This post was written by Gina Cavalier and Mark Melodia.
Earlier this week, Reed Smith's blog Life Sciences Legal Update posted that the Department of Health and Human Services' (HHS), Office for Civil Rights (OCR) announced the imposition of the first ever civil money penalty for violations of the HIPAA Privacy Rule. To learn more about this significant development, please click here.
This post was written by George Brown and Tom Webley.
Two former directors of engineering firm Mabey & Johnson received custodial sentences today, having been found guilty earlier this month of inflating the prices paid under humanitarian contracts to provide steel bridges to ensure that kickbacks of over Euros 420,000 could be paid to Saddam Hussein’s government.
The directors, Charles Forsyth and David Mabey, who were respectively the Managing Director and Sales Director of the firm, were found guilty of making the illegal payments in 2001 and 2002. Another employee, Richard Gledhill, had pleaded guilty to offences relating to breaching United Nations sanctions and subsequently gave evidence for the prosecution.
Continue Reading...This post was written by Matthew J. Thomas.
The US Federal Maritime Commission (FMC), which regulates US international ocean shipping services, has made life easier for thousands of logistics companies and their import/export customers.
The FMC regulates a broad range of “ocean transportation intermediaries,” the logistics providers and forwarders who connect importers and exporters with global shipping lines. Many of these (called “non-vessel-operating common carriers or “NVOCCs” ) act as resellers of ocean transportation services. NVOCCs buy space in bulk from vessel operators, then resell it, often bundled with additional services, to manufacturers and retailers.
On February 16th the FMC announced a plan to waive longstanding requirements that licensed NVOCCs publish their pricing in public freight tariffs and file all individual customer contracts with the FMC. Cutting these anachronistic filing rules will help over 3300 companies, according to the FMC, and should help encourage more individualized negotiations for international transportation solutions. The changes should take effect later this spring, but logistics companies still will need to comply with FMC licensing, bonding and recordkeeping rules.
The FMC cited the White House’s latest mandate for agencies to review rules and reduce burdens, set out in President Obama’s January 18, 2011 Executive Order 13563, and signaled a willingness to consider further cuts.
Hopefully the FMC’s zeal for streamlining will be contagious, given the rigorous regulatory landscape for logistics providers. Companies providing integrated supply chain solutions must navigate an impressive array of agencies, including the FMC, the Department of Transportation (air freight forwarding), Federal Motor Carrier Safety Administration (motor carrier forwarding and broking), Transportation Security Administration (facility security) and Customs and Border Protection (carrier bonding and manifest filing). With additional requirements and regulators for dual-use goods, arms, food, drugs, and hazardous materials, compliance planning quickly becomes an exceptionally sophisticated undertaking.
This post was written by Joshua Marker.
Catalog and retail marketing in California just got a little bit trickier. No longer can retailers require that a customer provide a ZIP code to complete a credit card transaction, and this may impede the ability of many retailers to generate in-store marketing leads. On February 10, 2011, the California Supreme Court held that the Song-Beverly Credit Card Act (“the Act”) covers key components of an individual’s address as ‘personal identification information’ in a credit card transaction.
In that case, Pineda v. Williams-Sonoma Stores, Inc., No. S178241, Williams-Sonoma’s practice of collecting individual’s ZIP codes when completing a credit card transaction was at issue. Williams-Sonoma collected these ZIP codes for credit card verification purposes and developed a retail marketing lead list from its in-store transactions. The California Supreme Court found that this practice violated Section 1747.08(a)(2) of the Act, as ZIP codes are ‘personal identification information’ covered by the Act, and the collection of that information was thus prohibited.
Continue Reading...This post was written by Cynthia O'Donoghue and Katalina Chin.
ENISA (the European Network and Information Security Agency) has issued a new report on data breach notifications . Having approached telecoms operators and data protection authorities (DPAs) on this topic, the report highlights data breach handling and key stakeholder concerns.
