Corporate Compliance, Investigations, & Responsibility

Public and private companies seeking to protect themselves in the post-Sarbanes-Oxley world of severe criminal and administrative penalties, disproportionate jury verdicts, and substantial settlements find corporate governance and compliance policies and programs increasingly important. Our cross-disciplinary practice group includes attorneys with experience in a broad array of corporate governance, securities, litigation, and regulatory areas, allowing us to help our clients manage their risks.

Board Counseling
We are well versed in the procedures, responsibilities, and duties added by the Sarbanes-Oxley Act of 2002; recent rules and regulations of the SEC, NYSE, NASD, and PCAOB; and the latest developments in the law governing corporate fiduciary duties. We advise clients on a variety of corporate governance issues:

• Officer and director duties and liabilities;
• Director guidelines, ethics standards, and other corporate codes of conduct;
• Board and committee structure and operations;
• Audit committee membership, structure, and functions;
• Securities and corporate disclosure issues;
• Executive employment/consultancy agreements, and executive compensation and indemnification;
• Responses to shareholder proposals;
• Responses to whistleblower hotline complaints and internal audit reports; and
• Derivative and shareholder litigation.

Corporate Compliance Programs
We help companies establish effective governance and compliance policies and training programs. Our attorneys know the requirements for programs that will protect our clients under the revised organizational sentencing guidelines and state fiduciary duty laws. We are well versed in government enforcement policy directives that impact corporate compliance, including the Department of Justice Thompson memorandum and enforcement directives implemented by diverse agencies such as the SEC, CFTC, and FERC.

We help clients assess their risk potential in a wide variety of substantive areas, and have advised clients on establishing corporate codes of conduct and other standards, procedures, and training programs to prevent and detect improper conduct. We assist clients to establish monitoring and auditing programs, whistleblower hotlines, and incentive, disciplinary, remediation and reporting programs and procedures. We also advise regarding establishing effective training programs, much of which we can conduct.

Investigative Skills
When problems arise, we act as independent counsel in internal investigations and as defense counsel in litigation involving alleged violations. We have advised boards of directors and audit committees, and conducted confidential investigations into a wide range of matters, including alleged financial and accounting irregularities affecting numerous statutes and regulations, often requiring financial restatements.

We have performed special board committee investigations and internal investigations for companies, boards of directors, audit committees, or special litigation committees into allegations of securities fraud, financial fraud, insider trading, financial irregularities requiring financial restatements, misappropriation of corporate assets or business opportunities, and a wide variety of other alleged criminal activity: commodities fraud, bank fraud, mail and wire fraud, bribery, tax fraud, antitrust violations, government contract fraud, federal and state program fraud, Foreign Corrupt Practices Act (FCPA) violations, money laundering, environmental health and safety violations, and healthcare fraud.

Many of the attorneys in our highly regarded civil and criminal securities enforcement team are former government prosecutors or former members of the SEC staff.  Our attorneys represent board of directors’ special litigation committees and third-party professional firms in many shareholder derivative actions and shareholder suits. Senior corporate executives in some of the most noteworthy cases in the country relating to allegations of accounting fraud, securities fraud, and corporate misconduct have relied on our attorneys.  We also have a team of lawyers with skill and experience in the Foreign Corrupt Practices Act, Patriot Act, Bank Secrecy Act, Sherman Act, and money-laundering statutes, whistleblower claims under Sarbanes-Oxley, and other statutes and qui tam actions.

Litigation Experience: Enforcement Proceedings, Derivative Litigation, Class Actions

White-Collar Criminal Defense. We are known for our representation in areas of corporate compliance and white-collar criminal matters, including corporate counseling, internal investigations, and criminal matters ranging from administrative subpoenas through grand jury investigations, trials, post-trial matters, and appeals. We handle matters in substantive areas including accounting and securities fraud, corporate misconduct, public corruption, money laundering, price fixing, government contract fraud, healthcare fraud, and environmental health and safety crimes. 

Securities Enforcement. We represent companies and their directors, officers, and employees in SEC, DOJ, NYSE, NASD, and State Attorneys General and County Attorney investigations and proceedings involving securities, mail, wire, bank and tax fraud, violations of the Foreign Corrupt Practices Act, and money-laundering violations; broker-dealers, hedge funds, investment companies, and investment advisers in SEC, NYSE, and NASD investigations and proceedings; auditors and their partners and employees in SEC proceedings and before State Boards of Public Accountancy; and financial institutions in bank regulatory and enforcement proceedings.  

