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Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
Fcpa And Anti Corruption Task Force Mo Fo
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Fcpa And Anti Corruption Task Force Mo Fo

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  • 1. Morrison & Foerster’sFCPA and Anti-CorruptionTask Force January 2011 © 2011 Morrison & Foerster LLP | All Rights Reserved | mofo.com
  • 2. Table of ContentsTab 1 FCPA Backgrounder 2 FCPA Practice: Compliance 3 FCPA Practice: Asia Investigations 4 FCPA Practice: Overview 5 2010: Another Record Breaking Year for FCPA Enforcement, Confirming “New Era,” Morrison & Foerster Client Alert, January 12, 2011 6 Alcatel-Lucent Settles “Unprecedented” $137 Million FCPA Case, Morrison & Foerster Client Alert, January 3, 2011 7 FCPA: DOJ May Be Listening, But It Is Not Changing Its Approach, Morrison & Foerster Client Alert, December 2, 2010 8 DOJ Official Proclaims “New Era” of FCPA Enforcement, Morrison & Foerster Client Alert, November 19, 2010 9 SEC Issues Proposed Doff-Frank Whistleblower Rules, Morrison & Foerster Client Alert, November 4, 2010 10 Professional Summaries Paul T. Friedman Randall J. Fons Daniel P. Levison Carl H. Loewenson, Jr. Kevin Roberts Robert Salerno Sherry Xiaowei Yin 2
  • 3. TAB 1 3
  • 4. FCPA BackgrounderWhat You Need to Know About the Foreign Corrupt Practices Act (“FCPA”)WHAT IS THE FCPA?• The FCPA prohibits paying – or promising to pay – anything of value to a foreign government official where the purpose is to obtain or retain business.• The FCPA also requires publicly traded companies to keep accurate books and records and implement appropriate internal controls.WHY IS THE FCPA IMPORTANT TO YOU?• FCPA applies to all U.S. nationals (companies or individuals) and any foreign company listed on a U.S. exchange or that submits reports to the SEC as result of capital raising activities (including trading American Depository Receipts).• Companies can be held responsible for FCPA violations by agents and joint venture partners.• Increasing number and size of FCPA cases: In 2002, there were zero criminal prosecutions. In 2004, there were only 3. By 2009, there were 34, with 150 open U.S. Department of Justice (“DOJ”) investigations.• Growing trend to aggressively enforce FCPA both by DOJ and U.S. Securities and Exchange Commission (“SEC”), with an increasing number of tag-along civil litigations. o Enforcement priority with increasing dedicated resources. o Steep financial penalties (e.g., Siemens was fined $800 million in U.S.; Daimler was fined $185 million). o Four letter word: J-A-I-L (executives have been sentenced to jail time). o Essentially strict liability for parent company for FCPA books and records violations of its wholly-owned subsidiaries. o Relevant to all industries: not just oil, pharmaceutical, or high tech. o Relevant to many geographies: China and many other countries are deemed “high risk.” o Collateral consequences, including debarment from government contracts and reputational harm.• Growing global patchwork of anti-corruption laws and multi-national cooperation (i.e., OECD Convention, UK Bribery Act 2010). © 2010 Morrison & Foerster LLP | mofo.com
  • 5. FCPA BACKGROUNDER What You Need to Know About the Foreign Corrupt Practices Act (“FCPA”)HOW CAN MORRISON & FOERSTER HELP?• Our domestic and international offices advise on and investigate FCPA matters.• We have a deep bench, and work seamlessly across our offices. Our Securities Litigation, Enforcement, and White Collar (“SLEW”) practice group includes more than 150 attorneys in our 16 offices worldwide, with over 20 former federal and state criminal prosecutors, former SEC enforcement attorneys, as well as in- house accounting experts.• Been there, done that: We have performed a large number of FCPA investigations -- large and small — in China, Japan, Korea, Thailand, Indonesia, other Asian countries, and Latin America.• We have vast experience in scores of FCPA matters for major companies and individuals, across a wide range of FCPA matters: o Diligence: conducted due diligence reviews for potential M&A transactions (both buy and sell side), prospective agents, consultants and joint venture partners, and in other contexts, in Asia-Pacific, Europe, Middle East, South America, and North America. o Counseling: advised on FCPA compliance policies and procedures, including real-time counseling to legal and compliance departments when problematic facts emerge. o Compliance Programs/Training: designed, reviewed, and provided anti-corruption compliance training (in numerous languages including English, Mandarin and Spanish). o Investigations: conducted scores of cross-border internal investigations on behalf of companies and Boards of Directors; represented companies and individuals in investigations by DOJ and SEC. o Remediation: when anti-corruption problems are detected, we help companies fix those problems.• We are well-equipped to protect companies and individuals in parallel criminal, SEC and civil proceedings, as well as with related government contracts issues.• Largest investigation practice among international firms in Asia, including over 30 litigators in Japan and over 20 Chinese-trained lawyers in Beijing, Shanghai, and Hong Kong offices.• Strong presence in the UK.• Follow the money: we have an in-house Forensic Accounting Services Group.• Our Privacy & Data Security Group assists in cross-border investigations. 2
  • 6. FCPA BACKGROUNDER What You Need to Know About the Foreign Corrupt Practices Act (“FCPA”)EXPERTISE BASED ON HANDLING SCORES OF FCPA MATTERS• Represented many global companies in internal investigations, government investigations, self-reporting procedures.• Where necessary, we can field a team in several countries simultaneously.• A few representative examples: o Represented a U.S.-based multinational Fortune 50 company in internal investigation of alleged violations of the FCPA in Asia-Pacific countries. Following the conclusion of our investigation and self- reporting, neither the SEC nor the DOJ took any action against our client. o Represented a U.S.-based multinational public corporation in an internal investigation of whistleblower allegations of violations of the FCPA in China and elsewhere in Asia, with interviews in several countries. o Assisting a public company acquisition target with FCPA diligence requests from potential buyers. o Representing senior executives of multinational corporations in investigations by DOJ and SEC into allegations of illegal payments to government officials in Nigeria, Angola, Kazakhstan, Venezuela, and Thailand. o Investigating FCPA allegations at a telecom company and software company in Venezuela. o Investigating FCPA allegations at a NASDAQ-listed Chinese services company. o Represented an officer of a large oil services firm in a joint DOJ and SEC investigation relating to payments to government officials in Indonesia and Brazil. o Conducting an FCPA internal investigation in Latin America for a Fortune 500 company.UK BRIBERY ACT 2010• In April 2011, companies doing business in the UK will be subject to this new law globally.• It is broader than the FCPA in important respects.• We are advising companies on exposure and compliance with this new law.For more information about Morrison & Foerster’s FCPA and Anti-Corruption practice, please contact:PAUL T. FRIEDMAN CARL H. LOEWENSON, JR.SAN FRANCISCO NEW YORK(415) 268-7444 (212) 468-8128PFRIEDMAN@MOFO.COM CLOEWENSON@MOFO.COMRANDALL J. FONS ROBERT A. SALERNODENVER WASHINGTON, DC(303) 592-2257 (202) 887-6930RFONS@MOFO.COM RSALERNO@MOFO.COMDANIEL P. LEVISON SHERRY XIAOWEI YIN KEVIN ROBERTSTOKYO BEIJING LONDON81 3 3214 6522 6 10 5909 3566 020 7920 4160DLEVISON@MOFO.COM SYIN@MOFO.COM KROBERTS@MOFO.COM 3Because of its generality, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice basedon particular situations.
  • 7. TAB 2 4
  • 8. Representative Morrison & Foerster has extensive experience in a wide range of FCPA compliance matters. Our FCPA Task Force has a strong track record ofFCPA Compliance working with global companies to manage their risk and exposure toPrograms and anti-corruption issues.Training We have developed, implemented, and reviewed anti-corruption programs for global companies in many industries, including professional services, defenseFCPA TASK FORCE CONTACTS: and aerospace, media and entertainment, and transportation, among others. We have conducted scores of FCPA training programs in English, Japanese,PAUL T. FRIEDMAN and Mandarin to companies operating in China, Japan, and elsewhere in AsiaSAN FRANCISCO to all levels of employees, officers, and directors.(415) 268-7444 In addition, we work closely with clients in developing FCPA-relatedPFRIEDMAN@MOFO.COM agreements for joint ventures, agents, consultants, key vendors, and other business relationships, as well as anti-corruption training modules forCARL H. LOEWENSON, JR. employees, agents, consultants, and third-party intermediaries. We have alsoNEW YORK(212) 468-8128 conducted scores of reviews of prospective agents, consultants, and jointCLOEWENSON@MOFO.COM venture partners in Europe, the Middle East, South America, North America, and the Asia-Pacific region.RANDALL J. FONS In the M&A context, we have assisted with anti-corruption due diligence intoDENVER foreign acquisition targets with substantial operations in the Asia-Pacific, Latin(303) 592-2257 America, among other regions. Based on results of due diligence, we haveRFONS@MOFO.COM developed FCPA compliance programs for merged entities, including drafting ofROBERT A. SALERNO anti-corruption policies and training materials and assisting clients withWASHINGTON, DC in-person training prior to closing.(202) 887-6930 We leverage our global network of resources and experts in the United States,RSALERNO@MOFO.COM Europe, and the Asia-Pacific to ensure effective geographic coverage for our clients. Our Securities Litigation, Enforcement, and White-Collar DefenseDANIEL P. LEVISON Practice Group is comprised of more than 150 attorneys in our 16 officesTOKYO81 3 3214 6522 worldwide and includes over a dozen former federal and state criminalDLEVISON@MOFO.COM prosecutors, former Securities and Exchange Commission (SEC) enforcement attorneys, and in-house accounting experts with decades of public accounting experience. Representative Matters The following are illustrative examples of our vast expertise relating to FCPA compliance programs. Following Asia-Pacific-wide internal investigation, worked with a Fortune 50 global company to re-engineer anti-corruption compliance program. © 2010 Morrison & Foerster LLP | mofo.com
  • 9. FCPA PRACTICE: COMPLIANCERepresentative Conducted dozens of FCPA training sessions in English and in Mandarin to companiesFCPA operating in China, including recently to a publicly traded real estate company, and to aCompliance subsidiary of a public U.S. company.Programs and Following the representation of a U.S. company accused of FCPA violations related to salesTraining of aerospace supplies in Asia, we conducted an internal investigation which included an audit of the clients FCPA Compliance Program and internal controls. Also assisted the client with developing an enhanced FCPA Compliance Program and employee training materials. Assisted a publicly-traded U.S. company with FCPA due diligence into foreign acquisition target with substantial operations in China, Latin America, and South Asia. Based on results of due diligence, developed FCPA compliance program for merged entity, including drafting of anti-corruption policy and training materials, and assisted client with in-person training of China employees prior to closing. Represented a large multinational services company in reviewing and developing enhancements as needed for its FCPA Compliance Program, including developing FCPA-related agreements for joint venture and other business relationships, employees, agents, consultants, and third-party intermediaries. Represented a global professional services firm to review its FCPA Compliance Program, recommend enhancements, and develop training materials. Following our response to allegations of FCPA violations on behalf of a large multinational defense contractor, we conducted a review of the existing FCPA Compliance Policies and developed enhancements and internal controls. Also performed extensive reviews of more than 50 prospective agents, consultants, and joint venture partners in Europe, the Middle East, South America, North America, and the Asia-Pacific region and provided training for upper management and legal department. Developing and implementing FCPA Compliance Program for a multinational company providing cross-border services. Includes FCPA-related agreements for joint venture and other business relationships and training modules for employees, agents, consultants, and third-party intermediaries. Training provided to upper management and legal staff. Represent a large multinational company in reviewing and developing enhancements as needed for its FCPA Compliance Program. Represent a large multinational company in reviewing and developing enhancements as needed for its FCPA Compliance Program, including developing FCPA-related agreements for joint venture and other business relationships, employees, agents, consultants and third-party intermediaries. Training to upper management will likely be provided during Fall 2010. Represent a large multinational media company in reviewing and developing enhancements as needed for its FCPA Compliance Program, including developing FCPA-related agreements for joint venture and other business relationships, employees, agents, consultants, and third-party intermediaries. 2
  • 10. FCPA PRACTICE: COMPLIANCERepresentative Reviewed existing FCPA/anti-corruption policy, provided comments; commented on draftFCPA training materials, and delivered half-day training to management and staff of operatingCompliance subsidiary of a NYSE-listed transportation company. Training was conducted at two clientPrograms and locations in China.Training Provided training and materials on FCPA compliance to local staff of a NASDAQ-listed communications company in Shanghai. Local managers and staff attended the training. Provided FCPA compliance training and materials to the Board of Directors and senior management of a NASDAQ-listed mobile application service provider in Shanghai. Provided FCPA compliance materials to a leading value-added distributor of medical imaging and other diagnostic equipment in China. Provided FCPA compliance materials to a diversified U.S. multinational company. Provided FCPA and anti-corruption advice to a leading developer and manufacturer of pharmaceutical products. Conducted FCPA compliance training for a diversified multinational Fortune 500 company, a leading consumer survey and consulting firm, and a well-known international financial services firm. References While most of our clients prefer confidentiality pertaining to our services in this area, we will be able to provide references upon request. 3
  • 11. TAB 3 5
