FINRA Publishes New Sanction Guidelines Urging Harsher Penalties for Violations

This post was also written by Kiran Somashekara.

The Financial Industry Regulatory Authority’s (FINRA’s) National Adjudicatory Council (NAC) released updated Sanction Guidelines on May 12, 2015, for use in adjudicating disciplinary proceedings involving FINRA member firms and associated brokers. The updated Sanction Guidelines provide for tougher sanctions for violations of FINRA rules. FINRA explained that the Guidelines “harmonize the Sanction Guidelines with the current state of the cases in this area,” but are not meant to prescribe fixed sanctions for particular rule violations. The updated Sanction Guidelines are immediately effective and applicable to all disciplinary matters as well as ongoing investigations and negotiations with FINRA’s Enforcement Department.

Click here to read the full issued Client Alert.

Board of Directors: Guide to Cybersecurity Oversight

Cybersecurity and data breach risk were prominent subjects at the 35th Annual Ray Garrett Corporate and Securities Law Institute held on April 30, 2015 at Northwestern Law School in Chicago. Reed Smith partner Mark Melodia, along with several other panelists, engaged in a lively discussion of effective board oversight of cybersecurity challenges facing their companies during a panel addressing Cybersecurity and Data Breach: The New Reality for Directors and Those Who Advise Them. Notably, this was the first time that cybersecurity issues were the sole focus of a Garrett Institute panel.

Click here to view the full post on our sister blog, Technology Law Dispatch.

State AGs’ Interest in Privacy and Cybersecurity – No End in Sight – REDUX (or, if you prefer, we told you so…)

Reed Smith has closely followed State AGs’ interest and activities of in the areas of privacy and cybersecurity and recently blogged on a major NAAG (National Association of Attorneys General) conference in April on these topics. That conference, sponsored by the Mississippi AG, was meant to educate AGs – most of whom are the elected consumer protectors-in-chief in their states – on the complex issues of data loss and misuse as well as evolving privacy standards.  The conference resulted in several key takeaways from the conference, including that AGs were likely to double down on privacy enforcement and regulatory change.

Click here to read the full post on our sister blog Technology Law Dispatch.

The UK shines a spotlight on enablers of organised crime

From 3 May 2015, businesses in the UK will face new risks as a reform in the law will mean that those enabling the criminal activities of an organised crime group, including professionals, can be prosecuted more easily. It is important that all businesses are alive to the risk of not asking questions, or of failing to reconsider the wider context of their work once a suspicion arises.

To find out more about the impact this new change in the law could have on you and your business, click here to read the full issued Client Alert.

Football Bribery: Jail for Ex-players and middlemen

A former professional football player, Delroy Facey, has been convicted and imprisoned for offences under the UK Bribery Act. The BBC reports the conviction and sentence here.

If you love sport it’s a sad story. Facey was a decent striker who, at one time, was considered good enough to play for Bolton Wanderers, then in the Premier League. He made 10 appearances for Bolton. However, his star faded early and he went through a litany of lower-league clubs via a series of loans or releases (West Brom, Huddersfield, Tranmere, Notts County, Lincoln City) until ending up at non-league Albion Sports.

At some point, Facey became a football agent. He fell into a relationship with a group who wanted to fix matches in order to profit from betting markets. Facey and another footballer were to identify players amenable to being bribed. Unfortunately for the fixers, the National Crime Agency had been tipped off and surveillance revealed powerful evidence of a conspiracy to pay off players in lower-league matches, so that certain results could be achieved.

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Reed Smith’s Government Contracts Weekly Rundown

Here is a rundown of last week’s top developments related to government contracts to get you back on track and ready for this week.


On April 23, Defense Secretary Ash Carter unveiled the Defense Department’s second cyber strategy to guide the development of DoD’s cyber forces, and to strengthen its cyber defenses and its posture on cyber deterrence.


The U.S. Supreme Court declined to hear the U.S. Department of Housing and Urban Development’s challenge of a Federal Circuit decision that it must use competitive bidding rather than grants to sign up partners to participate in its Section 8 public housing project.


On April 20, the Office of the Inspector General of the United States Department of Health and Human Services released new guidance to assist governing boards of health care entities in their oversight of organizational compliance with state and federal laws that regulate the health care


GAO released a report on April 22, identifying a number of challenges facing the government’s approach to cybersecurity and the actions needed to address the various challenges.