The revised e-Privacy Directive (2002/58/EC) brought in EU data breach notification requirements for the telecoms sector and the European Commission is considering the inclusion of the finance, healthcare and small business sectors. By requiring mandatory data breach notification to the national data protection authority, the Commission hopes to encourage organisations to increase the level of security afforded to personal data and to reassure citizens about the security of their personal data by telecom sector operators.
Continue Reading...This post was written by Nick Tyler.
In spite of impending cuts in the budgets of local government across the UK it is notable that the national data protection regulator, the ICO, has seen fit to hit two London Borough Councils with hefty fines for ineffective data security policies and practice.
It is bordering on the incredible in this day and age that they should have issued unencrypted laptops to their home workers, but what probably amounted to the ‘last straw’ from the ICO’s point of view was that the councils failed to follow their own policies, which specifically required encryption. Two such laptops were stolen from an employee’s home.
Continue Reading...This post was written by Nick Tyler.
The EU Commission has recently approved Israel as a country providing “an adequate level of protection for personal data transferred from the European Union”.
This follows a lengthy process which was nearly derailed, after Irish Government objections, following the assassination in Dubai last January of a Hamas official allegedly committed by agents of Mossad, Israel’s Secret Service, and associated allegations of identity theft involving the passports of Irish (as well as UK) citizens.
Continue Reading...This post was written by James A. Rolfes.
Last week, the Tenth Circuit Court of Appeals, in a matter of first impression, held that a life insurance company sales agent, who referred to himself as a Financial Services Representative (FSR), did not have to fulfill the fiduciary duties imposed on investment advisers under the Investment Advisers Act. Instead, the incidental nature of the investment advice given and the manner in which the sales agent was compensated, qualified the agent for the broker-dealer exemption to the Act’s definition of an investment advisor.
In Thomas v. Metropolitan Life Ins. Co., --- F.3d ---, 2001 WL 310371 (10th Cir. Feb. 2, 2011), the Met Life sales agent analyzed the plaintiffs’ financial situation, gave advice on how to allocate their 401(k) funds, conducted an investment/insurance product “suitability analysis” and recommended the plaintiffs’ purchase of a variable universal life insurance policy. In doing so, alleged the plaintiffs, the agent and, vicariously, his life insurance company employer, failed to disclose the strong incentives the agent had to sell the Met Life proprietary products -- a purported violation of an investment advisor’s statutory duty to give unbiased advice.
The Tenth Circuit, however, rejected the notion that the Act imposed fiduciary obligations on a life insurance agent’s provision of investment advice in the context of the sale of insurance products. The court instead held that the agent’s actions met the two pronged definition of a broker-dealer whose advice the statute explicitly exempts. In particular, the court found that (i) the agent gave advice “solely incidental to” his sale of the life insurance product; and (ii) his compensation (i.e., a $500 brokerage commission) derived from the sale of the insurance policy, and not from his provision of investment advice. In so holding, the court expressed its belief that the plain language of the statute, the legislative history and SEC interpretations all supported the court’s conclusion that the statute’s reference to advice “solely incidental” to the brokerage services meant advice “solely attendant to,” or “given in connection with,” the brokerage service provided, and not to the amount or import of the advice given. Consequently, even though the agent’s advice purportedly served as the “central component” of the sale transaction, he gave such advice in connection with, and thus incidental to, the sale of the insurance product. He therefore did not owe the plaintiffs a fiduciary duty under the Investment Advisers Act.