  • 12. FCPA Practice: Asia InvestigationsRepresentative Morrison & Foerster has over 25 years of experience on the ground in Asia. We have over 200 attorneys and other professionals in our Asia offices,FCPA including 45 Japan-licensed attorneys, 17 Hong Kong-licensed solicitors, 17Investigations England- and Wales-qualified attorneys, and 22 attorneys with PRC bar qualifications. Dozens of our litigators in Asia specialize in the skills andand Other Internal techniques necessary to effectively conduct internal investigations.Reviews — Our firm has significant experience conducting a wide range of investigations inChina and China, from purely domestic investigations to those with a more global reach. Our China team is also supported by over a dozen former federal and stateAsia-Pacific criminal prosecutors, former Securities and Exchange Commission (SEC)HONG KONG enforcement attorneys, and in-house accounting experts with decades of public33/F EDINBURGH TOWER accounting experience.THE LANDMARK15 QUEENS ROAD CENTRAL Morrison & Foerster’s Hong Kong, Beijing, and Shanghai offices frequentlyHONG KONG represent companies, individuals, audit committees and management, andPHONE: (852) 2585-0888FAX: (852) 2585-0800 advise independent directors and special committees of boards of directors. The firm has been recognized as one of the five best corporate governance legal practices in Asia (Corporate Governance Asia Recognition Awards).SHANGHAISUITE 3501, BUND CENTER We work with our clients to design and implement codes of ethics andNO. 222, YAN AN ROAD employee guidelines, insider trading prevention programs and policies,EAST SHANGHAI 200002PEOPLE’S REPUBLIC OF CHINA whistleblower protections, disclosure policies, and audit committee policiesPHONE: (86 21) 2322-5200 required by the Sarbanes Oxley Act of 2002. Our U.S. securities experts inFAX: (86 21) 2322-5300 China advise on issues related to the SEC, drawing on relevant expertise in our U.S. offices as needed.BEIJING22ND FLOOR, CHINA CENTRAL The firm also has developed and presented seminars for clients and developedPLACE TOWER 3 compliance policies and controls on important related topics, including77 JIANGUO ROAD conducting internal investigations – including on FCPA, antitrust, revenue andCHAOYANG DISTRICTBEIJING 100025 accounting issues, IP, import licensing topics; designing effective compliancePEOPLES REPUBLIC OF CHINA programs -- including on antitrust and anti-corruption topics; and coping withPHONE: (86 10) 5909-3399 parallel proceedings.FAX: (86 10) 5909-3355 The following are illustrative examples of our wide-ranging experience we haveTOKYO in China relating to FCPA as well as other investigations. Many of our mattersSHIN-MARUNOUCHI BUILDING29TH FLOOR cannot be described due to client confidentiality requirements.5-1, MARUNOUCHI 1-CHOMECHIYODA-KU, TOKYO100-6529, JAPANPHONE: 81 3 3214 6522FAX: 81 3 3214 6512 © 2010 Morrison & Foerster LLP | mofo.com
  • 13. FCPA PRACTICE: ASIA INVESTIGATIONSRepresentative China – FCPAFCPA Represent a major U.S. medical device developer in an internal investigation involving FCPAInvestigations and anti-bribery issues in China.and Other Represent the audit committee of a NASDAQ-listed company in connection with an internalInternal investigation involving numerous local staff interviews regarding FCPA and accountingReviews — issues relating to a major public tender process.China and Represented Fortune 500 company in SEC investigation and internal investigation of: (a)Asia-Pacific accounting for revenue on complex contract with a Chinese state-owned enterprise; and (b) related FCPA issues. Conducted an internal investigation concerning FCPA issues on behalf of an audit committee of a semiconductor manufacturer with U.S. and China operations. We also represented the company in a related SEC informal investigation, which ended quickly and with no action taken against our client. Represented the former head of the China operations of an entertainment sales and distribution company in an FCPA internal investigation. Represented a U.S. company accused of FCPA violations related to sales of aerospace supplies in Asia. The allegations included bribes paid to government officials to obtain large contracts with the foreign government. Our internal investigation included witness interviews and forensic review of books and records in Chinese and English. We also assisted the client with developing an enhanced FCPA Compliance Program and employee training. Represented a major China-based, NASDAQ-listed company in a company-wide internal investigation regarding possible accounting irregularities, in conjunction with outside auditors. Following the investigation, which involved employee interviews and document review, also successfully defended the company against multiple delisting actions by NASDAQ, handled all aspects of related communications with public investors, represented the company in an SEC investigation and U.S. class action lawsuit, and negotiated favorable settlements for both. Represented a U.S.-based multinational public corporation in an internal investigation of whistleblower allegations of violations of the FCPA in China and elsewhere in Asia, with interviews in several countries. Following the conclusion of our investigation and self-reporting, the SEC and DOJ took no action against our client. Represented the independent committee of a NASDAQ-listed company in the investigation of potential breaches of Sarbanes-Oxley and FCPA requirements in connection with payments to PRC officials. Represented the independent directors of a NASDAQ-listed company based in China in conducting an investigation into alleged bribery activities and falsification of records involving multiple points of sale throughout China. 2
  • 14. FCPA PRACTICE: ASIA INVESTIGATIONSRepresentative Represented the Special Committee of a NASDAQ-listed Bermuda corporation with itsFCPA principal place of business in China in an internal investigation of possible FCPA violationsInvestigations related to use of consultants.and Other Conducted internal investigation into alleged bribery activities in the PRC media industry byInternal third-party consultants engaged by a NASDAQ-listed company.Reviews — Conducted numerous FCPA training sessions in English and in Mandarin to companiesChina and operating in China, including recently to a publicly traded real estate company, and to aAsia-Pacific subsidiary of a public U.S. company. China – Other Represent a major international property developer with extensive operations in China in an internal investigation in connection with alleged misdeeds by its China country manager. Represent executives of industrial products company in international cartel and corrupt- payments investigation spanning Japan, China, Malaysia, America, and Europe. Represent a NASDAQ-listed technology company and its audit committee in connection with an internal investigation into accounting irregularities and related SEC and Sarbanes-Oxley issues. Represent a U.S.-based multinational public corporation in an investigation of its business practices in Europe, Asia, Australia, and North America in connection with a U.S. grand jury subpoena and related government investigations in Europe, New Zealand, and Asia. Represent a U.S.-based multinational public corporation in an internal investigation of alleged price-fixing practices in its Asian operations triggered by the receipt of a grand jury subpoena. Represented the audit committee of a NASDAQ-listed company in connection with China sales irregularities and related accounting and SEC and Sarbanes-Oxley-related issues. The work also involved coordination of deposition-type interviews with a China country manager who was ultimately terminated, and other staff in-country. Represented a U.S. public company with operations in Asia in an internal investigation regarding the company’s employee stock option program, involving the review of documents and interviewing of employees in English, Chinese, and Japanese. Represented a U.S.-based public company in an internal investigation of a whistleblower complaint regarding self-dealing and product safety issues in its China-based sourcing operations. The following are illustrative examples of our work advising board committees and conducting internal reviews and investigations in other areas of Asia. Other Asia-Pacific Investigations Represented multiple employees of a large Japanese manufacturer in U.S. Department of Justice investigations of alleged cartel and FCPA activity. 3
  • 15. FCPA PRACTICE: ASIA INVESTIGATIONSRepresentative Represented a U.S. software company in an internal investigation of its Japanese subsidiaryFCPA relating to accounting policies and procedures. We interviewed sixteen witnesses in JapanInvestigations and nineteen witnesses in the United States.and Other Represented a U.S. software company in an internal investigation of its Japanese subsidiaryInternal after a whistleblower complaint about revenue manipulation.Reviews — Represented a large Japanese multinational foreign company sanctioned by the U.S. StateChina and Department for alleged violations related to sales of controlled products and services toAsia-Pacific restricted countries. Our internal investigation and compliance reviews involved lawyers in our Tokyo, Singapore, and Washington, DC offices, and successfully concluded with the State Department agreeing to lift the sanctions. Represented a Japanese chemical company in an antitrust investigation triggered by a grand jury subpoena. The investigation included the company’s U.S. and European subsidiaries, and was conducted by attorneys from the firm’s Tokyo, New York, San Francisco, and London offices. Represented a major consumer electronics company, headquartered in Japan, in an internal investigation in connection with alleged price fixing allegations in the CRT industry. Represented a major conglomerate, headquartered in Japan, in an internal investigation in connection with alleged price fixing allegations in the LCD industry. Represented a Japanese software company in an internal investigation in connection with possible theft of trade secrets. Represented a U.S.-based multinational corporation in an internal investigation regarding the import licensing practices of its Japanese subsidiary. Represented a U.S. public company and its Asia subsidiary in an investigation of alleged improper labeling of the grade and quality of plastics used in computer monitors and other electronics equipment. Represented independent directors in an investigation into alleged kickbacks paid in connection with the formation of a joint venture and acquisition of assets in the telecommunications industry. Represented a global company in an investigation by the Japanese government involving potential claims concerning a government contract. Counsel healthcare products company on FCPA compliance relating to its operations in Japan. Represented an officer of a large oil services firm in a joint DOJ and SEC investigation relating to payments to government officials in Indonesia and Brazil. Represented senior executive of global oil and gas services company in an FCPA investigation of activities in Africa, Asia, and Europe. Investigating FCPA allegations in Taiwan, Malaysia, the Philippines, and Thailand for a Fortune 100 company. 4
  • 16. FCPA PRACTICE: ASIA INVESTIGATIONSRepresentative For more information about Morrison & Foerster’s FCPA practice, please contact:FCPAInvestigations PAUL T. FRIEDMAN CARL H. LOEWENSON, JR. RANDALL J. FONS SAN FRANCISCO NEW YORK DENVERand Other (415) 268-7444 (212) 468-8128 (303) 592-2257Internal PFRIEDMAN@MOFO.COM CLOEWENSON@MOFO.COM RFONS@MOFO.COMReviews —China and ROBERT A. SALERNO DANIEL P. LEVISONAsia-Pacific WASHINGTON, DC TOKYO (202) 887-6930 81 3 3214 6522 RSALERNO@MOFO.COM DLEVISON@MOFO.COM 5
  • 17. TAB 4 6
  • 18. Representations Our Securities Litigation, Enforcement, and White-Collar Defense Practice Group is comprised of more than 150 attorneys in our 16 offices worldwide.Involving FCPA The Group includes over a dozen former federal and state criminal prosecutors, former Securities and Exchange Commission (SEC) enforcement attorneys,FCPA TASK FORCE CONTACTS: and in-house accounting experts with decades of public accounting experience.PAUL T. FRIEDMAN Our domestic and international offices often advise on and investigate allegedSAN FRANCISCO FCPA violations. These matters have spanned the three primary provisions of(415) 268-7444 the FCPA: anti-bribery, books and records, and internal controls.PFRIEDMAN@MOFO.COM Representative MattersCARL H. LOEWENSON, JR. Represented a U.S.-based multinational public corporation in an internalNEW YORK investigation of whistleblower allegations of violations of the FCPA in China(212) 468-8128 and elsewhere in Asia, with interviews in several countries. Following theCLOEWENSON@MOFO.COM conclusion of our investigation and self reporting, the SEC and DOJ took noRANDALL J. FONS action against our client.DENVER Represent senior executives of multinational corporations in investigations(303) 592-2257 by the Department of Justice (DOJ) and the SEC into allegations of illegalRFONS@MOFO.COM payments to government officials in Nigeria, Angola, Kazakhstan, and Thailand.ROBERT A. SALERNO Conducted an internal investigation of possible FCPA violations involvingWASHINGTON, DC(202) 887-6930 telecom company in Venezuela.RSALERNO@MOFO.COM Investigating FCPA allegations in Taiwan, Malaysia, the Philippines, and Thailand for a Fortune 100 company.DANIEL P. LEVISON Represented an officer of a large oil services firm in a joint SEC/JusticeTOKYO Department investigation relating to payments to government officials in81 3 3214 6522 Indonesia and Brazil.DLEVISON@MOFO.COM Represent a major U.S. medical device developer in an internal investigation involving FCPA and anti-bribery issues in China. Conducted FCPA due diligence reviews for a defense contractor on more than 50 prospective agents, consultants, and joint venture partners in Europe, the Middle East, South America, North America, and the Asia/Pacific region. © 2010 Morrison & Foerster LLP | mofo.com
  • 19. FCPA PRACTICE: OVERVIEWRepresentations Conducted numerous FCPA training sessions in English and in Mandarin to companiesInvolving FCPA operating in China, including recently to a publicly traded real estate company, and to a subsidiary of a public U.S. company. Represented employee of a large international public company under investigation for violation of the FCPA in connection with activities in Argentina . After testimony, the SEC took no action against the employee. Represented the former president of a Fortune 500 oil services conglomerate in an FCPA investigation of improper payments in connection with government contracts in Nigeria. Represented oil services industry executives in connection with DOJ and SEC investigations of alleged FCPA violations in Venezuela and Nigeria. Represented the former in-house counsel of a Fortune 500 oil services conglomerate in an FCPA investigation in connection with activities in Africa and Europe. Represent board member of European company in FCPA investigation of activities in global telecom industry. Represented Fortune 500 company in an SEC investigation and internal investigation of: (a) accounting for revenue on complex contract with a Chinese state-owned enterprise; and (b) related FCPA issues. Represent multiple employees of large Japanese manufacturing company in investigations relating to FCPA and cartel activities. Counsel software company on policies and procedures for FCPA compliance in connection with activities around the world. Counsel healthcare products company on FCPA compliance relating to its operations in Japan. Represented senior executive of global oil and gas services company in an FCPA investigation of activities in Africa, Asia, and Europe. Conducted an internal investigation concerning FCPA issues on behalf of an audit committee of a semiconductor manufacturer with U.S. and China operations. We also represented the company in a related SEC informal investigation, which ended quickly and with no action taken against our client. Represented the former head of the China operations of an entertainment sales and distribution company in an FCPA internal investigation. Represented a U.S. company accused of FCPA violations related to sales of aerospace supplies in Asia. The allegations included bribes paid to government officials to obtain large contracts with the foreign government. Our internal investigation included witness interviews and forensic review of books and records in Chinese and English. We also assisted the client with developing an enhanced FCPA Compliance Program and employee training. Represented a major China-based, NASDAQ-listed company in a company-wide internal investigation regarding possible accounting irregularities, in conjunction with outside auditors. Following the investigation, which involved employee interviews and document review, also successfully defended the company against multiple delisting actions by 2