• Securities and RICO Litigation. We represent corporations and their directors and officers, attorneys, and auditors in securities and corporate litigation; directors, officers, and others in insider trading litigation; ERISA plan fiduciaries and related providers in securities and breach of fiduciary duty litigation arising from 401K plans; national and regional broker-dealers and hedge funds in litigation and arbitration of securities and common-law claims; and broker-dealers and investment advisers in litigation arising from tax shelter advice and transactions. 
• Derivative Suits and Corporate Claims. We represent corporate directors and officers in derivative actions or actions brought by bankruptcy trustees; special litigation committees as independent corporate counsel in evaluating the merits of derivative demand letters and claims; corporations or bankruptcy trustees bringing claims against current or former directors and officers involving securities or common-law or bankruptcy claims; and auditors and their partners and employees in litigation brought by corporations or bankruptcy trustees involving securities or common-law claims. 
• Merger and Acquisition Litigation. We represent directors and officers, corporations, and shareholders in pre- and post-closing actions alleging securities and common-law claims in connection with merger and acquisition transactions or sales of all or a portion of a business; corporations and their directors and offices in proxy disclosure litigation; and corporations bringing post-closing claims against current or former shareholders, directors, officers, or employees involving securities or common-law claims arising from misrepresentations made in merger and acquisition transactions or the payment of an inflated deferred purchase price through earnout arrangements, in which misrepresentations, false transactions, and false entries are alleged.
• Financial Derivatives and Swap Litigation. We represent public and privately held companies, governments, and governmental entities and financial institutions in litigation involving derivatives and swaps.

Class Actions. Attorneys in our large, diversified class action practice have substantial experience in all of the core competencies needed for a robust class action practice, including class certification standards and procedures under Federal Rule of Civil Procedure 23, as interpreted by the courts and as revised by the recently enacted Class Action Fairness Act (CAFA). One partner represented clients in passage of CAFA and has developed a practice guide based on the new provisions governing removal and class action settlements.  Our attorneys also have substantial familiarity with the state equivalents of Rule 23.

We also have a deep background in the procedures governing complex litigation that are often relevant in class actions:

• removal from state to federal court under diversity jurisdiction (as revised by CAFA) and federal question jurisdiction;
• transfer and consolidation of class actions by the Judicial Panel on Multi-District Litigation; and
• best practices in case management, including sequencing of discovery, use of dispositive motions, etc.

Because expert witnesses often play a critical role in class actions, both on class certification questions and on the merits, or with respect to affirmative defenses, we have frequently worked with statistical and other experts concerning such questions as the predominance of individualized over common issues of fact. We also have considerable experience with the Daubert rules for expert testimony admissibility.

Our attorneys have remarkable skills in class action practice, procedure, and class certification issues such as typicality and adequacy, frequently working with experts in opposing class certification motions and boasting a strong track record in defeating class certification. 

We also have substantial backgrounds in class action settlements, including such issues as opt outs, scope of releases, hearings on fairness and reasonableness, and appeals of objectors.

Tax Controversy and Litigation. A major highlight of our wide-ranging tax practice is our extensive experience in handling tax controversies, both at administrative levels and in litigation before the courts. We represent clients in controversy matters at all levels within the IRS:

• In the pre-audit phase, we advise clients on all aspects of documenting transactions and retaining files in order to maximize the opportunities for success in audit and litigation.
  
• During the audit phase, we help our clients analyze and evaluate factual and legal issues and make presentations to local IRS officials and to the IRS National Office in referrals for technical advice. We also have broad experience in many of the IRS' new issue resolution techniques, such as the negotiation of pre-filing agreements, industry issue resolutions, and fast-track mediation.
  
• We regularly prepare administrative settlement agreements, draft refund claims, secure and co-ordinate the reports and testimony of effective expert witnesses, and respond to or contest IRS testimonial and document production demands.
  
• In coordinated examination and industry specialization audits, we deal with IRS attorneys to eliminate issues and to minimize the need for litigation.
  
