The DOJ’s Recent Yates Memo and its Effect on Insurance Coverage for Government Investigations

Sally Yates of the U.S. Department of Justice (“DOJ”) recently issued a memorandum detailing the DOJ’s increased commitment to pursue individuals engaged in corporate wrongdoing.  The memo will likely affect the manner in which companies conduct internal investigations and interact with government prosecutors.  Companies should take their current D&O insurance policies into consideration, as this memo will have significant insurance-related implications.

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What does the Consumer Rights Act 2015 mean for Businesses in the UK?

On October 1, the Consumer Rights Act 2015 went into effect in the UK.  The Act, which is divided into three parts, encompasses the entire United Kingdom, and extends consumer rights and significantly restructures overall business-to-consumer relationships.  We have summarized the legislation and identified ways in which UK businesses that deal with consumers will likely be affected.  In addition, we propose some ways that businesses can prepare for these changes.

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Proposed FinCEN Regulations Would Bring New AML Requirements to Investment Advisers

Investment advisers subject to SEC registration would be affected by proposed regulations from the Financial Crimes Enforcement Network.  The regulations, proposed in August 2015, would require such investment advisers to create anti-money laundering programs as well as to undertake reporting and recordkeeping responsibilities under the Bank Secrecy Act, including filing suspicious activity reports.

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Further Amendments to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR)

In keeping with the Obama Administration’s efforts to normalize relations with Cuba, the U.S. government is making further amendments to CACR and EAR.  While the overall embargo is still in place, these amendments will lessen the degree of various restrictions.  The effects will be seen in areas including travel, telecommunications and internet-based services, commercial and financial transactions, physical presence and operations, support for the Cuban people, and remittances.  The amendments are being put into effect today, September 21, 2015.

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European Court ruling REACH

The European Court’s ruling in the ‘substances in articles’ case FDC and FMB v Ministre de l’ecologie, du development durable et de l’energie will extend aspects of EU chemical law compliance.  Going forward, importers and suppliers doing business in the EU will be required to have increased oversight and understanding of the chemical compositions of products to the level of their component articles.  This piece explores the various implications and potential difficulties arising as a direct result of this ruling.

Click here to read the issued Client Alert.

Big win for SFO in LIBOR trial – Tom Hayes sentenced to 14 years. More SFO prosecutions to come in financial sector?

The conviction of Tom Hayes in the first UK LIBOR trial (click here to read more) is a watershed moment. It’s a big win for the SFO, although it must be said that a more damning book of evidence could not be imagined. The judge’s sentencing remarks (link to repay detailed study. Hayes received 14 years, one of the heaviest sentences on record for this offence. The judge’s summary reads like a case-study of how an accused should not behave, both before and after they are accused.

We will have more to say on this and similar cases in due course. For now it suffices to say that the huge profile of the trial and the very heavy sentence mean that a clear message is going to the dealing rooms and the C-suites of the City of London: Fraud is fraud. Financial professionals don’t get special treatment. Clever people who try to “play” the judicial system like they did the markets risk total disaster.

Key Regulatory Contacts

Chris Borg
+44 (0)20 3116 3650

Claude Brown
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George Brown
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Rob Falkner
+44 (0)20 3116 2980

Jacqui Hatfield
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Charles Hewetson
+44 (0)20 3116 2976

Brett Hillis
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Marjorie C. Holmes
+44 (0)20 3116 2986

Rosanne Kay
+44 (0)20 3116 3414

Edward S. Miller
+44 (0)20 3116 3470

Eoin O’Shea
+44 (0)20 3116 3794

Prajakt Samant
+44 (0)20 3116 2915

Suzie Savage
+ 44 (0)20 3116 3565

Tom Webley
+44 (0)20 3116 3631

Jo Williams
+44 (0)20 3116 3661

Iran: Joint Comprehensive Plan of Action agreed, but no immediate sanctions relief

On 24 November 2013, the P5+1 countries (comprising the United States, Russia, China, the United Kingdom, France and Germany) together with Iran, agreed the Joint Plan of Action (JPOA), which relaxed some of the sanctions imposed against Iran by the EU and U.S. The JPOA was intended to provide interim sanctions relief, while the parties worked towards a more comprehensive and long-term solution.