  • 20. FCPA PRACTICE: OVERVIEWRepresentations NASDAQ, handled all aspects of related communications with public investors, representedInvolving FCPA the company in an SEC investigation and U.S. class action lawsuit, and negotiated favorable settlements for both. Represented the independent committee of a NASDAQ-listed company in the investigation of potential breaches of Sarbanes-Oxley and FCPA requirements in connection with payments to PRC officials. Represented the independent directors of a NASDAQ-listed company based in China in conducting an investigation into alleged bribery activities and falsification of records involving multiple points of sale throughout China. Represented the Special Committee of a NASDAQ-listed Bermuda corporation with its principal place of business in China in an internal investigation of possible FCPA violations related to use of consultants. Conducted internal investigation into alleged bribery activities in the PRC media industry by third-party consultants engaged by a NASDAQ-listed company. 3
  • 21. TAB 5 7
  • 22. Client Alert.January 12, 20112010: Another Record-Breaking Year for FCPAEnforcement, Confirming "New Era"By Paul T. Friedman, Ruti Smithline, and Angela E. KleineSince 2007, regulators and commentators alike have touted each passing year as a record-breaking year for FCPAenforcement. 2010 was no exception. Last year saw an explosion in the number of cases brought by the Department ofJustice (DOJ) and the Securities and Exchange Commission (SEC). The last 12 months also brought the imposition ofrecord-breaking corporate fines and prison terms for individual defendants.In November of last year, Assistant Attorney General Lanny Breuer, Criminal Division, DOJ, announced that “[W]e are in a 1new area of FCPA enforcement.” A look back at 2010 confirms Mr. Breuer’s statement—in the history of FCPAenforcement, there has never been a year quite like 2010.THE NUMBERSThe number of FCPA enforcement actions increased by 85% from 2009 to 2010. Last year, the DOJ brought 48 criminalcases. The SEC filed 26 new actions. To put these numbers in context, in 2007—commonly anointed the first record-breaking year of FCPA enforcement—the DOJ brought 18 cases and the SEC filed 20 cases. Although these numbershave been steadily increasing from year to year, 2010 overshadowed any prior year in sheer numbers of enforcementactions.The monetary penalties assessed against corporations in 2010 were also astounding in their magnitude. In total,companies paid a record $1.8 billion in financial penalties to the DOJ and SEC in 2010. Even in 2008, when Siemenspaid $800 million (which remains the largest single fine ever paid), the DOJ and SEC collected $890 million in total for that 2year. Of the top 10 biggest FCPA settlements of all time, eight of them were reached in 2010. These include: COMPANY SETTLEMENT AMOUNT (in millions) BAE Systems $400 ENI/Snamprogetti $365 Technip $338 Daimler $185 Alcatel-Lucent $1371 Pleases see our Client Alert from November 19, 2010, http://www.mofo.com/files/Uploads/Images/101118-FCPA-Enforcement.pdf. A transcript of thespeech is available at http://www.justice.gov/criminal/pr/speeches/2010/crm-speech-101116.html.2 See “Recent Cases, Foreign Companies Dominate New Top Ten,” FCPA Blog (Jan. 5, 2010), http://www.fcpablog.com/blog/2011/1/5/recent-cases-foreign-companies-dominate-new-top-ten.html.1 © 2011 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 23. Client Alert. 3And 2010 also brought the longest FCPA prison sentence ever handed down: seven years and three months. Therewere a few relatively short sentences, such as the six months that Gerald and Patricia Green received for allegedly payingbribes to Thai government officials in order to win film festival contracts. But, overall, 2010 saw prosecutors aggressivelygoing after individuals, and individuals receiving hefty prison sentences. For example, two of the defendants involved in 4the Haiti Telecom investigation received sentences of 48 months and 57 months.A YEAR OF FIRSTS2010 was also remarkable as a year of firsts in terms of creative and aggressive enforcement, both by U.S. regulators andthe international anti-corruption community. To list just a few examples, 2010 was the first year that:x The SEC charged a company that is not a U.S. issuer with FCPA violations. 5x The DOJ successfully used money-laundering conspiracy charges to reach the conduct of foreign government officials accepting bribes. 6x U.S. and UK law enforcement cooperated in a massive corruption undercover sting operation. 7x U.S. Congress enacted a new law providing a bounty program for FCPA whistleblowers. 8x The UK passed the UK Bribery Act 2010 criminalizing a company’s failure to prevent bribery and commercial bribery between private parties. 9CONCLUSION2010 was unquestionably a watershed year for FCPA enforcement. Regulators ushered in a “new era” of enforcementthrough aggressive and expansive prosecutions. Regulators are promising the “era” to continue in 2011, and beyond. Ifso, 2011 may produce yet another record-breaking year.ContactMorrison & Foerster’s FCPA and Anti-Corruption Task Force:Paul T. Friedman Carl H. Loewenson, Jr. Randall J. Fons Robert A. SalernoSan Francisco New York Denver Washington, D.C.(415) 268-7444 (212) 468-8128 (303) 592-2257 (202) 887-6930pfriedman@mofo.com cloewenson@mofo.com rfons@mofo.com rsalerno@mofo.comDaniel P. Levison Sherry Yin Kevin RobertsTokyo Beijing London+ 81 3 3214 6717 + 86 10 5909 3566 + 020 7920 4160dlevison@mofo.com syin@mofo.com kroberts@mofo.com3 DOJ Press Release No. 10-422 (Apr. 19, 2010), http://www.justice.gov/opa/pr/2010/April/10-crm-442.html.4 DOJ Press Release No. 10-639 (June 2, 2010), http://www.justice.gov/opa/pr/2010/June/10-crm-639.html; DOJ Press Release No. 10-883 (July 30,2010), http://www.justice.gov/opa/pr/2010/July/10-crm-883.html.5 Complaint, SEC v. Panalapina, Inc. (S.D. Tex. Nov. 4, 2010), http://www.sec.gov/litigation/complaints/2010/comp21727.pdf.6 DOJ Press Release No. 10-639 (June 2, 2010), http://www.justice.gov/opa/pr/2010/June/10-crm-639.html.7 DOJ Press Release No. 10-048 (Jan. 19, 2010), http://www.justice.gov/opa/pr/2010/January/10-crm-048.html.8 Please see our Client Alert from November 4, 2010, http://www.mofo.com//files//Uploads/Images/101104-Dodd-Frank-Whistleblower.pdf.9 Please see our Client Alert from September 30, 2010, http://www.mofo.com/files/Uploads/Images/100930-UK-Bribery-Act-2010.pdf.2 © 2011 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 24. Client Alert.About Morrison & Foerster:We are Morrison & Foerster—a global firm of exceptional credentials in many areas. Our clients include some of thelargest financial institutions, investment banks, Fortune 100, technology and life science companies. We’ve beenincluded on The American Lawyer’s A-List for seven straight years, and Fortune named us one of the “100 BestCompanies to Work For.” Our lawyers are committed to achieving innovative and business-minded results for our clients,while preserving the differences that make us stronger. This is MoFo. Visit us at www.mofo.com.Because of the generality of this update, the information provided herein may not be applicable in all situations and shouldnot be acted upon without specific legal advice based on particular situations.3 © 2011 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 25. TAB 6 8
  • 26. Client Alert.January 3, 2011Alcatel-Lucent Settles “Unprecedented”$137 Million FCPA CaseBy Paul T. Friedman, Angela E. Kleine and Ruti SmithlineAfter a six-year international investigation, the DOJ and SEC announced that Alcatel-Lucent S.A. will pay one of the 1largest settlements in Foreign Corrupt Practices Act history. The Paris-based telecommunications company and threeof its subsidiaries will pay $92 million to resolve criminal charges with the DOJ and $45 million in disgorgement to the SECfor using consultants to bribe government officials in Costa Rica, Honduras, Malaysia, and Taiwan. The $137 million 2settlement is the seventh largest FCPA settlement ever reported.FOCUS ON MEANINGFUL INTERNAL CONTROLSDOJ charged Alcatel-Lucent with violating the internal controls and books and records provisions of the FCPA, and threesubsidiaries with conspiring to violate those provisions and the FCPA’s anti-bribery provisions. The SEC brought civilcharges against Alcatel-Lucent for bribery, books and records, and internal control violations.The SEC alleged that, from 2001 through 2006, Alcatel and its subsidiaries “failed to detect or investigate numerous red 3flags.” The complaint does not implicate any Alcatel officer or director. Rather, the SEC concluded that the briberyscheme was the product of a “lax corporate control environment.”The government acknowledged that, at the time the bribes were made, Alcatel already had a “company-wide FCPAtraining program” and “risk assessment committee” in place. However, employees allegedly routinely disregarded orcircumvented those programs, and the risk assessment committee was more focused on “customer lawsuits” than onpreventing bribery.“UNPRECEDENTED” AGREEMENT TO FOREGO THIRD-PARTY AGENTSThe DOJ’s announcement focused on Alcatel’s “business model”—pursuing business opportunities in foreign countriesusing third-party agents and consultants. DOJ said “this business model was shown to be prone to corruption.”1 Department of Justice Release No. 10-1481 (Dec. 27, 2010), available athttp://www.justice.gov/opa/pr/2010/December/10-crm-1481.html; SEC Litigation Release No. 21795 (Dec. 27, 2010), available athttp://www.sec.gov/litigation/litreleases/2010/lr21795.htm.2 See “In New Top Ten, Eight Are Foreign,” FCPA Blog (Nov. 5, 2010), available athttp://www.fcpablog.com/blog/2010/11/5/in-new-top-ten-eight-are-foreign.html.3 Complaint, SEC v. Alcatel-Lucent, S.A. (S.D. Fla. Dec. 27, 2010), ¶¶ 3, 19, available athttp://www.sec.gov/litigation/complaints/2010/comp21795.pdf.1 © 2011 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 27. Client Alert. 4The SEC’s complaint highlights two extreme examples. A perfume distributor was hired as a “consultant” in Honduras.He had no telecom experience, but was the brother of a government official. Also, the Alcatel employees responsible forreviewing Costa Rican consultants’ reports could not read or speak Spanish.In its three-year deferred prosecution agreement, Alcatel agreed to stop using third-party sales and marketing agents inconducting its worldwide business. DOJ reported that the “unprecedented pledge” was made on the company’s “owninitiative and at a substantial financial cost.”Alcatel-Lucent added in a separate statement that it was the “first in its industry” to terminate its international agents and 5consultants, which it said were the “primary” source of the improper payments. The company added that it is “a radicallydifferent company today” than at the time the improper payments were made, with “different management, including anew CEO, a new executive committee and a different Board of Directors, . . . a zero-tolerance policy regarding bribery andcorruption and . . . a system in place with strong processes and Internet-based and live training designed to prevent thesetypes of situations in all aspects of our business.” The company added that it has “implemented policies and proceduresto prevent the violations from happening again.”Notwithstanding Alcatel-Lucent’s existing anti-corruption program, the company agreed to implement rigorous complianceenhancements. As part of the settlement, the company also agreed to retain an “independent compliance monitor forthree years to oversee the implementation of the enhanced FCPA compliance program and to submit yearly reports to 6[DOJ].”THE LONG AND WINDING ROAD TO SETTLEMENTThe settlements were a long time coming. In 2004, Alcatel learned that Costa Rican authorities were investigating its vice 7president and long-time employee Christian Sapsizian for bribery in that country. Soon after, Alcatel fired Sapsizian andEdgar Valverde Acosta, Alcatel’s senior Costa Rican officer.Alcatel disclosed these payments to the U.S. government in 2004. But according to the DOJ, Alcatel’s cooperation with 8the U.S. government’s investigation was “limited and inadequate.” Cooperation did not improve, according to the DOJ,until after Alcatel merged with U.S.-based Lucent Technologies in November 2006.4 SEC Complaint, note 3 above, at ¶¶ 32, 40.5 Alcatel-Lucent Press Release, Alcatel-Lucent Welcomes the Settlements with U.S. Authorities Regarding Previously ReportedViolations of Foreign Corrupt Practices Act (Dec. 27, 2010), available athttp://www.alcatel-lucent.com/wps/portal/!ut/p/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLd4x3tXDUL8h2VAQAURh_Yw!!?LMSG_CABINET=Docs_and_Resource_Ctr&LMSG_CONTENT_FILE=News_Releases_2010/News_Article_002305.xml.6 DOJ Release No. 08-848 (Sept. 23, 2008), available at http://www.justice.gov/opa/pr/2008/September/08-crm-848.html.7 Alcatel-Lucent Condensed Consolidated Financial Statements (June 30, 2010), at 43-46.8 DOJ Release No. 10-1481, note 1, above.2 © 2011 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 28. Client Alert.In December 2006, Sapsizian was indicted for causing Alcatel to wire $14 million in “commission” payments to a 9consultant, who then transferred $2.5 million to a government official in Costa Rica. He pled guilty in June 2007 and 10was convicted in September 2008. Sapsizian was sentenced to 30 months in prison, three years of supervised release, 11and forfeiture of $261,500. Acosta was likewise indicted for conspiring to arrange the bribes back in 2007, but he 12remains a fugitive.Lucent, meanwhile, had its own FCPA issues prior to its merger with Alcatel and settled FCPA charges with DOJ andSEC in December 2007. The government alleged that Lucent improperly paid travel expenses for Chinese government 13officials from 2000 to 2003. Lucent paid a $1 million criminal fine and $1.5 million in civil penalties.Then, in its February 2010 10-K, Alcatel announced that in December 2009 it had reached agreements in principle toresolve the DOJ and SEC’s investigations of the company. The SEC and DOJ announced the final settlements, subject tocourt approval, on December 27, 2010.Alcatel’s settlement with the U.S. government came after the company already agreed to pay $10 million to settle acorruption case brought by the government of Costa Rica. And, Alcatel’s corruption saga may not yet be over. TheHonduras government said it will reopen investigations into alleged bribes in that country in light of the U.S. government 14settlements. Alcatel disclosed in its financial statements that French and Costa Rican authorities are also investigating 15the company’s activities.DOJ PUNISHES THE COMPANY’S “LIMITED” COOPERATIONThe DOJ’s announcement stated that Alcatel’s unusually high penalty reflected, in part, the company’s “limited andinadequate cooperation” before Alcatel’s 2006 merger with Lucent. This despite the fact that the company self-reportedimproper payments in 2004. DOJ did acknowledge that after the merger, the company’s cooperation “substantiallyimproved,” and said the charging documents reflect that cooperation.9 DOJ Release No. 06-850 (Dec. 19, 2006), available at http://www.justice.gov/opa/pr/2006/December/06_crm_850.html.10 DOJ Release No. 07-411 (June 7, 2007), available at http://www.justice.gov/opa/pr/2007/June/07_crm_411.html; DOJ Release No.08-848 (Sept. 23, 2008), available at http://www.justice.gov/opa/pr/2008/September/08-crm-848.html.11 DOJ Release No. 08-848 (Sept. 23, 2008), available at http://www.justice.gov/opa/pr/2008/September/08-crm-848.html.12 Notice to Transfer to Fugitive Status, U.S. v. Edgar Valverda Acosta, Case 1:06-cr-20797-PAS (S.D. Fla. June 14, 2007), available athttps://secure.traceinternational.org/compendium/file.asp?id=576.13 DOJ Release No. 07-1028 (Dec. 21, 2007), available at http://www.justice.gov/opa/pr/2007/December/07_crm_1028.html; SECRelease No. 20414 (Dec. 21, 2007), available at http://www.sec.gov/litigation/litreleases/2007/lr20414.htm.14 Associated Press, Honduras Reopens Alcatel Bribe Case on SEC Ruling (Dec. 29, 2010), available athttp://www.businessweek.com/ap/financialnews/D9KDN1F00.htm.15 Alcatel-Lucent Condensed Consolidated Financial Statements, note 7 above.3 © 2011 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 29. Client Alert.CONCLUSIONThis significant settlement underscores the importance of establishing and maintaining robust internal controls andcompliance programs. It is not enough to put a compliance program in place. Policies and procedures must be followed,monitored, and updated regularly. Importantly, that includes keeping tabs on the consultants and other agents that thecompany and its subsidiaries employ in foreign countries. This case highlights the potential perils of reliance onconsultants and other agents in foreign countries, given DOJ’s statement that Alcatel’s “business model was shown to beprone to corruption.”Contact:Morrison & Foerster’s FCPA and Anti-Corruption Task Force:Paul T. Friedman Carl H. Loewenson Randall J. Fons Robert A. SalernoSan Francisco New York Denver Washington, D.C.