Talking to the Government

Transcription

1 Talking to the Government Presented by: Ashley E. Davis, Blank Rome Government Relations, LLC Christopher A. Lewis, Blank Rome LLP Hardy Vieux, Blank Rome LLP Moderated by: Jerry D. Bernstein, Blank Rome LLP

2 TALKING TO THE GOVERNMENT MORE OFTEN? THE DODD-FRANK ACT CHANGES THE WHISTLEBLOWER LANDSCAPE 2

3 How Does Dodd-Frank Change the Whistleblower Landscape? Creates new financial incentives for employees at both publicly and privately-held companies to come forward to SEC or CFTC with information that assists it in uncovering securities violations Information must be original e.g., derived from independent knowledge or analysis If information leads to successful enforcement action that results in sanctions exceeding $1 million, whistleblower eligible for 10 30% of sanctions collected Act does not create a private right to prosecute a securities violation whistleblowers must work directly with SEC/CFTC in order to recover Act expands employees covered by Sarbanes-Oxley 3

4 How Does Dodd-Frank Change the Whistleblower Landscape? Anti-retaliatory protections strengthened Any whistleblower who alleges such retaliation can sue in federal court Act requires SEC to keep whistleblowers identities confidential; whistleblower need not appear as a party in the case; to maintain identity secrecy, whistleblower must have attorney representation until compensation is to be paid Opportunity for substantial awards to covered whistleblowers: reinstatement, two times back pay owed with interest, compensation for litigation costs, including expert witness fees and attorneys fees False Claims Act anti-retaliation provisions also strengthened: now FCA provides protection to agents or associated others who act in an effort to stop FCA violations 4

5 How Will Dodd-Frank Impact You, the Employer? Employees have an incentive to avoid internal compliance/reporting procedures Increased whistleblower complaints Increased likelihood of publicized whistleblower actions Challenge to legitimately discipline or terminate employment of those who may also qualify as whistleblowers 5

6 How Should Employers Respond to the Dodd-Frank Changes? Companies must act quickly at earliest hint of impropriety Immediately consider commencing internal investigation Consider voluntarily disclosing any misconduct uncovered; company must take every step the investigation dictates 6

7 How Should Employers Respond to the Dodd-Frank Changes? Take proactive response to compliance Create or review whistleblower policies and practices to ensure they allow for immediate identification of possible violations and a corresponding immediate response Train supervisors regarding proper evaluation and disciplinary procedures Train employees so that they are aware of applicable compliance programs and reporting procedures 7

8 Your Company is Being Investigated - What Do You Do? What is the company s status? Witness, Subject or Target? Conduct a thorough internal investigation by outside counsel Issues of attorney-client privilege Full disclosure? Pros and Cons What s good for the company may not be good for its execs Remedies: Declination, Deferred Prosecution, Guilty Plea, Fine, Monitor, Compliance Program Collateral Consequences: Debarment and Injunction

9 Your Employee is Engaged in Alleged Wrongdoing - What Do You Do? Engage outside counsel to investigate? To self-report or not to self-report? that is the question Duty to disclose? Are you a public company? Advantages of Self-Reporting: Amnesty, Leniency, Milder Sanctions McNulty Memo Remaining Silent maybe they ll never find out

10 Your Employee is Engaged in Alleged Wrongdoing - What Do You Do? To which government agency do you go? Regulators, Prosecutors, Law Enforcement REMEMBER: Make sure your own house is in order before going to the government!

11 The Top Five Things Clients Always Ask About Regulatory Proceedings What, me worry? It s only a de minimis violation. Understand all potential consequences Self-Reporting Duties Disclosure Obligations Litigation Penalties & collateral consequences Criminal referrals

12 The Top Five Things Clients Always Ask About Regulatory Proceedings, cont d Everybody does it. Why are they picking on me? Selective enforcement as a defense Understand changing enforcement priorities Avoid becoming the next poster child for the issue of the day We ve always done it this way. How can they change the law? Equitable estoppel as a defense How can we end this? Settlements Understanding the regulatory mindset

13 The Top Five Things Clients Always Ask About Regulatory Proceedings, cont d Can you speak to a Senator or Congressman to fix this? When is political intervention appropriate?

14 Opportunities Opportunities and Pitfalls When Dealing With Congress Knowing the process and working that process Educating Members and their staff can make a difference Fixing a problem before it becomes a problem. unintended consequences Frank/Dodd Success

15 Pitfalls Opportunities and Pitfalls When Dealing With Congress Consequences of lying under oath Mixed Messages, what is used and what is meant Controlling the use of information Declining the invitation to testify