Ironically, this decision follows on the heels of the SEC’s release of the January 2011 SEC Staff’s Study on Investment Advisers and Broker-Dealers. Pursuant to the Congressional mandate in Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC Staff evaluated the effectiveness of existing legal and regulatory standards of care for providing personalized investment advice and securities recommendations to retail customers. Contrary to the court’s analysis, the Staff suggests that the amount of advice a broker-dealer provides is relevant in analyzing the applicability of the broker-dealer exemption. But of even greater importance, the Staff strongly recommended consideration of regulatory enacted rules that would do away with the broker-dealer exemption altogether, and instead impose a uniform fiduciary standard on both investment advisers and broker-dealers who provide personalized investment advice about securities to retail customers. In particular, the Staff called for a uniform fiduciary standard that would, among other things, require broker-dealers to disclose conflicts of interest – the issue at the heart of the plaintiffs’ claims in Thomas v. Met Life.
Thus, while the Thomas v. Met Life decision provides comfort to insurance companies and their sales agents, such comfort may be short lived.
The Director of the Serious Fraud Office (SFO), Richard Alderman, gave a speech yesterday about the Bribery Act which touched on many practical issues and further guidance to be issued.
The speech covered:
Without pre-empting the guidance which is anticipated shortly, the SFO is clearly keen to lay to rest some of the wilder speculation which has recently appeared in the press concerning the impact of the Act, particularly with regard to corporate hospitality. Mr Alderman has sought to leave his audience with the impression that the SFO’s enforcement of the Act will be tough, yet underpinned by common sense. The written guidance should reinforce that message.
With a title like "Tactical Secrets" I was expecting a insiders look into fly fishing for Steelhead trout . But then I realized I was reading the New York Times. Instead, this piece addresses the government's assertion of the state-secrets privilege in General Dynamics Corp v. US.
Déjà vu all over again. Nick Silver compares the political landscape that President Clinton faced with the current congressional make up now facing President Obama.
When blogs reference other blogs, we here in the Round Up office get excited. Howard Sklar at Open Air Blog explains why he disagrees with the FCPA Professor and Alexandra Wrange (of TRACE) over the impact of the UK Bribery Act.
Sudan Watch: With referendum results showing overwhelming support for secession, Khartoum is calling for an end to the US embargo. In news that should surprise absolutely no one, the US has decided to wait and see.
The National Institute of Standards and Technology has issued new guidelines for cloud computing. If "safeguarding data in the public cloud" is something you are in to, or have no idea what it means, you may want to read this.
This post was written by Steven D. Tibbets and Lawrence S. Sher.
A recent U.S. Court of Federal Claims bid protest decision illustrates how one agency’s apparent attempt to award a sole-source contract without making the findings to justify the award was unlawful, though, ultimately, the protest challenging award was not successful. The Court’s decision in Mobile Medical International Corp. v. United States, demonstrates a situation in which a sole-source award was mis-handled by the agency and subsequently set aside following a protest. In our experience, there are times when contractors suspect that their competitors have been “pre-selected” or just seem to have the inside track for certain contract awards even when those awards are not, technically, sole source. This case may serve as helpful authority in challenging such awards.
In Mobile Medical, the Government engaged in sole source pre-award negotiations with a contractor for a particular type of mobile medical trailer. At the time of the negotiations, neither the contractor, nor any other vendor offered the specific type of trailer the Government needed via an FSS contract. The Government then issued an FSS request seeking quotes for those trailers. After the closing date for the receipt of quotes, the Government permitted the contractor to add the trailers of the type the Government needed to the contractor's FSS contract. At that point, the Government awarded the order to the contractor. The Court determined that this procedure was improper and amounted to "targeted pre-selection of contractors outside the FSS system, which is inconsistent with the FSS system, as well as the general goals of fair and open competition espoused in" Government procurement laws. The Court ultimately denied the protest, however, because the protester had failed to establish that it would have been in line for award if the Government had handled the procurement properly.
This case illustrates why it is generally better for Government procurement personnel to conduct competitive procurements even where the agency has a particular vendor it believes will be the best or only vendor to respond to a solicitation. In this case, even though the Government issued an RFQ on which anyone, ostensibly, could compete, the Court criticized this procedure as a de facto sole-source award in light of the surrounding circumstances.
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