(415) 268-7444 (212) 468-8128 (303) 592-2257 (202) 887-6930pfriedman@mofo.com cloewenson@mofo.com rfons@mofo.com rsalerno@mofo.comDaniel P. Levison Sherry Yin Kevin RobertsTokyo Beijing London+ 81 3 3214 6717 + 86 10 5909 3566 + 020 7920 4160dlevison@mofo.com syin@mofo.com kroberts@mofo.comAbout Morrison & Foerster:We are Morrison & Foerster—a global firm of exceptional credentials in many areas. Our clients include some of thelargest financial institutions, investment banks, Fortune 100, technology and life science companies. We’ve beenincluded on The American Lawyer’s A-List for seven straight years, and Fortune named us one of the “100 BestCompanies to Work For.” Our lawyers are committed to achieving innovative and business-minded results for our clients,while preserving the differences that make us stronger. This is MoFo. Visit us at www.mofo.com.Because of the generality of this update, the information provided herein may not be applicable in all situations and shouldnot be acted upon without specific legal advice based on particular situations.4 © 2011 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 30. TAB 7 9
  • 31. Client Alert.December 2, 2010FCPA: DOJ May Be Listening, But It Is NotChanging Its ApproachBy Paul T. Friedman, Ruti Smithline, and Angela E. KleineAs we wrote in our November 19, 2010 FCPA Client Alert, Assistant Attorney General Lanny Breuer, Criminal Division,Department of Justice, recently acknowledged that “some practitioners and others would like to see, in the FCPA area, an 1amnesty program similar to the one that exists in the realm of antitrust.” In a hotel ballroom filled with FCPA defenseattorneys and in-house counsel, Mr. Breuer stated that “we listen to considered suggestions of this kind.” But onNovember 30, 2010, in front of the Senate Judiciary Committee’s Subcommittee on Crime and Drugs, Acting DeputyAssistant Attorney General Greg Andres rejected the possibility of an amnesty program for FCPA cases.Although seemingly inconsistent with Mr. Breuer’s suggestion that DOJ was willing to consider an amnesty program, Mr.Andres’s remarks at the Senate Hearing reinforced Mr. Breuer’s basic theme: the DOJ’s aggressive enforcement of theFCPA is here to stay irrespective of extensive criticism.For months, critics of the recent approach to FCPA enforcement have urged regulators to adopt a leniency programmodeled after one effectively used by DOJ’s Antitrust Division. Under the Antitrust Division’s Corporate LeniencyProgram, the first member of a price-fixing cartel that self-reports the violation—and agrees to cooperate fully with thegovernment—can receive a free pass. The government’s rationale for granting amnesty is that, without a member of thecartel coming forward, it may be difficult or impossible for the government to discover and prosecute the illegal conduct.Similarly in the FCPA context, advocates of a leniency program argue that, in the absence of self-disclosure, the 2government is not as likely to discover the FCPA violation. International bribery investigations are lengthy andexpensive, and the government has limited resources. The government often relies on companies to conduct their owninternal investigations and report their findings. Critics of the government’s aggressive FCPA enforcement argue thatcompanies should get amnesty, or the very least leniency, for self-reporting violations that regulators are otherwiseunlikely to find.Advocates of an FCPA amnesty program also point to the detrimental effects an FCPA conviction can have on a 3company, including debarment from federal programs. By rewarding self-disclosure and cooperation, companies couldbe spared potentially devastating outcomes while still remediating and addressing the improper conduct. And, giving thecompany amnesty would not prevent the government from pursuing the individuals who perpetuated the illegal conduct.1 Please see our Client Alert from November 19, 2010, available at http://www.mofo.com/files/Uploads/Images/101118-FCPA-Enforcement.pdf. Atranscript of the speech is available at http://www.justice.gov/criminal/pr/speeches/2010/crm-speech-101116.html.2 See transcript from October 27, 2010 Legal Reform Summit, sponsored by U.S. Chamber of Commerce.3 See Testimony of Michael Volkov before the Subcommittee on Crime and Drugs, Committee on the Judiciary, United States Senate, November 30,2010, available at http://judiciary.senate.gov/hearings/hearing.cfm?id=4869.1 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 32. Client Alert.Moreover, as one critic pointed out, an amnesty program would be a significant improvement to FCPA enforcement thatregulators could implement quickly and without protracted legislative action. “[The Justice Department] could do it 4tomorrow” by making a new policy.Despite the advocacy for an amnesty program, Mr. Andres made clear that DOJ is not interested in making changes to itscurrent enforcement practices. Mr. Andres stated that DOJ does not believe “that immunity is appropriate, just as [it] 5do[esn’t] believe that a bank robber could get immunity for disclosing that he robbed a bank.” According to Mr. Andres,the fact that a company self-discloses a violation does not merit the company “getting a pass for those crimes.”Mr. Andres also pointed out that companies already receive favorable treatment for self-reporting violations. According toMr. Andres, DOJ has traditionally encouraged companies to self-report, promising credit for cooperation, and DOJ officialsconsistently assert that “a company that comes forward on its own will see a more favorable resolution than one that 6doesn’t.” As a result, Mr. Andres said that, given the credit self-reporting companies already receive from DOJ, he was“not sure there’s a need for a formal amnesty program.”However, just how much “credit” a company receives by self-reporting under the current enforcement regime is subject tovigorous debate. There is a widespread belief among practitioners that a company may not benefit at all by havingreported the violation and, in some instances, it is in fact worse off. An amnesty program would at least give companies aconcrete and transparent incentive to self-disclose a violation, governed by clear “rules of the road.”CONCLUSIONDOJ’s rejection of the amnesty program highlights two significant trends in FCPA enforcement:One, it leaves companies in the same uncertain and uncomfortable position of deciding whether self-reporting isbeneficial. The decision about whether to self-report is a difficult one, and the analysis needs to take into considerationmore than just DOJ’s statements about cooperation credit currently available. The decision is necessarily informed by thespecific facts and circumstances, and should be made only after consideration of all relevant facts, in consultation withexpert counsel.Two, the government will continue its heightened prosecution of FCPA cases regardless of mounting criticism. While thegovernment may be “willing to listen” to constructive criticism and suggestions, thus far it has not been convinced that anychange to its increasingly aggressive enforcement policies is warranted.ContactMorrison & Foerster’s FCPA and Anti-Corruption Task Force:Paul T. Friedman Carl H. Loewenson, Jr. Randall J. Fons Robert A. SalernoSan Francisco New York Denver Washington, D.C.(415) 268-7444 (212) 468-8128 (303) 592-2257 (202) 887-6930pfriedman@mofo.com cloewenson@mofo.com rfons@mofo.com rsalerno@mofo.com4 See id.5 See Testimony of Deputy Assistant Attorney General Greg Andres before the Subcommittee on Crime and Drugs, Committee on the Judiciary, UnitedStates Senate, November 30, 2010, available at http://judiciary.senate.gov/hearings/hearing.cfm?id=4869.6 See transcript from Lanny Breuer’s November 2010 speech, available at http://www.justice.gov/criminal/pr/speeches/2010/crm-speech-101116.html.2 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 33. Client Alert.Contacts continued:Daniel P. Levison Sherry Yin Kevin RobertsTokyo Beijing London+ 81 3 3214 6717 + 86 10 5909 3566 + 020 7920 4160dlevison@mofo.com syin@mofo.com kroberts@mofo.comAbout Morrison & Foerster:We are Morrison & Foerster—a global firm of exceptional credentials in many areas. Our clients include some of thelargest financial institutions, investment banks, Fortune 100, technology and life science companies. We’ve beenincluded on The American Lawyer’s A-List for seven straight years, and Fortune named us one of the “100 BestCompanies to Work For.” Our lawyers are committed to achieving innovative and business-minded results for our clients,while preserving the differences that make us stronger. This is MoFo. Visit us at www.mofo.com.Because of the generality of this update, the information provided herein may not be applicable in all situations and shouldnot be acted upon without specific legal advice based on particular situations.3 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 34. TAB 8 10
  • 35. Client Alert.November 19, 2010DOJ Official Proclaims “New Era” of FCPAEnforcementBy Paul T. Friedman, Ruti Smithline, and Angela E. KleineAssistant Attorney General Lanny Breuer, Criminal Division, Department of Justice, announced a “new era of FCPA 1enforcement” this week. He emphasized that DOJ’s aggressive enforcement of the FCPA is “here to stay.”The Foreign Corrupt Practices Act (“FCPA”) is a federal law enacted in 1977 to prohibit making payments to foreign 2officials for the purpose of obtaining or retaining business. It applies broadly to U.S. companies and individuals,companies that have issued securities registered in the U.S., employees and agents of U.S. businesses, and foreignnationals and businesses that cause prohibited acts in the U.S.Speaking at the American Conference Institute’s National Conference on the Foreign Corrupt Practices Act, Mr. Breuerdescribed “historic” growth in FCPA actions during 2010. He concluded with concrete advice to companies operating inthe new climate of “vigorous” enforcement.AGGRESSIVE ENFORCEMENTFCPA enforcement has “become more aggressive,” and Mr. Breuer stated that companies “are right to be moreconcerned.” He detailed the Department of Justice’s FCPA increased enforcement efforts during 2010, including:• “Historic Cases”: In the past year, DOJ has imposed well over $1 billion in criminal penalties—more than in any prior 12-month period. Last year and this year combined, the government has charged over 50 individuals and collected nearly $2 billion in FCPA-related cases. In comparison, in 2004 it charged just 2 individuals and collected $11 million. The Department is now focused on prosecuting individuals, as well as levying substantial criminal fines against companies.• “Significant Changes in the Fraud Section”: The Department’s Fraud Section grew significantly this year. Its new FCPA Unit alone consists of over a dozen prosecutors dedicated solely to FCPA cases. The FCPA Unit is also working with the Asset Forfeiture and Money Laundering Section, which targets, in part, proceeds of foreign official corruption being laundered through the United States.• Increasing International Cooperation: The Department is expanding its reach by forming partnerships with foreign agencies. Cooperation with the U.K.’s Serious Fraud Office, for example, led to guilty pleas and a $400 million-plus criminal fine against a U.K. company. The speech also highlighted the United States’ participation in the Organization for Economic Cooperation and Development (“OECD”), an international economic organization of 30 member countries.1 A transcript of the speech is available at http://www.justice.gov/criminal/pr/speeches/2010/crm-speech-101116.html.2 Foreign Corrupt Practices Act of 1977, Pub. L. No. 95-213, 91 Stat. 1494 (codified as amended at 15 U.S.C. §§ 78m, 78dd-1, 78dd-2, 78dd-3, 78ff).For a summary of the FCPA’s provisions, please see our Client Alert from September 20, 2010, available athttp://www.mofo.com/files/Uploads/Images/100920-FCPA.pdf.1 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 36. Client Alert.TAKING ON FCPA CRITICSMr. Breuer acknowledged that the government’s increasingly aggressive FCPA enforcement has drawn criticism. Heagreed that there has been some “thoughtful” commentary, but emphasized that some “much less thoughtfulcommentary” is “exactly upside down.”• Rejecting “Bad for Business” Criticisms: Mr. Breuer forcefully rejected the argument that FCPA enforcement is “bad for business.” He reiterated the Department’s position that the FCPA is vital to ensuring market integrity and an even playing field.• “Competitive Disadvantages”: Mr. Breuer described the criticism that FCPA enforcement puts American business at a competitive disadvantage as “unfounded.” More than half of the Department’s FCPA resolutions in the last five years have involved foreign companies. In any case, the United States, he said, leads by example. As a result, the U.K. and other OECD members are stepping up anti-bribery enforcement around the world.• Open to Suggestions: Mr. Breuer acknowledged that at least some criticisms are “worth debating.” The Department takes “serious commentary” into account. He specifically recognized calls for an amnesty program similar to that under antitrust law. He did not entirely reject it, but said only, “I can at least tell you that we listened to [and] considered suggestions of this kind.”SUGGESTIONS TO COMPANIESMr. Breuer made clear that companies should not “wait in worry for [DOJ] to come knocking.” Rather, companies need tobe proactive and take affirmative steps that “would put [ ] organizations in a better position for the day we do comeknocking, or that could prevent us from coming at all.” He offered two specific suggestions to companies given theclimate of vigorous FCPA enforcement.1) “Take a hard look at your organization’s FCPA compliances practices.”Reviewing and strengthening compliance programs is more important than ever in the Department’s “new era” of FCPAenforcement.• Guidance from the OECD: Mr. Breuer referred companies to the OECD’s recently published Good Practice Guidance on Internal Controls, Ethics, and Compliance. 