Below is our roundup for June 2014’s biggest compliance stories. Vote for which one you think deserves the top spot!
Dodd-Frank Conflict Mineral Disclosure Deadline Reached - June 2, 2014 was the first filing deadline for SEC issuers to comply with the SEC’s conflict minerals rule under Dodd Frank. Listed companies must report to the SEC under the statute as to what due diligence measures they undertook regarding any conflict minerals in their chain of custody.
China Continues Arrests of Top-Level Officials as Part of Official Anti-Graft Campaign - In recent weeks, Wan Qingliang party chief of Guangzhou, Xu Caihou, a former vice-chairman of the powerful Central Military Commission, and Su Rong, vice-chairman of China’s parliamentary advisory body have all been fired or are under investigation for corruption. Thousands of Communist party officials have been investigated for corruption since President Xi Jinping took power two years ago.
SEC Brings First Anti-Retaliation Case Under Dodd-Frank Act Whistleblower Provisions – In an administrative proceeding against Paradigm Capital Management, an investment adviser to private funds, the SEC alleged that the company had demoted a head trader and removed him from his trading and supervisory responsibilities after he’d disclosed infractions by the company to the SEC. The company was penalized $2.1 million and ordered to hire an independent compliance consultant. More…
Time for another TRACE Blog poll to find out what was this month’s biggest story. Cast your vote below:
FCPA Settlements Continue – This month, Diebold Incorporated agreed to pay more than $48 million to settle SEC and DOJ allegations that Diebold bribed foreign government officials in China, Indonesia and Russia. Stryker Corporation agreed to pay over $13.2 million to settle SEC charges that Stryker’s subsidiaries allegedly made illicit payments to doctors and government employees in Argentina, Greece, Mexico, Poland and Romania.
Court Finds Dodd-Frank Protections Do Not Protect Whistleblowers Outside US – In the case Liu v. Siemens AG, a U.S. District Court ruled that the anti-retaliation provision of the 2010 Dodd-Frank financial reform law, which shields whistleblowers from discipline for reporting alleged violations by their employers, did not apply to conduct outside the United States. The plaintiffs had claimed that they were fired after disclosing that Siemens AG, a German company, was funneling kickbacks to Chinese and North Korean hospital officials.
OECD criticizes Russia’s implementation of Anti-Bribery Convention – Despite certain progress, the OECD remains concerned with Russia’s compliance with key provisions of the OECD Anti-Bribery Convention, the organization announced this month. Having just completed a second report on Russia’s implementation of the convention, the OECD’s Working Group on Bribery concluded, among other things, that Russian law enforcement and related agencies needed to implement a more proactive approach to detecting, investigating and prosecuting foreign bribery offenses.
UK launches new National Crime Agency – The United Kingdom announced a new crime-fighting agency, the National Crime Agency (NCA), with “national and international reach and the mandate and powers to work in partnership with other law enforcement organizations.” The NCA will work in coordination with the Serious Fraud Office and other national agencies to combat and prosecute bribery and corruption.
U.S. Congressman Sentenced to 3 Years For Extortion – Former Congressman Rick Renzi (R.-AZ) was sentenced to 36 months in prison for convictions on public corruption, money laundering and other charges. Among other allegations, Renzi was accused of committing extortion while trying to swap U.S. government land for a farm that belonged to a business partner who owed him money.
In the wake of the recent financial and debt crisis, the European Union continues to seek new regulations to mitigate fluctuations in the financial system. Most recently, European authorities met to discuss draft legislation that would substantially increase the degree to which European companies must disclose their profits as well as change capital reserve requirements for banks. These legislative efforts follow closely on the heels of other draft EU legislation that requires companies in various industries to make public the payments they make to foreign governments. Below, we outline both of these new proposed regulations.
Disclosure Requirements for Banks
On February 27, 2013, the European Parliament and EU Council reached an agreement to implement much of the G-20 Basel III rules, which were developed in 2010 to safeguard the global banking system from another financial crisis. The newest agreement focuses primarily on restricting bonuses in the financial sector, instituting capital and liquidity requirements, and imposing new governance and transparency rules for banks.
If passed, EU banks would soon be required to disclose to the EU Commission the following information for the previous year:
the number of their employees,
how much profit they made ,
how much they paid in taxes,
how many subsidies they’ve received, and
their net banking income.
The EU Commission has said that it intends to use the relevant data in order to make determinations regarding competitiveness, credit availability and investment levels of European financial institutions. More…
Many companies are responding by redoubling their efforts to encourage internal reporting. But nurturing a strong internal disclosure program is something of an art, requiring a certain level of sensitivity to balance both the interests of the company and the interests of the individual. While some disclosures are frivolous and malicious, others, that may be substantial, can become lost or forgotten in piles of paperwork. We’ve listed here some tips to help those developing in-house disclosure programs maximize the number of employees reporting problems internally before they seek outside help:
Announce the program widely. Are employees properly informed about how and when they can report issues? It’s amazing how many may not even know that an internal disclosure program exists. More…