On 14 July 2015, the Joint Comprehensive Plan of Action (JCPOA) was agreed.

The EU and U.S. have agreed to lift the majority of nuclear-related sanctions against Iran, provided Iran implements certain agreed measures in respect of its nuclear programme. If certain goals are reached, the UN arms embargo could be removed in five years, and the restrictions on ballistic missile technology could be lifted in eight years. The implementation of such measures by Iran must be verified by the International Atomic Energy Agency (IAEA).

All sanctions remain in place for the time being. However, a plan has been agreed which may lead to an eventual lifting of certain sanctions.

In the meantime, the EU has published Council Decision (CFSP) 2015/1148, which extends the limited sanctions relief put in place by the JPOA until 14 January 2016. This is to allow time for the necessary arrangements and preparations for the implementation of the JCPOA. Relevant contracts which fall within the JPOA relaxation must be executed within that date. For further details on the JPOA limited sanctions relief, see our previous alert of 23 January 2014.

We will be publishing more detailed comments on and analysis of the JCPOA shortly.

47 Attorneys General to Congress: Federal Breach Legislation Should Not Preempt the States

 On July 7, 2015, attorneys general from 47 states and territories sent a letter to Congressional leaders urging them to consider federal data breach notification legislation that does not preempt the states. The move comes on the heels of a data breach announcement made by the Office of Personnel Management, and renewed interest on the Hill in passing federal privacy and data security legislation. Some of the pending bills include preemption provisions.

The attorneys general are consistently vocal about the need for any federal data breach legislation to uphold a state’s right to implement more restrictive state laws and to investigate data breaches that affect their citizens. A group of states sent a similar letter to Congressional leaders in 2005, urging them to respect the work that the state had begun in this area. Illinois Attorney General Lisa Madigan sent the same message to Congress in her February 2015 testimony. The most recent letter emphasized the states’ work in the areas of data security, identity theft, and privacy over the past decade, pointing specifically to the Illinois Attorney General’s work with identity theft victims.

Illinois is not the only state active in the area of data security and privacy. Massachusetts was the first state to pass data security regulations and continues to be at the forefront of large-scale data breach investigations. Connecticut recently created a Privacy and Data Security Department, which furthers the goals of that office’s four-year-old privacy task force. Many states, including Florida, have updated their state data breach notification laws to change with the evolving nature of breaches and breach investigations. California, Indiana, New Jersey, and Texas have also been especially active in this area.

Separate from data breaches, privacy is a hot-button issue for the attorneys general, as well. As Congress considers omnibus privacy legislation that addresses not only data breach notification, but also substantive privacy regulation, the debate over state preemption is likely to heat up. And as we have previously noted, states increasingly are acting in the absence of a breach to investigate privacy practices as unfair or deceptive under state UDAP laws. All businesses should be tuned in to the states’ continued focus on all things privacy.



Iran: Further extension of limited sanctions relief to 13 July 2015

In our alert of 8 July, we reported that the P5+1 and Iran had announced the extension of the Joint Plan of Action Relief Period (the JPOA Relief Period) to today, 10 July 2015.

Negotiations with Iran continue. To allow more time for the parties involved to reach a long-term solution, the JPOA Relief Period has been further extended to Monday, 13 July 2015. As with the previous extension, the suspension and relaxation of sanctions remain in place in identical form. No additional sanctions have been suspended. All activities conducted under the JPOA must be concluded by 13 July 2015.

Click here to read the full issued Client Alert.

Financial Conduct Authority (FCA) publishes its Annual Report and Accounts for 2014/15

On 2 July 2015, the UK’s financial regulatory, the Financial Conduct Authority (FCA), published its annual report and accounts 2014/15.

Overview  The annual report highlighted several areas in which the FCA has been active over the past 12 months, including:

  • The use by the FCA of its new consumer credit powers
  • The launch of ‘Project Innovate’ to encourage innovation in the financial services sector
  • The FCA review into competition in the wholesale market
  • Working towards the implementation of the Senior Managers Regime
  • The publication of the FCA’s cash savings and retirement income market studies
  • Implementing the new pension reforms
  • Enforcement action, especially in relation to LIBOR and FX
  • Responding to the findings of the Davis Review into the FCA’s own handling of the launch of its 2014/15 business plan

Click here to read the full issued Client Alert.