesota U.S. Attorney during the Clinton administration, is the first Senate-confirmed U.S. Attorney for the office since Paulose. He was sworn into office last week.

U.S. Attorneys typically change some of the leaders in their offices after they are sworn in.

Marti did not return a phone call seeking comment.

Joe Palazzolo contributed to this report.