Sep. 13, 2023

SEC Charges 11 More Wall Street Firms With Widespread Records Failures

The SEC announced charges against 11 more Wall Street firms on August 8, 2023, for failing to maintain and preserve electronic communications. The firms acknowledged that their conduct violated recordkeeping provisions of federal securities laws, agreed to pay combined penalties of $289 million, and have begun improving their compliance policies and procedures to address control weaknesses. Included in the charges are Wells Fargo, BNP Paribas Securities Corp., SG Americas Securities, LLC, BMO Capital Markets Corp., Mizuho Securities USA LLC, Houlihan Lokey Capital, Inc., Moelis & Company LLC, Wedbush Securities Inc., and SMBC Nikko Securities America, Inc. The Anti-Corruption Report consulted with Miller & Chevalier attorney Sandra Hanna, for insights about the actions and what we can expect to come. See “Compliance Challenges in Records Management” (Aug. 16, 2023).

M&A Lessons From the $388‑Million Credit Suisse Settlement

When Swiss bank UBS acquired rival Credit Suisse in June in a rescue takeover initiated by the Swiss government, it knew it was also acquiring the legal troubles of a financial institution on the brink of collapse. UBS’s takeover meant having to foot the bill for $388 million in combined penalties in a coordinated global resolution reached with U.S., U.K. and Swiss authorities. We spoke to Withersworldwide partner Harvey Knight and counsel Martin Auerbach, as well as MoloLamken partner Eric Nitz, about lessons that could be drawn from the penalties and the corrective measures that the regulators required. See “Noticing Red Flags, Cultivating Company Culture Key to Compliance” (May 24, 2023).

Colombian Conglomerate Resolves DOJ and SEC FCPA Charges

The DOJ and SEC announced resolutions on August 10, 2023, with Colombian financial conglomerate Grupo Aval and its bank subsidiary, Corporación Financiera Colombiana (Corficolombiana), for violations of the FCPA. The entities agreed to pay over $80 million, an amount that could drop by as much as $20 million under conditions related to resolutions with Colombian authorities, as set out by the DOJ. According to the SEC and the DOJ, between 2012 and 2015, Corficolombiana conspired to pay more than $23 million in bribes to Colombian officials to win the rights to construct and operate a 328‑mile highway project. The Anti-Corruption Report obtained insights from Matteson Ellis, a partner at Miller & Chevalier, about the case and what compliance practitioners can learn from it. See “Deputy Assistant AG Miller Discusses Robust DOJ Anti-Corruption Efforts, Stressing Individual Accountability, Self-Reporting, Remediation and Cooperation” (Mar. 1, 2023).

Navigating Evolving Data Breach Litigation and Regulatory Risks

Companies face “virtually inevitable” class action lawsuits when their customers experience data breaches affecting substantial amounts of consumer information, Orrick partner Douglas H. Meal said at the Practising Law Institute’s Twenty-Fourth Annual Institute on Privacy and Cybersecurity Law. He and Sidley partner Alan Charles Raul took a comprehensive look at the regulatory and litigation implications of data breaches, including recent developments in class action litigation, the impact of recent Supreme Court decisions on regulatory agencies, and regulatory and enforcement activity by the FTC, SEC and other government bodies concerning cybersecurity and data privacy. See “How Law Firms Can Prevent, Detect and Respond to Ransomware Attacks” (Sep. 15, 2021). 

SEC and CFTC Continue to Penalize Firms for Electronic Communications Recordkeeping Violations

Since 2021, the SEC and CFTC have imposed approximately $2 billion in aggregate penalties on more than a dozen registered firms for failure to preserve records of business-related communications, particularly those made on unapproved devices or apps (off-channel communications). The agencies continue to target such violations, recently resolving four parallel enforcement proceedings against the U.S. broker-dealer, swap dealer and futures commission merchant arms of HSBC and The Bank of Nova Scotia based on the firms’ failures to preserve records of electronic communications and associated supervisory failures. This article parses the four settlement orders. See “Compliance Challenges in Records Management” (Aug. 16, 2023). 

Sidley Picks Kenneth A. Polite as Co‑Head of White Collar: Defense and Investigations Practice

Sidley Austin named Kenneth A. Polite, Jr., to co‑lead its white collar: defense and investigations practice. Polite will join as a partner after having spent two years as Assistant Attorney General for the criminal division in the DOJ. For insights from Kenneth A. Polite, Jr., see “Assistant A.G. Polite Discusses Declinations in Cases With Aggravating Circumstances and Revised ECCP” (Apr. 12, 2023). For insights from Sidley, see “FINRA Clarifies Stance on CCO Supervisory Liability” (May 25, 2022).

Avantor Hires Claudius Sokenu as Chief Legal and Compliance Officer

Chemical company Avantor has announced the addition of Claudius Sokenu as chief legal and compliance officer and executive vice president, responsible for legal, ethics and compliance functions. For insights from Claudius Sokenu, see “Brockmeyer and Stokes Offer Four Benefits of Cooperation and Four Ways Companies Can Go Wrong in Their Internal Investigations” (Dec. 16, 2015).