3 The OECD’s recommendations for evaluating compliance programs include: o Risk-Assessment: Assess the company’s individual risks, such as industry and geography, to tailor internal controls, ethics, and compliance programs. o A Strong Anti-Corruption Policy Based on the Risk Assessment: Implement a clear and visible anti- corruption policy applicable to all employees and entities the company controls. High-risk areas, such as gifts and hospitality expenses, should be the subject of specific compliance programs. Senior management should establish a strong “tone at the top,” and individuals at all levels of the company should be responsible for monitoring and ensuring compliance. o Oversight: Consider whether a senior corporate officer should be charged with overseeing anti-bribery compliance. That individual (or group) should have sufficient resources, autonomy from management, and the authority to report directly to the board’s audit committee.3 The guidance is available on the OECD website at http://www.oecd.org/dataoecd/5/51/44884389.pdf.2 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 37. Client Alert. o Guidance: Make guidance and advice, including responses to urgent questions about situations in foreign jurisdictions, available to employees and business partners. o Reporting: Allow all employees and business partners to report potential violations confidentially and protect them from discipline. o Re-Assessment: Regularly review and re-assess anti-bribery policies and programs.• High-risk industries: Mr. Breuer discussed the fact that the government is increasingly taking an “industry-wide approach” to FCPA investigation. Corporations can even receive “credit” by providing the government with information about their competitors and clients. Industries that have been the subject of a high number of Department of Justice and Securities and Exchange Commission enforcement actions include energy, infrastructure, pharmaceuticals and medical devices, life sciences, 4 telecommunications, and defense.2) Self-ReportingMr. Breuer assured companies, “there is no doubt that a company that comes forward on its own will see a morefavorable resolution than one that doesn’t.” He cited a recent example in which “cooperation” meant that companycounsel conducted an investigation in 46 jurisdictions, hired an outside auditor, and held over 60 meetings and calls withthe DOJ and SEC. The company ultimately received a deferred prosecution agreement.Mr. Breuer’s message encouraging self-reporting is not itself reflective of a “new era” of enforcement. The Department,as reflected in Mr. Breuer’s speech, has traditionally encouraged companies to self-report violations. But, the decisionwhether to self-report is, as Mr. Breuer acknowledged, “a difficult one.” The analysis needs to take into considerationmore than the cooperation credits available. The decision is necessarily informed by the specific facts and circumstances,and should be made only after consideration of all relevant factors, in consultation with expert counsel.CONCLUSIONMr. Breuer’s speech underscores the increasing momentum of FCPA enforcement activities, and the high priority DOJ isgiving to FCPA enforcement. His suggestion that companies take a hard look at their FCPA compliance policies andcontrols is a good one, and we have been speaking to our clients about the importance of doing so.ContactMorrison & Foerster’s FCPA and Anti-Corruption Task Force:Paul T. Friedman Carl H. Loewenson, Jr. Randall J. Fons Robert A. SalernoSan Francisco New York Denver Washington, D.C.(415) 268-7444 (212) 468-8128 (303) 592-2257 (202) 887-6930pfriedman@mofo.com cloewenson@mofo.com rfons@mofo.com rsalerno@mofo.comDaniel P. Levison Sherry Yin Kevin RobertsTokyo Beijing London+ 81 3 3214 6717 + 86 10 5909 3566 + 020 7920 4160dlevison@mofo.com syin@mofo.com kroberts@mofo.com4 For more information, please see our Client Alert from January 19, 2010, “Government FCPA Enforcement ‘Intensely Focused’ on Life SciencesCompanies,” available at http://www.mofo.com/government-fcpa-enforcement-intensely-focused-on-life-sciences-companies-12-01-2009/.3 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 38. Client Alert.About Morrison & Foerster:We are Morrison & Foerster—a global firm of exceptional credentials in many areas. Our clients include some of thelargest financial institutions, investment banks, Fortune 100, technology and life science companies. We’ve beenincluded on The American Lawyer’s A-List for seven straight years, and Fortune named us one of the “100 BestCompanies to Work For.” Our lawyers are committed to achieving innovative and business-minded results for our clients,while preserving the differences that make us stronger. This is MoFo. Visit us at www.mofo.com.Because of the generality of this update, the information provided herein may not be applicable in all situations and shouldnot be acted upon without specific legal advice based on particular situations.4 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
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  • 40. Client Alert.November 4, 2010SEC Issues Proposed Dodd-Frank Whistleblower RulesBy Paul Friedman, Boris Yankilovich and Justin HoogsYesterday, the Securities and Exchange Commission released a 181-page set of Proposed Rules for the implementationof the new, robust whistleblower provisions enacted as part of the Dodd-Frank Wall Street Reform and Consumer 1Protection Act (“Dodd-Frank”). The provisions encourage whistleblowers to report violations of the securities laws to theSEC by offering bounties for information leading to successful enforcement actions.The fact that the SEC acted unanimously and quickly in crafting this comprehensive proposal — well in advance of theApril 2011 deadline to issue final regulations — suggests that it perceives the new whistleblower provisions as animportant part of its enforcement toolkit. Recent blockbuster whistleblower payouts, including last month’s $96 million 2bounty awarded to a pharmaceutical company’s former employee under the False Claims Act, have reinforced concernsabout the new whistleblower bounty provisions and their potential impact on the business community. The issuance ofthese Proposed Rules comes days after the SEC’s announcement that it has set aside a fund of $452 million for 3anticipated whistleblower claims.SYNOPSIS OF KEY PROVISIONSWhile the comment period, which runs through December 17, 2010, may lead to changes in the final implementation ofthe Rules, we have prepared a preview and synopsis of some of the key provisions in the Proposed Rules to help ourclients prepare for the changes ahead: • Who Is A “Whistleblower”? o The Proposed Rules do not significantly limit Dodd-Frank’s broad definition of “whistleblower,” which includes any individual, or two or more individuals acting jointly, who provide(s) to the SEC “original” information relating to a violation of the securities laws. o While officers, directors, employees, shareholders, business competitors, agents, consultants, distributors, vendors, contractors, service providers, or customers can generally serve as whistleblowers, the Proposed Rules clarify that certain employees or directors, such as those with established professional obligations that play “a critical role in achieving compliance with the federal securities laws,” would not qualify as whistleblowers.1 The Proposed Rules (Release No. 34-63237; File No. S7-33-10) are available at http://www.sec.gov/rules/proposed/2010/34-63237.pdf. For asummary of Dodd-Frank’s whistleblower provisions, please see our Client Alert from July 21, 2010, available athttp://www.mofo.com/files/Uploads/Images/100721SLEW.pdf.2 See http://www.reuters.com/article/idUSTRE69S4LZ20101029;http://online.wsj.com/article/SB10001424052702303443904575578713255698500.html?mod=googlenews_wsj.3 http://www.sec.gov/news/studies/2010/whistleblower_report_to_congress.pdf1 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 41. Client Alert. o The Proposed Rules explain that the whistleblower’s information need only relate to a “potential violation” of the securities laws, and that Dodd-Frank’s anti-retaliation protections do not depend on an ultimate determination about whether the reported potential violation constituted an actual violation of the securities laws. • Who Is Not A Whistleblower? o Dodd-Frank prohibits certain individuals from receiving bounties as whistleblowers, such as persons convicted of crimes related to the violation, persons who learned of the disclosed information by performing audits of financial statements as required by the securities laws, and persons who knowingly provide false, fictitious, or fraudulent information. o The Proposed Rules further delineate who may receive bounties as whistleblowers by specifically excluding: persons who provide information after the company has received any formal or informal request, inquiry, or demand from the SEC (unless the company fails to provide the documents or information to the requesting authority in a timely manner); persons who provide information obtained through communications protected by the attorney- client privilege, or information obtained in connection with the legal representation of a client; persons who provide information obtained in connection with an independent public accountant’s performance of an engagement required under the securities laws; persons with legal, compliance, audit, supervisory, or governance responsibilities to whom information about potential misconduct was communicated with the reasonable expectation that they would take appropriate steps to respond to the alleged violation (unless the company does 4 not disclose the information to the SEC in a timely manner or proceeds in bad faith); persons who provide information obtained from or through a company’s legal, compliance, audit, supervisory, or governance functions (unless the company does not disclose the information to the SEC in a timely manner or proceeds in bad faith); persons who obtained the provided information in a manner that violates federal or state criminal law; and persons who provide information that was obtained from those who would otherwise be excluded under any of the above limitations.4 After Dodd-Frank’s enactment, many lawyers and compliance officers expressed concern that the prospect of large awards would reduce theeffectiveness of existing compliance, legal, audit, and similar processes for investigating and responding to potential misconduct. By excludingcompliance-focused employees from serving as whistleblowers, the Proposed Rules may dampen Dodd-Frank’s impact on companies’ internalcompliance processes, audits, and investigations. By commenting that the SEC will consider higher percentage awards for those whistleblowers whofirst report violations through internal compliance programs, the Commission further encourages potential whistleblowers to turn first to companies’ owncompliance vehicles before reporting to the government.2 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 42. Client Alert. • Whistleblower Anonymity. o Under the Proposed Rules, a whistleblower would be permitted to provide information anonymously, but only if he or she is represented by an attorney who is identified to the SEC at the time of the initial submission and who certifies that he or she has verified the whistleblower’s identity. The whistleblower, however, would have to disclose his or her identity before the SEC could pay out any award. o The SEC will not reveal the whistleblower’s identity, or disclose other information reasonably expected to reveal his or her identity, except under limited circumstances — for example, when such disclosure is required to a defendant or respondent in a SEC-initiated federal court or administrative action. o The SEC may share information with other domestic and foreign regulatory and law enforcement agencies, but domestic agencies are required to maintain the information as confidential, and foreign agencies must provide the SEC with appropriate assurances of confidentiality. • No Impediments Against Whistleblower Communications With the SEC. o The Proposed Rules prohibit any person from taking any action to impede a whistleblower from communicating directly with SEC staff about a potential violation. This prohibition includes attempting or threatening to enforce a confidentiality agreement against the whistleblower, unless the confidentiality agreement deals with information covered under exceptions for the attorney-client privilege or legal representation. o Aiming to ensure unobstructed communication between the Commission and the whistleblower, the Proposed Rules authorize SEC staff to communicate directly with the whistleblower, without first seeking the consent of company counsel. This rule would apply even to communications with high ranking directors and officers, to whom company counsel’s representation ordinarily would attach to preclude direct contact by outside counsel. • Gains From One’s Own Misconduct? o The Proposed Rules do not categorically prohibit wrongdoers from being rewarded as whistleblowers. To prevent wrongdoers from financially benefiting from their own misconduct, however, the Proposed Rules restrict how much of a sanction the SEC may consider as the basis for the whistleblower’s bounty. Specifically, the Proposed Rules prohibit the SEC from counting any monetary sanctions imposed against the whistleblower or against an entity for liability based substantially on conduct directed, planned or initiated by the whistleblower. o As a result of these limits on conduct that can be considered in establishing the qualifying sanction amount, culpable individuals have an incentive to blow the whistle on others who engage in the misconduct alongside the whistleblower, although the whistleblower likely will do so only if he or she believes that the conduct attributable exclusively to others will sustain a hefty monetary sanction. The SEC is soliciting comments on whether to expressly limit the category of whistleblowers to only those individuals who provide information about another person’s potential violations.3 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 43. Client Alert. • No Amnesty for Culpable Whistleblowers. o In addition to precluding recovery from a whistleblower’s own misconduct, the Proposed Rules would clarify that whistleblowers who participated in the alleged wrongful conduct are not immune from prosecution or enforcement actions. Yet, under existing policy, the SEC retains discretion to determine whether, by how much, and in what manner to credit the whistleblower’s cooperation.STEPS COMPANIES SHOULD CONSIDER TO MINIMIZE THE IMPACT OF THE NEW WHISTLEBLOWER LAW ANDREGULATIONSExperience with other statutes, such as the False Claims Act, shows that whistleblowers are often employees who firstraised concerns internally and felt that their concerns were not adequately addressed by their corporate employer.To minimize the risks presented by the Dodd-Frank whistleblower provisions, companies should consider doing more toensure that their compliance systems are robust and state-of-the-art, and to demonstrate prompt, sincere attention toemployee concerns. Companies should review their compliance and ethics programs to ensure that these programsallow them to identify, investigate, and handle potential misconduct quickly and effectively. Companies also shouldreinforce to their managers the importance of taking concerns seriously and respectfully. Our clients should consider thefollowing specific steps, among others: • Re-emphasize Culture of Compliance: Company management should regularly communicate the importance of compliance, and ensure that employees receive periodic training on compliance issues. Companies might consider incentivizing internal reporting and ethical decision-making. • Hotline: Companies should examine Hotline procedures to ensure that employee concerns are adequately addressed in a timely and effective manner that consistently conveys that concerns are being taken seriously. • Renewed Management Training, Especially Senior Management: Companies should emphasize education and training of management on recognition of whistleblower complaints, procedures to respond to complaints, and non-retaliation policies. • Regular Compliance Audits and Risk Assessments: Companies should examine Hotline reports and other sources in developing and updating their compliance programs. Regular compliance audits and risk assessments should be conducted to detect potential risks and offenses.ContactMorrison & Foerster’s FCPA and Anti-Corruption Task Force:Paul T. Friedman Carl H. Loewenson, Jr. Randall J. Fons Robert A. SalernoSan Francisco New York Denver Washington, D.C.(415) 268-7444 (212) 468-8128 (303) 592-2257 (202) 887-6930pfriedman@mofo.com cloewenson@mofo.com rfons@mofo.com rsalerno@mofo.comDaniel P. Levison Sherry Yin Kevin Roberts Daniel P. WestmanTokyo Beijing London Northern Virginia+ 81 3 3214 6717 + 86 10 5909 3566 + 020 7920 4160 (703) 760-7795dlevison@mofo.com syin@mofo.com kroberts@mofo.com dwestman@mofo.com4 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
