In the Press

FCPA enforcement actions often focus on corruption at the marketing and sales level, where life science companies have discovered a myriad of ways to improperly market and sell their products. However, Supreme Court rulings surrounding disgorgements suggest that companies improperly obtaining product approval are putting their entire product line at risk, regardless of how compliant their marketing and sales actions are once approved.

The 2017 unanimous Supreme Court ruling in Kokesh v. SEC stated that disgorgements are to be classified as punishments, and as a result, subject to the five year statute of limitations. Whereas previous enforcement actions were left to a wide timeline of transactions, the ruling severely limits that window leaving the SEC in a time-crunch to quickly scrutinize a company’s conduct in the five years immediately preceding disclosure. As a result, the SEC now has motivation to be much more aggressive with its “ill-gotten gains” calculations.

The increase in motivation married with the shortened window for enforcement could lead to trouble for any company under investigation having received improper regulatory approval within that five year period. In his latest article in Policy and Medicine,  Overseas Regulatory Approvals Bring Additional Risks, FRA Director, Mike Trahar, takes a look at past disgorgement calculations and discusses the importance of compliance at every stage of product development, especially regulatory approval.

Article one:

Risking the Pipeline: Fraud and Corruption during Research and Development

Article two:

Overseas Regulatory Approvals Bring Additional Risks

FRA Director, Simon Taylor, joined the panel Tackling illicit finance: Political rhetoric or a new priority for law enforcement? at GIR Live London Winter this month alongside Timothy Bowden, Dechert; James Brady, Cleary Gottlieb Steen & Hamilton; Jose Smith, Global Financial Crime Counsel, Barclays and Polly Sprenger, Katten Muchin Rosenman. FRA Director, Edward Nkune, also attended the annual event. Below are their key insights covering what was discussed throughout the day.

• Matthew Wagstaff, Joint Head of Bribery and Corruption, SFO, confirmed that waiver of privilege will be seen as a significant indication of cooperative conduct on the part of corporates who self-report
• The SFO are unlikely to follow the DOJ model of providing guidance on how compliance programmes will be assessed for the purposes of the adequate procedures defence. The SFO do not have a dedicated ‘compliance’ expert such as Hui Chen and would not be looking to appoint one
• SFO are strengthening their senior management team, particularly with regard to Intelligence and Case Development
• The Tesco acquittals were unexpected. The SFO were surprised that the trial judge took a very different view on the quality of the evidence, but it was stressed that the SFO take on difficult cases
• Unexplained Wealth Orders (“UWOs”) – there was a broad consensus that these are important new tools but are likely to be used only in exceptional cases
• The focus on money laundering and sanctions violations and the escalation in fines, penalties and remediation costs have forced banks to radically re-assess risk appetite for certain markets and jurisdictions. The Danske bank scandal will be another amplifier for this. Stemming the flow of ‘de-risking’ will require a combined effort centred on technological solutions, information sharing and improved regulator guidance

GIR Live London Winter

Wells Fargo CEO John Strumpf was named “2013 Banker of the Year” by American Banker Magazine. That same year, Carrie Tolstedt, head of Wells Fargo’s consumer banking division “The Community Bank”, was named “Most Powerful Woman in Banking”. In 2015, Strumpf beat Amazon’s Jeff Bezos to be named “CEO of the Year” by Morningstar Inc., and shortly after, in 2016, the company reported grossing over $90 billion in revenue. Wells Fargo had positioned itself at the top of the financial world and seemed poised to stay there. Less than a year later, allegations of widespread fraud and customer abuse knocked them from their seat at the top.

An aggressive sales initiative within “The Community Bank” at Wells Fargo led to strict daily sales quotas, leaving managers and employees fighting to hit their sales goals. Ultimately, accusations of fraud and customer abuse stemmed from allegations that employees had created accounts for existing customers without their permission. While many would look towards Wells Fargo’s compliance programs for answers, FRA’s Matt Bedan argues that it is just as important to look at the company’s culture. For example, in 2015, Wells Fargo had over 10,000 employees dedicated to organizational risk with plans to add even more. The company had extensive compliance infrastructure, confidential reporting lines, and senior level oversight. Lack of compliance resources could not be the source of blame for this scandal.

In this first article of a three-part series for The Anti-Corruption Report, FRA Manager Matt Bedan takes a close look at the culture within Wells Fargo. He discusses the aggressive sales initiative and the high-pressure environment that opened the door for fraudulent acts. The second article in the series will examine the incident through the lens of behavioral science with the final article providing practical advice for companies to incorporate lessons learned into their own compliance programs.

Read the first article in the latest  The Anti-Corruption Report.

A new study by a research agency has identified the globe’s ten best consulting firms for forensics and investigations. The list of top consultancies includes both generalists that have a leading investigations practice, as well as specialists that focus exclusively on topics such as corruption, bribery, fraud and other threats.

When it comes to hiring the services of consultants, according to Global Investigations Review, a platform dedicated to the world’s investigations scene, consultancy buyers eyeing a global partner should look no further than ten consulting firms that lead the way in service and customer excellence. Based on extensive research, the researchers pinpointed 10 consulting firms deemed most capable of successfully handling sophisticated cross-border government-led and internal corporate investigations.

FRA has been listed as one of the top 10 consulting firms for fraud, forensic and investigation services. Consultancy.org comments, “London-headquartered Forensic Risk Alliance (FRA) supports clients with financial investigations, regulatory compliance and data analytics. International offices are located in Europe (Paris, Helsinki and Zürich) and the United States (New York, Philadelphia, Rhode Island, Texas and Washington DC).”

All ten consulting firms are assessed by the researchers to have both a broad and deep client offering, spanning the fields of Anti-Corruption, Compliance & Ethics, Cybersecurity, Data Analytics, Data Governance and Compliance, eDiscovery, Forensic Accounting, Financial Investigations, Trade Agreements and Independent Oversight.

Read the complete article on Consultancy.org

FRA Principal, Derek Patterson, is joining the panel at GIR’s first Live event in Zurich. The event promises to bring together the best of private practitioners and in-house counsel to discuss topics at the forefront of investigations, white-collar crime and fraud.

Derek is on the panel ‘Resolving a cross-border investigation: making the right decisions and avoiding the pitfalls’. The panel will focus on resolving investigations and will discuss questions such as; how do you bring things to a satisfactory conclusion, how do you coordinate document collection across multiple jurisdictions, do you alert government regulators, how should you handle multiple government investigations and how can you best resolve government investigations across multiple jurisdictions.

Derek will be joined by Marc Mauerhofer, head of anti-money laundering and suitability at the Swiss Financial Market Supervisory Authority, Martina Berli-Stettler, head of litigation and investigations at Swiss bank Credit Suisse, and Lisette van Eenennaam, Deputy Head of Special Investigations and Senior Legal Counsel Integrity at ABB.

GIR Live Zurich