• For all audits, we prepare protests of proposed IRS audit adjustments, and we represent our clients in conferences with IRS appeals officers.
  
• When necessary, we litigate Tax Court cases and refund suits on behalf of our clients in all federal courts.
  
• In our criminal practice, we defend our clients throughout the entire process, including grand jury investigations, jeopardy assessment review hearings, summons enforcement contests, post-indictment proceedings, trial, and post-trial proceedings.

Substantive Experience
Our clients in the post-Sarbanes-Oxley, increasingly global environment face corporate compliance issues in the following areas:

• Securities Advice
• Tax Advice
• Whistleblowers
• Antitrust and Competition
• Anti-Money Laundering (AML)
• Foreign Corrupt Practices Act
• Export Controls
• Economic Sanctions
• Anti-Boycott Regulation
• Foreign Investment Review and Regulation
• Data Protection and Privacy
• Electronic Document Management and Retention

Securities Advice. Our attorneys who focus on corporate governance and SEC compliance issues do the following:

• Represent issuers, underwriters, and investors in public and private offerings, mergers and acquisitions, going-private transactions, tender offers, stock repurchases, recapitalizations, and spin-offs;
  
• Assist SEC-reporting companies with their periodic reporting and other obligations under the Securities Exchange Act of 1934, including 10-K, 10-Q and 8-K filings, proxy statements, and Section 16 and Schedule 13D/G filings;
  
• Advise regarding the Sarbanes-Oxley Act and the SEC's rules adopted to implement many of its provisions, as well as the corporate governance and other listing requirements of the New York Stock Exchange, the American Stock Exchange, and NASDAQ;
  
• Advise boards of directors and board committees of SEC-reporting companies regarding board, board committee, and auditor independence requirements, compliance with corporate governance responsibilities, adoption of corporate governance "best practices," and self-evaluation of corporate governance performance; and
  
• Advise on SEC reporting and governance issues arising out of extraordinary transactions, affiliate transactions, corporate control issues, executive compensation, shareholder relations and communications, and stock plans. 

Our securities advisers coordinate with our extensive ERISA practice regarding disclosure and the securities law aspects of employee benefit plans.

Tax Advice. Our attorneys form one of the nation's premier tax advisory practices, regularly appearing as special tax counsel in a wide variety of transactions and advising corporations on all aspects of tax management, including planning, IRS audits, administrative appeals, and litigation.

Both Congress (American Jobs Creation Act) and the Department of the Treasury (Circular 230) have recently dramatically altered the relationships between corporations and their tax advisors in ways that significantly affect corporate governance. The new rules change the financial reporting obligations of corporations with respect to tax matters, the types of opinions on which management may rely, the penalty regime for relying on "disqualified opinions," and the obligations of in-house counsel in advising management in tax matters. Those rules also impose SEC reporting obligations when certain penalties are imposed and dictate the situations under which the IRS may demand production of an attorney's analyses of tax reserves.

Our tax professionals routinely advise corporate tax departments on how to comply with these rules and how to avoid draconian penalties. We counsel corporate clients and their advisors on preserving privileges and assuring that the tax advice they give and receive and the tax reporting they provide offers the maximum protection from the assertion of penalties.

Whistleblowers. We advise clients on how to respond to whistleblower allegations. Our experience includes the procedures developed under the Sarbanes-Oxley Act of 2002 regarding the investigation of such claims and the procedures for adjudicating such claims, as well as the investigation and adjudication of such allegations under a variety of other federal statutes. Other employees sometimes contact the federal government directly and in some circumstances such allegations become qui tam proceedings; our government contract attorneys have handled many such cases.

Antitrust and Competition. A vital part of our antitrust and competition practice is counseling clients on antitrust compliance issues, in a wide variety of contexts.  We regularly:

• Design antitrust compliance programs for clients, including preparing antitrust guidelines, conducting antitrust audits and special investigations, and devising training and educational programs for corporate managers and employees;
  
• Advise trade associations on such antitrust compliance issues as statistical reporting and information-gathering programs, ethical codes, participation in litigation and regulatory proceedings, and antitrust policy and competition law issues;
  
• Represent a number of industry standards-setting organizations, including those developing standards governing electronic data exchange, and represent clients who participate in such organizations;
  
• Work with our colleagues in the intellectual property (IP) and transaction groups, since IP and technology licensing increasingly present antitrust issues;
  
• Counsel clients on structuring and operating joint ventures and other collaborative activities, including joint R&D, marketing, and production arrangements, teaming and other joint bidding arrangements, preferred provider programs, and joint lobbying and other activities designed to influence legislative and regulatory initiatives as well as advise on applying pre-merger reporting requirements to joint ventures;
  
• Advise clients in regulated industries on applying exemptions in the airline, railroad, trucking, insurance, and other industries; and
  
• Advise our foreign clients on applying US antitrust laws to their activities and on the reach of US jurisdiction.