  • 44. Client Alert.About Morrison & Foerster:We are Morrison & Foerster—a global firm of exceptional credentials in many areas. Our clients include some of thelargest financial institutions, investment banks, Fortune 100, technology and life science companies. We’ve beenincluded on The American Lawyer’s A-List for seven straight years, and Fortune named us one of the “100 BestCompanies to Work For.” Our lawyers are committed to achieving innovative and business-minded results for our clients,while preserving the differences that make us stronger. This is MoFo. Visit us at www.mofo.com.Because of the generality of this update, the information provided herein may not be applicable in all situations and shouldnot be acted upon without specific legal advice based on particular situations.5 © 2010 Morrison & Foerster LLP | mofo.com | Attorney Advertising
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  • 46. Attorney Bio. Paul Friedman specializes in defending class action litigation, particularlyPaul T. Friedman securities, antitrust, and consumer cases, in courts across the country, often in multidistrict litigation. He also specializes in conducting internal investigations on behalf of Audit Committees and companies (some of which are global in scope and focus on alleged price-fixing by cartels and Foreign Corrupt Practices Act issues). He co-leads the firms FCPA Task Force. He frequently represents clients in SEC investigations. In 28 years with Morrison & Foerster, he has represented companies ranging from start-ups to some of the largest global companies, audit and special committees, individual directors and officers, venture capital firms, investment banks, and law firms in securities class actions and derivative actions.PARTNER In addition to securities and antitrust litigation, Mr. Friedman has an active practice in corporate and other complex commercial litigation. He is a425 MARKET STREET frequent speaker on topics relating to securities litigation, cross-borderSAN FRANCISCO litigation, the FCPA, and internal investigations.CALIFORNIA 94105-2482(415) 268-7444 Mr. Friedman was recognized in the 2010 and 2006 BTI Consulting GroupsPFRIEDMAN@MOFO.COM Client Service All-Star survey for consistently delivering exceptional client service. Mr. Friedman has also been listed in the 2007-2011 Best Lawyers in America directories for Commercial Litigation, and is regularly recognized as a Northern California “Super Lawyer.” Mr. Friedman was the Chair of the Ninth Circuit Advisory Board, a group of senior lawyers from throughout the Ninth Circuit appointed by the Chief Judge during 2008-2009. He was the Chair of the 2003 Ninth Circuit Judicial Conference and was also the Chair of the Lawyer Representatives Coordinating Committee of the 2003 Ninth Circuit Judicial Conference. He served as Program Chair of the 2002 Ninth Circuit Judicial Conference. Mr. Friedman was the Chair of the Lawyer Representatives of the Ninth Circuit Judicial Conference from the Northern District of California during 1998- 2000. In 2002, the bench and bar of the Northern District of California honored him with the Public Service Award in recognition of his service to the Court. Mr. Friedman joined Morrison & Foerster in 1982 and became a partner in 1986. He has served as Deputy Chair (1987-1990) and Chair (1990-1993) of the firms Litigation Department. He is the Chair of The Morrison & Foerster Foundation, a member of the firms Executive Committee, This is MoFo. © 2010 Morrison & Foerster LLP | mofo.com
  • 47. ATTORNEY BIO.Paul T. Friedman Compensation Committee, and Board of Directors, and is a Vice President of the Executive Committee of the Yale Law School Association.PARTNERSAN FRANCISCO Mr. Friedman was a member of Phi Beta Kappa at the University of(415) 268-7444 California, Berkeley. He was also awarded the University Medal, the highestPFRIEDMAN@MOFO.COM undergraduate honor at the University, presented to the most distinguished student in the graduating class. Representative Experience In re Crocs, Inc. Securities Litigation; Wheeler v. Snyder et al. (D. Colo.) Represent Crocs, Inc. and certain of its current and former officers and directors in shareholder class actions (claiming violations of the Exchange Act) and derivative lawsuits filed in Colorado. In February 2009, won dismissal of all derivative claims, with prejudice, on first motion to dismiss. No appeal was filed. Motions to dismiss the federal securities class action claims have been fully briefed and are pending court ruling. (Pending) Asia-Pacific FCPA Investigation Represented a U.S.-based multinational Fortune 50 company in internal investigation of alleged violations of the Foreign Corrupt Practices Act in Asia-Pacific countries. Following the conclusion of our investigation and self-reporting, neither the SEC nor the DOJ took any action against our client. (2007) Global Cartel Investigations Representing a U.S.-based multinational Fortune 50 company in global cartel investigations and all related civil and criminal proceedings in several countries, including class action litigation. (Ongoing) Antitrust Multi-District Litigation Won dismissal with prejudice in 51 separate nationwide class actions, which were combined into one MDL proceeding in the Northern District of Georgia. Plaintiffs alleged that defendants conspired to set fuel surcharge levels on "Less Than Truckload" shipments. On behalf of our Fortune 50 client, we obtained a stay of discovery, and moved to dismiss the complaint on the ground that plaintiffs had not alleged facts to establish a conspiracy under the standards set forth by the Supreme Court in Twombly v. Bell Atlantic. The court granted the motion to dismiss and set a very high standard for any subsequent amendment. The plaintiffs concluded that they could not meet that standard, and the case was dismissed with prejudice. (2009) 2
  • 48. ATTORNEY BIO.Paul T. Friedman Late-Payment Fees Class Action With hundreds of millions of dollars at stake, won dismissal with prejudicePARTNER of nationwide class action complaint on the first motion to dismiss in caseSAN FRANCISCO involving cutting edge preemption issues arising from the collection of(415) 268-7444PFRIEDMAN@MOFO.COM late payment fees that allegedly exceeded the amounts allowable under state law. No appeal filed. (2009) Stock Option Investigations Conducted internal investigations regarding stock option issues on behalf of several audit committees/special committees. (2005 - 2007) Nationwide Antitrust Class Action for Fortune 50 Company Won motion to dismiss without leave to amend for Fortune 50 company in nationwide antitrust class action, which alleged that client unlawfully tied the sale of loss/damage protection to the sale of ground transportation services. No appeal filed. (2008) Billing Adjustment Class Action Won dismissal with prejudice of putative nationwide class action for our Fortune 50 client alleging unfair business practices for requiring customers to seek billing adjustments for packages that they processed for shipment but decided not to ship. No appeal filed. (2009) BayStar Capital Management, LLC v. Core Pacific-Yamaichi International (H.K.) Limited (C.D. Cal.) Successfully defended Chinas largest investment bank, China International Capital Corp. (Hong Kong) Ltd. ("CICC"), in a securities fraud action alleging $100 million in damages. After two years of hard-fought litigation, the case was dismissed, with prejudice, with no payment from our client. (2007) In re Excess Value Insurance Coverage Litigation 2004 WL 1724980 (S.D.N.Y. MDL-1139). Lead defense counsel in 26 state and federal class actions alleging contract, tort, deceptive trade practices, RICO and antitrust claims challenging collection of insurance premiums in connection with shipments. Successfully implemented a strategy of removing all state cases to federal court and obtained consolidation of the cases in Multidistrict Litigation proceedings. After motions to dismiss disposed of most claims, the cases settled on favorable terms. (2008) Fulfillment Services, Inc. v. UPS 528 F.3d 614 (Ninth Circuit Court of Appeals). Won dismissal, with 3
  • 49. ATTORNEY BIO.Paul T. Friedman prejudice, for UPS in nationwide class action related to compliance with tariff requirements of the Interstate Commerce Act and transportationPARTNER fees paid by a large class of shippers over a five-year period. WonSAN FRANCISCO affirmance of judgment by Ninth Circuit. (2008)(415) 268-7444PFRIEDMAN@MOFO.COM EIJ v. UPS 233 Fed. Appx. 600 (9th Cir. 2007). Won affirmance of summary judgment in favor of UPS on fraud, contract, bad faith, and other claims arising from lost shipment. (2007) Primary Practices Securities Litigation, Enforcement + White-Collar Defense Antitrust + Competition Law Litigation Professional Recognition Paul Friedman is recommended as a leading lawyer by Best Lawyers In America 2011 and Super Lawyers 2009. He is also recognized in the BTI Consulting Groups Client Service All-Star Team 2010 for consistently delivering superior client service. Education University of California, Berkeley (A.B., 1976) Yale Law School (J.D., 1980) Bar Admissions California Clerkships Hon. Harry Pregerson, U.S. Court of Appeals, Ninth Circuit Publications Perspectives on FCPA Issues Faced By Every Global Company | January 2011 | Multimedia 2010: Another Record-Breaking Year for FCPA Enforcement, Confirming "New Era" | 1/12/2011 | Client Alert Alcatel-Lucent Settles “Unprecedented” $137 Million FCPA Case | 1/3/2011 | Client Alert FCPA: DOJ May Be Listening, But It Is Not Changing Its Approach | 12/2/2010 | Client Alert DOJ Proclaims “New Era” of FCPA Enforcement | 11/19/2010 | Client Alert 4
  • 50. ATTORNEY BIO.Paul T. Friedman SEC Issues Proposed Dodd-Frank Whistleblower Rules | 11/4/2010 | Client AlertPARTNER FCPA Backgrounder:SAN FRANCISCO What You Need to Know About the Foreign Corrupt Practices Act(415) 268-7444 (“FCPA”) | 9/20/2010 | Client AlertPFRIEDMAN@MOFO.COM Speaking Engagements FCPA: Understanding Risks and Mitigating Your Exposure | 02/02/2011- 02/02/2011 MCLE Workshops: Offering Credits in Detection/Prevention of Substance Abuse; Elimination of Bias; and Current Topics in Legal Ethics | San Francisco Presentation | 01/13/2011-01/13/2011 MCLE Workshops: Offering Credits in Detection/Prevention of Substance Abuse; Elimination of Bias; and Current Topics in Legal Ethics | Palo Alto Presentation | 01/13/2011-01/13/2011 The "New" SEC - What Does It Mean to You? (San Francisco Presentation) | 11/19/2009-11/19/2009 The Global Anti-Corruption Regulatory Climate--Protecting You and Your Company | 9/17/2008 The Global Anti-Corruption Regulatory Climate: Protecting You and Your Company | 9/17/2008 The Globalization of Liability: Managing Multinational Solutions - AIG Companies Seminar | 4/8/2008 "The Perfect Payday: Current Regulatory and Legal Issues Surrounding Stock Option Backdating Investigations." | 4/30/2007 Stock Options Back-Dating Investigations: What Does it Mean for You and Your Company? (Palo Alto Presentation) | 6/13/2006 Stock Options Back-Dating Investigations: What Does it Mean for You and Your Company? (San Francisco Presentation | 6/8/2006 5
  • 51. Attorney Bio. Randall Fons serves as Co-Chair of the firms Securities Litigation,Randall J. Fons Enforcement, and White-Collar Defense Group. His practice focuses on representing corporations, officers, and directors faced with SEC and other enforcement matters. Prior to joining Morrison & Foerster in 2006, Mr. Fons spent 18 years with the SEC in trial and directorship posts around the U.S., where he directed investigations and litigation of matters concerning market manipulation, insider trading, FCPA, financial reporting, auditors, broker- dealers, and investment advisors. Since joining Morrison & Foerster, Mr. Fons has assisted numerous boards of directors and their audit committees in conducting internal investigations, often advising clients on remedial measures responsive to the securities issues investigated. He has also represented numerous officers andPARTNER directors of public companies caught up in SEC and DOJ investigations, auditors in SEC and PCAOB investigations, and regulated entities and5200 REPUBLIC PLAZA individuals appearing before the SEC, FINRA, and other self-regulatory370 SEVENTEENTH STREET organizations. Mr. Fons also represents investment advisors, includingDENVER advisors to hedge funds, in SEC proceedings.COLORADO 80202-5638(303) 592-2257 From 2000 to 2006, Mr. Fons served as the Regional Director of the SEC’sRFONS@MOFO.COM Central Regional Offices. The Central Region, composed of three offices located in Denver, Ft. Worth, and Salt Lake City, focused on both enforcement and regulatory oversight programs across an 11-state area. Before his tenure with the Central Regional Office, Mr. Fons was Regional Director for the SEC’s Southeast Region from 1998 to 2000, where he managed the work of the Miami and Atlanta offices. Mr. Fons began his impressive career with the Commission in 1988 as a staff attorney in the SEC’s Chicago office and rose to head that office’s enforcement program. Mr. Fons has been awarded the SECs Distinguished Service Award, the Commissions highest recognition, and the Capital Markets Award. He is listed in Best Lawyers in America for his expertise in Securities Law and is highly recommended by Legal 500 for issues pertaining to the SEC. In 2008, he was the recipient of a Burton Award for Legal Achievement for an article he co-authored regarding securities enforcement. Mr. Fons received his law degree from the University of Colorado School of Law, where he was a contributor to the University of Colorado Law Review. He is a member of the Colorado and Illinois bars. This is MoFo. © 2010 Morrison & Foerster LLP | mofo.com
  • 52. ATTORNEY BIO.Randall J. Fons Representative Experience SEC InvestigationPARTNER Represented audit committee of large shipping company in its internalDENVER(303) 592-2257 investigation concerning violations of Regulation FD. After report to SEC,RFONS@MOFO.COM SEC declined to bring an action against company based on its internal investigation, cooperation and remedial measures. SEC Investigation Represented special committee of a multi-national book retailer in its internal investigation concerning stock option backdating. SEC took no further action after our report of findings and recommendations for remedial steps for company. SEC Investigation Represented former Vice President of Finance of a public company under investigation by the SEC for financial reporting and internal control issues. After Wells submission and meetings, SEC dropped the matter as to our client. SEC Investigation Represented audit committee of an international catalog retailer in its internal investigation of revenue recognition issues. After report to the SEC, SEC declined to bring any enforcement action. PCAOB Investigation Represented audit firm and its principals in PCAOB investigation and investigations by varioius states concerning audit of international public company. Successfully negotiated a favorable settlement on behalf of audit firm and its principals. SEC Investigation Represented former CEO of large apparel manufacturer in SEC investigation concerning insider trading. SEC closed matter without action after investigation. SEC Investigation Represented employee of a large international public company under investigation for violation of the FCPA. After testimony, the SEC took no action against the employee. SEC v. R. Brooke Dunn, et al. (D. Nevada) Represent former officer of public gaming company in enforcement action alleging insider trading based on non-public material 2