The IRS has issued proposed regulations under Code Sec. 5000C relating to the 2 percent tax on payments made by the U.S. government to foreign persons pursuant to certain contracts. The regulations also contain guidance addressing when foreign persons can claim an exemption from the tax.

FinCEN and ICE Issue Geographic Targeting Order (GTO) Against Miami-Area Electronics Exporters

On April 21, 2015, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) served a Geographic Targeting Order (GTO) on about 700 electronics exporter businesses in the Miami area as part of an investigation into cash transactions possibly tied to trade-based money-laundering schemes utilized by drug cartels. The GTO goes into effect April 28, 2015 and expires 180 days thereafter (October 25, 2015). It was issued in coordination with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations and the Miami Dade State Attorney’s Office South Florida Money Laundering Strike Force and is similar to a GTO that FinCEN issued to fashion-industry businesses in the Los Angeles area in October 2014.

Click here to read the full issued Client Alert.

Reed Smith’s Government Contracts Weekly Rundown

Here is a rundown of last week’s top developments related to government contracts to get you back on track and ready for this week.


On March 31, the Interagency Suspension and Debarment Committee (“ISDC”) released its report to Congress detailing an increase in the use of suspensions and debarment actions by federal agencies for fiscal year 2014.


Last Monday, a Washington, D.C., federal judge sentenced four Blackwater Worldwide guards to sentences ranging from 30 years to life in prison for the killing of 14 unarmed civilians in Baghdad, Iraq, in 2007.


Last Tuesday, the U.S. Senate passed a “doc fix” bill to permanently replace Medicare’s unpopular physician reimbursement system.


Last Friday, GSA held a public meeting where both the government and industry expressed their opinions on the proposed changes to the PRC.

CFPB Update: CFPB Orders $3.1 Million in Refunds to Military Servicemembers in Fifth Case Involving Military Allotments

On Monday, the Consumer Financial Protection Bureau (CFPB) announced the latest in a series of five enforcement actions involving military allotments: a $3.1 million consent order against a payment processor, Military Assistance Company (MAC) and its parent, Fort Knox National Company. The CFPB alleged that MAC had failed to disclose to servicemembers the amount of its fees and the fact that it had charged fees. MAC managed a payment processing system that took payments from servicemembers’ paychecks (allotments) and sent them to creditors such as car lenders or furniture sellers. Once the loan was paid off, excess funds would sometimes continue accumulating in a servicemember’s third-party payment processing account, often without the servicemember’s knowledge. MAC charged its allegedly undisclosed fees against these excess funds.

Click here to read the full issued Client Alert.

GSA Faces Push-Back on Proposed Rule Eliminating PRC

Reed Smith attended last Friday’s General Services Administration’s (GSA) public meeting on the proposed Transactional Data Reporting rule. GSA’s proposed rule would eliminate the Price Reduction Clause (PRC) in favor of transactional data reporting. We previously blogged about the parameters of the proposed rule here. GSA held this meeting in the hopes of opening dialogue on this significant change in policy.

Throughout the meeting, GSA faced skepticism from interested members of the public, as well as from the GSA’s Office of the Inspector General (“GSA OIG”) and Veteran Affair’s Office of the Inspector General (“VA OIG”). Interested members of the public voiced privacy concerns regarding the potentially sensitive commercial data GSA would collect through the proposed rule, and the interplay with the Freedom of Information Act. Questions linger as to the details of data collection and who will have access to such data, with GSA noting that this will require further consideration. Interested members of the public also noted the practical and logistical difficulties in meeting the reporting burdens, leaving some commentators to believe that GSA had significantly underestimated such burdens. GSA also faced criticism from intergovernmental entities. GSA OIG and VA OIG both cited concerns that the new proposed rule would strip the government from pricing protections afforded to it by the PRC.

Anne Rung, administrator of the Office of Federal Procurement Policy, was notably in attendance and gave comments reflecting her vision for federal procurement: simplicity and collaboration supported by a newly trained team of acquisition specialists using industry best practices. Rung does not believe that GSA’s proposed rule deviates from the focus on best value. Kevin Youel Page, Federal Acquisition Service Deputy Commissioner, echoed Rung, noting that this rule is not just meant to seek the lowest price possible, a concern that some have voiced.

Given the saliency of the PRC to government contractors, Reed Smith will provide in-depth analysis of the meeting over the coming days.