  • 53. ATTORNEY BIO.Randall J. Fons information concerning companys financial performance.PARTNER SEC InvestigationDENVER Represent hedge fund advisor in an examination and investigation(303) 592-2257RFONS@MOFO.COM conducted by the SEC. SEC Investigation Represented six former directors of large multi-national public company in complex SEC investigation concerning related party transactions and executive compensation disclosure. In re UnitedHealth Group, Inc. Securities Litigation (D. Minn.) Successfully defended the former chair of the compensation committee of the board of directors of UnitedHealth Group Inc. in government investigations and civil actions relating to allegations of option backdating, resulting in avoidance of action by the government and settlements favorable to our client in the civil actions. DOJ Investigation (DOJ Antitrust Division) Represent former trader at large brokerage firm in extensive DOJ investigation of conspiracy and manipulation in municipal securities market. No action taken against client after interview by DOJ. SEC and Multi-State Investigation Represented company operating a national person-to-person lending platform in investigations conducted by the SEC and dozens of states. Successfully negotiated a settlement of all actions on favorable terms for company, allowing it to register its securities and continue operations. Primary Practices Securities Litigation, Enforcement + White-Collar Defense Litigation Investment Management Professional Recognition Randall Fons is recommended as a leading lawyer by Legal 500 US 2009 and Best Lawyers In America 2011. In 2008, he was the recipient of a Burton Award for Legal Achievement for an article he co-authored regarding securities enforcement. Education University of Wisconsin (B.B.A., 1984) 3
  • 54. ATTORNEY BIO.Randall J. Fons University of Colorado School of Law (J.D., 1987)PARTNER Bar AdmissionsDENVER Illinois(303) 592-2257RFONS@MOFO.COM Colorado Clerkships Hon. William R. Moser, Wisconsin State Court of Appeals (1987-1988) Publications FCPA Backgrounder: What You Need to Know About the Foreign Corrupt Practices Act (“FCPA”) | 9/20/2010 | Client Alert The SEC Speaks Louder and Tougher in 2010 | 2/8/2010 | Client Alert Government FCPA Enforcement “Intensely Focused” on Life Sciences Companies | Andrews Medical Devices Litigation Reporter | 1/19/2010 | Article SEC Announces Enforcement “Game-Changers” | 1/14/2010 | Client Alert Corporate Cooperation: Cooperation in a Government Investigation | Bloomberg Corporate Law Journal | Winter 2009 | Article Enforcement To Be Top Priority at Schapiros SEC | 2/9/2009 | Client Alert Protecting Privileges During Government Investigations | INSIGHTS: The Corporate & Securities Law Advisor, Aspen Publishers, Vol. 22, No. 12 | 12/1/2008 | Article Potential Exposure Under the FCPA | Law360 | August 2008 | Article I Heard It Through the Grapevine | 7/18/2008 | Client Alert Securities Regulators Take the Initiative in Protecting Older Investors | The Review of Securities & Commodities Regulation, Vol. 41, No. 9 | 5/7/2008 | Article SEC and FINRA Examination Priorities in 2008 | 4/23/2008 | Client Alert SEC Enforcement Trends in Insider Trading | ABA Securities Litigation Journal, Vol. 18, No. 3 | Spring 2008 | Article The Attorney-Client Privilege and Work Product Doctrine in Government Investigations | Randall J. Fons and Brian N. Hoffman, Insights, vol. 21, no. 6. Republished with permission of INSIGHTS © 2007 Aspen Publishers, Inc. All rights reserved. | 6/7/2007 | Article The SEC Takes a New Look at the Foreign Corrupt Practices Act and Foreign Parties | Corporate Board Member Magazine, August 2006. | 8/1/2006 | Article 4
  • 55. ATTORNEY BIO.Randall J. Fons Tenth Circuit Addresses Selective Waiver of Attorney-Client Privilege and Work Product Protection when Documents Are Produced to the DOJPARTNER and SEC Pursuant to a Confidentiality Agreement | 6/28/2006 | ClientDENVER Alert(303) 592-2257RFONS@MOFO.COM SEC Brings its First Ever Enforcement Action Under the USA PATRIOT Act Against Crowell, Weedon & Co. | 5/25/2006 | Client Alert Morgan Stanley Pays $15 Million to Settle SEC Civil Injunctive Action Alleging That It Failed to Timely Produce Documents During Two SEC Investigations | 5/22/2006 | Client Alert Speaking Engagements Encouraging Internal Reporting of Wrongdoing in the New Era of SEC Whistleblower Rewards | 12/01/2010-12/01/2010 Association of Corporate Counsel Webcast: A New Era in SEC Enforcement | 11/18/2010-11/18/2010 42nd Annual Rocky Mountain Securities Conference | What are Respondents and Their Counsel to Do? Best Defense Practices in a Challenging Enforcement Environment | 05/07/2010-05/07/2010 The SEC and the IRO - What Every IRO Needs to Know About the SEC | The Rocky Mountain Chapter of the National Investor Relations Institute (NIRI) | 4/13/2010 Insider Trading: 2010 Update (Virginia Presentation) | 3/18/2010 Insider Trading: 2010 Update (New York Presentation) | 3/16/2010 The “New” SEC - What Does It Mean to You? (New York Presentation) | 11/19/2009-11/19/2009 Fallout from the Credit Crisis: Steps Every Company Should Take to Protect Itself and Its Officers and Directors (New York Presentation) | 11/20/2008 PLI - Coping with Broker/Dealer Regulation and Enforcement 2008 | 10/29/2008 Fallout from the Credit Crisis: Steps Every Company Should Take to Protect Itself and Its Officers and Directors-Palo Alto | 10/28/2008 A Primer on Subprime | 5/9/2008 Securities Law and Enforcement Update | 10/25/2007 5
  • 56. Attorney Bio. Daniel Levison focuses on commercial litigation and arbitration, withDaniel P. Levison particular emphasis on the resolution of multi-jurisdictional disputes, including assisting clients who are involved in matters before Japanese courts and arbitration tribunals. Mr. Levison also specializes in conducting internal investigations and compliance reviews in Japan, China and other locations across the Asia Pacific region, and works closely with the firms U.S. and European offices on global investigations. Clients rely on Mr. Levison for these highly sensitive matters, which have included antitrust, fraud and corruption, export control, and regulatory and product safety investigations. Mr. Levison is a member of the firm’s FCPA Task Force, and in addition to investigations, has assisted clients with developing, reviewing, and implementing anti-PARTNER corruption policies, procedures and training materials, as well as providing in-person training.SHIN-MARUNOUCHI BUILDING, Mr. Levison also advises on privacy and data protection issues, and has29TH FLOOR assisted clients with Japanese privacy matters since the Japanese privacy5-1, MARUNOUCHI 1-CHOME legislation was first developed, integrating local advice with global privacyCHIYODA-KU, TOKYO 100-6529 and data protection strategies. Mr. Levison also advises on regulatory81 3 3214 6522 matters and investigations relating to privacy and data protection.DLEVISON@MOFO.COM Mr. Levison has counseled clients in a range of matters involving contract disputes, business torts, antitrust, product liability, intellectual property, and other issues, and has developed particular expertise regarding cross-border electronic discovery matters. Mr. Levison has represented clients in a variety of industries, including electronics and manufacturing, software, chemicals, pharmaceutical and healthcare, sports and entertainment, transportation, real estate, hospitality, insurance, and banking and financial services, among others. Mr. Levison is qualified as Gaikokuho-Jimui-Bengoshi in Japan and is a member of the Daini Tokyo Bar Association. In 2006, he was an Adjunct Professor of Law at Temple University, Japan Campus, where he taught International Dispute Resolution. Primary Practices Litigation | Japan Commercial Litigation This is MoFo. © 2010 Morrison & Foerster LLP | mofo.com
  • 57. ATTORNEY BIO.Daniel P. Levison Product LiabilityPARTNER EducationCHIYODA-KU, TOKYO 100-6529 Cornell University (A.B., 1993)81 3 3214 6522DLEVISON@MOFO.COM London School of Economics (M.Sc., 1994) University of Pennsylvania Law School (J.D., 1997) Bar Admissions Pennsylvania New Jersey New York Japan (Gaikokuho-Jimu-Bengoshi) Clerkships Hon. Eduardo C. Robreno, U.S. District Court, E.D. Pennsylvania (1997- 1998) Publications FCPA Backgrounder: What You Need to Know About the Foreign Corrupt Practices Act (“FCPA”) | 9/20/2010 | Client Alert The Attorney-Client Privilege: What Every In-House Lawyer Should Know | 2/1/2009 | Article Japan: Personal Information Privacy Update | 5/21/2008 | Client Alert Personal Information Protection Update | 12/1/2007 | Article Speaking Engagements U.S. Product Recalls- | Legal and Practical Lessons from Recent Recall Crises | 04/14/2010-04/14/2010 Foreign Corruption Issues for Global Companies Operating in Japan | 10/29/2009-10/29/2009 The Attorney-Client Privilege: What Every In-House Lawyer Should Know | 2/1/2009 Successful Strategies for Establishing and Maintaining Strong China Operations | 5/31/2007 Product Liability and Consumer Litigation in the United States 2006 Seminar: What You Can Do to Prevent, Manage and Mitigate Risk | 2/28/2006 2
  • 58. Attorney Bio. Chip Loewenson is Co-Chair of the firms Securities Litigation, Enforcement,Carl H. and White-Collar Defense Group. His practice focuses primarily on white-Loewenson collar defense, including regulatory matters. His cases have included alleged insider trading, market manipulation, and other securities fraud issues, foreign corrupt practices, government contract fraud, FDA reporting, trade secrets, customs violations, tax evasion, money laundering, price- fixing, health care fraud, false claims against the government, obstruction of justice, and attorney discipline. He has also handled significant civil litigation, including cases involving civil RICO, securities fraud, and trade secrets. The United States District Court for the Southern District of New York has appointed Mr. Loewenson as receiver in three separate SEC enforcementPARTNER actions, including SEC v. Credit Bancorp, Ltd., in which he led a ten-year effort resulting in the recovery of most of the $200 million that customers1290 AVENUE OF THE AMERICAS lost in a Ponzi scheme. The SEC also appointed him IndependentNEW YORK Consultant in an enforcement action against the notorious securities boilerNEW YORK 10104-0050 room, Stratton Oakmont.(212) 468-8128CLOEWENSON@MOFO.COM Mr. Loewenson is a member of the American Bar Association and its Criminal Justice Section. He is a member of the Association of the Bar of the City of New York and has been a member of its Committee on Federal Courts and Committee on Professional Discipline. He is also a member of the New York Council of Defense Lawyers and the Federal Bar Council. From 2001-2007, he was a member of the New York State Ethics Commission, a body charged with interpreting and enforcing New York States ethics in government statutes. Prior to joining Morrison & Foerster in 1990, Mr. Loewenson served as an Assistant United States Attorney in the Southern District of New York for five years. For most of his time there, he served on the Securities and Commodities Fraud Task Force, where he prosecuted cases involving insider trading, stock manipulation, other securities fraud offenses, and tax evasion. As an Assistant U.S. Attorney, Mr. Loewenson was successful in 15 out of 16 verdicts in the cases he tried. In April 1991, he received the Directors Award for Superior Performance from the Director of the Executive Office for United States Attorneys. Mr. Loewenson taught trial practice as an Adjunct Assistant Professor of Law at New York University School of Law (1988 to 1992), at the Practising This is MoFo. © 2010 Morrison & Foerster LLP | mofo.com
  • 59. ATTORNEY BIO.Carl H. Loewenson Law Institute in New York City (1991-1994), and at the Trial Advocacy Program of the Manhattan District Attorneys Office (1989-1994).PARTNERNEW YORK At Yale Law School, Mr. Loewenson was a Note Editor of the Yale Law(212) 468-8128 Journal, and at Princeton, he was the Editorial Chairman of the DailyCLOEWENSON@MOFO.COM Princetonian. Mr. Loewenson was a Fulbright Scholar and was a visiting scholar at the Stockholm International Peace Research Institute in Stockholm, Sweden. After serving as a law clerk at the U.S. Court of Appeals for the First Circuit, he served for a year on the National Legal Staff of the American Civil Liberties Union in New York City as the Karpatkin Fellow. Representative Experience Multi-Faceted Investigation of University Grants Advised major U.S. research University in criminal and civil investigation of alleged false claims relating to federal research grants and contracts. (2009) Interpool Audit Committee Represented the Audit Committee of Interpool, Inc., a NYSE-listed company and one of the worlds leading lessors of shipping containers and chassis, in an internal investigation arising from an accounting restatement. (2003) Representing former Mortgage Executive in DOJ and SEC investigations (E.D.N.Y. and parallel SEC and USAO investigations) Representing the former Chief Financial Officer of one of the largest national mortgage originators, now bankrupt, in DOJ and SEC investigations and related shareholder litigation arising from the credit crisis. (Ongoing) SEC v Credit Bancorp. (S.D.N.Y.) As court-appointed receiver since 2000, successfully led an effort to identify and recover $200 million that had been lost in a Ponzi scheme. (Ongoing) SEC and DOJ Investigations Represent the former CEO of a large national bank in SEC and DOJ investigations relating to disclosures of losses in the banks mortgage portfolio. (Ongoing) Accounting Fraud Represented an auditor at an international accounting firm in an SEC 2
  • 60. ATTORNEY BIO.Carl H. Loewenson investigation involving allegations of securities fraud and improper professional conduct arising out of the audit of a public company atPARTNER which numerous members of top management were criminally convictedNEW YORK of engaging in a massive, collusive accounting fraud. After a Wells(212) 468-8128 process, the SEC staff terminated the investigation without commencingCLOEWENSON@MOFO.COM an action against the client. (2008) FINRA Investigation Represented a senior executive of a large bank in an investigation by the Financial Institutions Regulatory Authority ("FINRA") into allegations of political corruption. Following written submission, no charges were brought. (2008) Cross-Border Banking Investigation Represented multiple employees of a multinational bank in investigations by the U.S. Attorney’s Office, state criminal prosecutors, SEC, CFTC, U.S. banking regulators and foreign regulators regarding an alleged scheme to overvalue a commodities derivative trading portfolio. Following multiple interviews with law enforcement and regulatory agencies, no charges were brought against clients. (2008) Anti-Money Laundering Internal Investigation Conducted an internal investigation on behalf of the Audit Committee of the Supervisory Board of ABN AMRO Bank N.V. regarding anti-money laundering policies and practices at the banks US dollar clearing unit. United States ex rel. Smith v. Yale New Haven Hosp., 415 F. Supp. 2d 58 (D. Conn.). Obtained a favorable settlement for Yale University in a qui tam action brought under the False Claims Act. (2006) In re UnitedHealth Group, Inc. Securities Litigation (D. Minn.) Represented the former chair of the compensation committee of the board of directors of UnitedHealth Group Inc. in government investigations and civil actions relating to allegations of stock options backdating, resulting in avoidance of action by the government and settlements favorable to our client in the civil actions. (2008) Primary Practices Securities Litigation, Enforcement + White-Collar Defense Financial Services Litigation Trials 3
  • 61. ATTORNEY BIO.Carl H. Loewenson Professional Recognition Carl Loewenson is recommended as a leading lawyer by Chambers USAPARTNER 2010, Legal 500 US 2010, Best Lawyers In America 2011, BenchmarkNEW YORK Litigation 2010 and Super Lawyers 2009.(212) 468-8128CLOEWENSON@MOFO.COM Education Princeton University (B.A., 1979) Yale Law School (J.D., 1983) Bar Admissions New York Clerkships Hon. Frank M. Coffin, U.S. Court of Appeals, First Circuit (1983-1984) Publications FCPA Backgrounder: What You Need to Know About the Foreign Corrupt Practices Act (“FCPA”) | 9/20/2010 | Client Alert Recovering Lost Assets in Ponzi Schemes: An Immediate Look at the Legal, Governmental, and Economic Ramifications of the Bernard Madoff Scandal | 1/1/2009 | Article Court-Appointed Receivers for Ponzi Schemes | New York Law Journal | 12/30/2008 | Article Ethics of Internal Investigations | Internal Investigations 2008: Legal, Ethical & Strategic Issues, Practicing Law Institution Corporate Law and Practice Course Handbook Series, Number B-1679, June 2008 | 6/12/2008 | Article New Yorks New False Claims Act | 4/23/2007 | Article Civil RICO and Proximate Cause | 4/25/2006 | Article Collaborating with Accountants: Relationship Between Lawyers and Accountants Can Be Critical to the Success of Independent Investigations | 3/29/2004 | Article Parallel Proceedings | 3/1/2004 | Article Taking the Fifth During SEC Probe: Clients Assertion of Rights Should Be Irrelevant in Later Civil Enforcement | 7/16/2001 | Article DOJ Guidelines Offer Strategy Clues | 4/24/2000 | Article The Decision to Indict | 10/1/1997 | Article High Court Reins in Prosecution | 3/24/1997 | Article Civil Settlements and Criminal Trials | 9/19/1996 | Article 4
  • 62. ATTORNEY BIO.Carl H. Loewenson Second Circuits Broad View of Manipulation | 3/28/1996 | Article Room for Flexibility in Sentencing Corporations | 1/16/1995 | ArticlePARTNERNEW YORK Trimming the Hearsay Exception for Statements Against(212) 468-8128 Interest | 7/28/1994 | ArticleCLOEWENSON@MOFO.COM An Overview of the Federal Sentencing Guidelines for Organizations | 11/1/1993 | Article Expert Testimony Concerning Eyewitness Identification | 10/19/1993 | Article Criminal Trade Secrets Prosecutions | 4/1/1993 | Article Banks as Innocent Owner in Forfeiture Cases | 3/17/1993 | Article Congress Toughens Criminal Copyright Law | 11/13/1992 | Article The Innocent Owner Defense to Civil Forfeiture under Federal Narcotics Law | Originally published in White-Collar Crime Reporter, September 1992, pages 1-11. All rights reserved | 9/1/1992 | Article Plea Bargaining in Securities Cases | 8/1/1991 | Article The Constitutional Significance of the Discriminatory Effects of At-Large Elections | 1/1/1982 | Article Speaking Engagements FCPA: Understanding Risks and Mitigating Your Exposure | 02/02/2011- 02/02/2011 Insider Trading: 2010 Update (New York Presentation) | 3/16/2010 Fallout from the Credit Crisis: Steps Every Company Should Take to Protect Itself and Its Officers and Directors (New York Presentation) | 11/20/2008 Doing Business in China and the FCPA: How to Protect Yourself and Your Company | 10/14/2008 PLI, Internal Investigations 2008: Legal, Ethical & Strategic Issues | 6/10/2008 Stock Options Back-Dating Investigations: What Does it Mean for You and Your Company? (New York Presentation) | 6/22/2006 Stock Options Back-Dating Investigations: What Does it Mean for You and Your Company? (Northern Virginia Presentation) | 6/20/2006 The Legal and Strategic Guide to E-Discovery: Managing Your Legal Obligations From Document Creation to Discovery | 3/28/2006- 3/29/2006 5
  • 63. Attorney Bio. Kevin Roberts specializes in regulatory compliance, corporate investigationsKevin Roberts and fraud. He advises corporations and individuals in money laundering compliance and investigations, regulatory compliance, tax investigations, fraud, including the investigations and enforcement actions by the UKs Financial Services Authority. As part of his international practice, he also advises on mutual assistance requests and extradition. Mr. Roberts is a frequent speaker on money laundering, confiscation, and asset recovery, and is a contributing author to the leading text, Smith, Owen and Bodnar on Asset Recovery (Oxford University Press). Mr. Roberts is a Higher Court Advocate. Mr. Roberts is Corporate Counsel Liaison Officer for the IBAs Business Crime Committee and Treasurer of the European Criminal Bar Association.PARTNER He was noted in the UK Legal 500 for representing a pharmaceuticalCITYPOINT executive in the largest price-fixing case ever brought against BritishONE ROPEMAKER STREET companies by the governments Serious Fraud Office.LONDON EC2Y 9AW020 7920 4160 Primary PracticesKROBERTS@MOFO.COM Litigation Securities Litigation, Enforcement + White-Collar Defense Litigation + Dispute Resolution | Europe Professional Recognition Kevin Roberts is recommended as a leading white-collar criminal lawyer by Legal 500 UK 2010 and Euromoneys Expert Guides 2010. Education Bristol University (B.A., 1990) College of Law, Chester (L.P.C., 1992) Bar Admissions England & Wales Publications Ministry of Justice Publishes Consultation Paper on the UK Bribery Act 2010 | 9/30/2010 | Client Alert FCPA Backgrounder: What You Need to Know About the Foreign Corrupt Practices Act This is MoFo. © 2010 Morrison & Foerster LLP | mofo.com
  • 64. ATTORNEY BIO.Kevin Roberts (“FCPA”) | 9/20/2010 | Client Alert The long arm of the regulators | 5/13/2010 | ArticlePARTNERLONDON EC2Y 9AW UK Court of Appeal Clarifies FSA’s Statutory Power to Assist Overseas020 7920 4160 Regulators in Requests for Documents | 4/21/2010 | Client AlertKROBERTS@MOFO.COM International Asset Tracing in Insolvency | 12/24/2009 | Book Cigarette Cartel, Pharma Pricing- Recent UK Antitrust Rulings | 7/18/2008 | Client Alert 2
  • 65. Attorney Bio. Robert Salerno is an experienced litigator who focuses his practice on white-Robert A. Salerno collar criminal and complex commercial litigation. He regularly represents corporations and individuals in investigations conducted by the Department of Justice, U.S. Attorneys Offices, inspectors general, and other federal enforcement agencies, as well as in the parallel civil and administrative proceedings that often accompany white-collar criminal matters. He frequently handles matters involving the False Claims Act, the Foreign Corrupt Practices Act, healthcare fraud, government procurement issues, and indemnification disputes arising out of the mergers and acquisitions of companies involved in criminal investigations. He has litigated a wide variety of commercial disputes in federal and state courts, both in the Washington, D.C. area and throughout the country. He has also represented law firmsPARTNER and lawyers in professional malpractice suits and disciplinary proceedings. Mr. Salerno has been an instructor of trial and appellate advocacy skills at2000 PENNSYLVANIA AVENUE, NW programs sponsored by the National Institute of Trial Advocacy, GeorgetownSUITE 6000 University Law Center, and George Mason University School of Law. He is aWASHINGTON member of the American Bar Associations Litigation and Criminal JusticeDISTRICT OF COLUMBIA20006-1888 Sections.(202) 887-6930 Mr. Salerno is admitted to practice in the United States Courts of Appeals forRSALERNO@MOFO.COM the Third Circuit, the Fourth Circuit, the Ninth Circuit, and the District of Columbia Circuit and the United States District Courts for the District of Columbia, the Eastern District of Virginia, and the Western District of Virginia. Representative Experience False Claims Act Litigation Represent companies in criminal investigations, civil False Claims Act litigation and related administrative proceedings, including pharmaceutical companies regarding Medicaid reimbursement, Anti- Kickback Act and other health care fraud issues, government contractors in connection with a variety of compliance issues, and a telecommunications company in connection with the FCC’s E-Rate Program. Ahan v. Grammas Won defense judgment at trial for a national law firm in $226 million legal malpractice lawsuit in Maryland court. This is MoFo. © 2010 Morrison & Foerster LLP | mofo.com
  • 66. ATTORNEY BIO.Robert A. Salerno FCPA InvestigationsPARTNER Represented oil services industry executives in connection with DOJ andWASHINGTON(202) 887-6930 SEC investigations of alleged Foreign Corrupt Practices Act violations inRSALERNO@MOFO.COM Venezuela and Nigeria. United States v. Higgins Represent the president of a global biotech company in criminal proceedings relating to alleged "off-label" promotion of medical device in the Eastern District of Pennsylvania. Government Contracts Litigation Represented bidders in protests of contract awards at the Government Accountability Office and in actions for injunctive relief at the Court of Federal Claims. Federal Election Campaign Act Investigations Represented chief of staff to a U.S. Senator, an international businessman and a lobbyist in Department of Justice investigations regarding compliance with the Federal Election Campaign Act and related criminal statutes. Ispat Inland v. Kemper Won judgment for a large steel manufacturer in insurance coverage litigation in the Southern District of New York. Attorney Disciplinary Proceedings Represented a partner at an international law firm in connection with District of Columbia Bar disciplinary proceedings from administrative trial through the D.C. Court of Appeals. Horn v. Huddle Defense of former intelligence officer in civil litigation involving the state secrets privilege in U.S. District Court for the District of Columbia. Idaho v. Horiuchi Represented federal law enforcement agent in civil and criminal actions arising out of the armed confrontation at Ruby Ridge, Idaho. Primary Practices Securities Litigation, Enforcement + White-Collar Defense Commercial Litigation 2
  • 67. ATTORNEY BIO.Robert A. Salerno Government Contracts LitigationPARTNER EducationWASHINGTON Brown University (B.A., 1983)(202) 887-6930RSALERNO@MOFO.COM University of Virginia School of Law (J.D., 1990) Bar Admissions Virginia District of Columbia Publications FCPA Backgrounder: What You Need to Know About the Foreign Corrupt Practices Act (“FCPA”) | 9/20/2010 | Client Alert New Whistleblower Provisions Likely to Increase FCPA Enforcement | 7/21/2010 | Client Alert Fighting Off-Label Qui Tam Suits: Have Federal Courts Encouraged Filing of Speculative FCA Claims? | Legal Backgrounder, Vol. 25 No. 14, Washington Legal Foundation | 4/23/2010 | Article Department of Justice Issues Memoranda Addressing Discovery Obligations of Prosecutors in Criminal Cases | 1/5/2010 | Client Alert New Mandatory Disclosure and Compliance Requirements Will Impact All Government Contractors | 11/19/2008 | Client Alert Securities Litigation, Enforcement, and White-Collar Criminal Defense Newsletter, Summer 2008 | 7/11/2008 | Client Alert Proposal Would Make Business Ethics Rules Mandatory for Companies | 12/20/2007 | Client Alert DOJs Renewed Focus on Procurement Fraud: What It Means for You | 1/18/2007 | Client Alert Speaking Engagements Washington Legal Foundation Webcast: Communicating on Off-Label Treatments-Navigating the Treacherous Path Paved by Civil and Criminal Law Enforcement | 10/14/2009 Dealing with Uncle Sam: Government Contracts Enforcement Update (San Diego Presentation) | 10/11/2006 Dealing with Uncle Sam: Government Contracts Enforcement Update (Palo Alto Presentation) | 10/10/2006 Dealing with Uncle Sam: Government Contracts Enforcement Update (Los Angeles Presentation) | 10/1/2006 Stock Options Back-Dating Investigations: What Does it Mean for You 3
  • 68. ATTORNEY BIO.Robert A. Salerno and Your Company? (Northern Virginia Presentation) | 6/20/2006PARTNERWASHINGTON(202) 887-6930RSALERNO@MOFO.COM 4
  • 69. Attorney Bio. Sherry Xiaowei Yin is a partner in the Beijing office who specializes inSherry Xiaowei corporate structuring, mergers and acquisitions, RMB fund formation,Yin private equity, and securities matters. She has advised both multinational and Chinese clients involved in a range of industries, such as telecommunications, energy, retail, and logistics. Prior to joining Morrison & Foerster, Ms. Yin was a partner at a leading international firm in Beijing and worked on a number of award-winning transactions, including representing Sinopec Beijing Yanhua Petrochemical Company Limited in its US$500 million privatization by China Petroleum & Chemical Corporation. International Financial Law Review wrote that the transaction “stood out for the level of legal complexity and innovation” and “pioneered a new way for PRC companies to privatize overseas listedPARTNER companies.” Ms. Yin also led the team that advised the underwriters in an IPO for Shandong Chenming Paper Holding Limited, the first Chinese22ND FLOOR, TOWER 3, CHINA company with three categories of shares issued ― A, B, and H shares. This CENTRAL PLACE unprecedented transaction won the 2008 “Deal of the Year” award fromNO. 77, JIANGUO ROAD China Law & Practice, in association with IFLR1000.CHAOYANG DISTRICT, BEIJING Ms. Yin received her LL.B. and LL.M. degrees from China University of100025 Political Science and Law in 1984 and 1987, respectively. She attended the86 10 5909 3566 postgraduate studies program at the Université de Paris II ― Panthéon-SYIN@MOFO.COM Assas and attended an advanced U.S. law program sponsored by the Fulbright Foundation. Ms. Yin is qualified to practice in the People’s Republic of China. She is a native Mandarin speaker and fluent in English. Primary Practices Mergers + Acquisitions | China Capital Markets | China Corporate Professional Recognition Sherry Yin is recommended as a leading lawyer by Legal 500 Asia-Pacific 2010-2011 and IFLR1000 2011. Education China University of Politics and Law (LL.B., 1984) China University of Politics and Law (LL.M., 1987) This is MoFo. © 2010 Morrison & Foerster LLP | mofo.com
  • 70. ATTORNEY BIO.Sherry Xiaowei Yin Bar Admissions ChinaPARTNERCHAOYANG DISTRICT, BEIJING 10002586 10 5909 3566 PublicationsSYIN@MOFO.COM FCPA Backgrounder: What You Need to Know About the Foreign Corrupt Practices Act (“FCPA”) | 9/20/2010 | Client Alert China Outbound Portfolio Investment: Fleshing Out Regulations For QDII Securities Institutions & Insurers | 9/1/2007 | Article China Outbound Investment: Banks Scope Broadened, Trusts Added | 6/1/2007 | Article Transcript Cleavage by RNA Polymerase II Arrested by a Cyclobutane Pyrimidine Dimer in the DNA Template | 1/1/1994 | Article Speaking Engagements M&A Risk Management Workshop | Issues and Solutions on Warranty and Indemnity | 01/20/2011-01/20/2011 Morrison & Foerster IP Roundtable - Global Intellectual Property Strategy | 12/17/2010-12/17/2010 Going Public Seminar - What You Need to Know When Planning Your U.S./Hong Kong IPO | 10/25/2010-10/25/2010 9th Annual Anti-Trust Summit | Renmin University | 07/17/2010- 07/17/2010 China Private Equity & Venture Forum | Asian Venture Capital Journal | 05/25/2010-05/25/2010 BioCapital China Summit 2009 | 11/7/2009 CVCA Annual General Meeting & Private Equity Summit 2009 | 10/27/2009 New Energy Finance: Food for Thought Seminar | New Energy Finance: Food for Thought Seminar | 10/20/2009-10/20/2009 China M&A Toolkit - What You Need to Know About Outbound Mergers & Acquisitions in the Current Economic Climate (Beijing Presentation) | 5/25/2009 China M&A Toolkit - What You Need to Know About Outbound Mergers & Acquisitions in the Current Economic Climate (Shanghai Presentation) | 5/20/2009 AVCJ Private Equity & Venture Forum in China | 5/20/2009 China M&A Toolkit - What You Need to Know About Outbound Mergers & Acquisitions in the Current Economic Climate (Hong Kong Presentation) | 5/18/2009 2
  • 71. NEW YORKSAN FRANCISCOLOS ANGELESPALO ALTOSAN DIEGOWASHINGTON, D.C.NORTHERN VIRGINIADENVERSACRAMENTOWALNUT CREEKTOKYOLONDONBEIJINGSHANGHAIHONG KONGBRUSSELS 14 © 2010 Morrison & Foerster LLP All Rights Reserved | www.mofo.com

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