Anti-Money Laundering (AML). We advise on all aspects of AML rules and regulations, both in the compliance counseling and enforcement contexts. Our attorneys are familiar with the long-standing AML legal framework set forth in the Bank Secrecy Act and the Title 18 of the US Code, as well as the more recent and still evolving standards imposed by Title III of the USA Patriot Act. Our AML attorneys:

• Help clients meet increasingly complicated and comprehensive AML requirements, counter-terrorist financing regimes, know-your-customer (KYC) rules, and asset blocking and reporting requirements;
  
• Confront enforcement problems, evaluate clients' existing AML policies and procedures, and assist clients to set up and implement new programs, incorporating best practices that meet with regulatory approval;
  
• Advise financial institutions subject to new USA Patriot Act KYC requirements and long-standing Office of Foreign Assets Control (OFAC) anti-terrorism/asset-blocking regimes;
  
• Advise on methods for conducting customer due diligence consistent with the institution's business model; screening customers against various USG lists; resolving false positives; and filing reports with either OFAC, the Financial Crimes Enforcement Network (FinCEN), or both;
  
• Develop independent audit plans for institutions that are required to test their AML and OFAC compliance systems; and
  
• Advise several major European financial groups-including insurers and intermediaries-on how to effectively exploit the single license to write insurance on a cross-border basis in the European Union. Steptoe's advice covers the basic regulatory regimes set out in the EU Directives and national implementing provisions, while embracing and addressing European AML and KYC practices and protocols.

Foreign Corrupt Practices Act (FCPA). Our attorneys have extensive experience with the FCPA's anti-bribery and accounting requirements, and the accounting and record-keeping procedures that meet SEC compliance requirements and protect corporations from possible anti-bribery transgressions. We also advise companies on comparable international standards, local law requirements, and the expanding requirements being imposed by international financial institutions (such as the World Bank). Our attorneys:

• Analyze complex investment, teaming, and joint venture arrangements in emerging markets to ensure FCPA compliance;
  
• Develop compliance and internal record-keeping systems and policies to ensure against regulatory infractions;
  
• Draft legal opinions, business review letters, contract clauses and terms, and regulatory guidance on specific corporate transactions, offset requirements, and third-party agency arrangements;
  
• Conduct internal investigations into allegations of improper payments to foreign government officials by corporate employees, subsidiaries, or third parties, and advise with respect to potential disclosures under US law;
  
• Advise on collateral regulatory regimes pertaining to marketing activities, sales commissions, and political contributions;
  
• Defend against Justice Department, SEC, and World Bank enforcement/debarment proceedings and investigations;
  
• Identify and supervise counsel in foreign jurisdictions to obtain opinions on local law regarding gratuities provided to foreign government officials and political parties; and
  
• Assist clients in resolving local disputes and litigation arising from FCPA compliance requirements.

Export Controls. Our attorneys routinely handle cases involving all aspects of US export controls under the Commerce Department, State Department and other (e.g. Nuclear Regulatory Commission) regimes. With their increasing focus on national security, counter-terrorism, industrial espionage, and proliferation of sensitive technologies, the US export control regimes are critical to corporate compliance and risk management, especially as companies extend their presence globally, outsource their requirements abroad, or maintain a diverse nationality workforce. We also pride ourselves in having a trans-Atlantic capability with talented attorneys in our London and Brussels offices.  We advise on the following:

• Commodity jurisdiction rulings, product and technology classifications, and advisory opinions;
  
• Export license applications, technical assistance agreements, license amendments and transfers, special license requirements, and license exceptions for export activities;
  
• Regulatory compliance in corporate reorganizations, mergers and acquisitions, asset purchases, and strategic alliances involving materials, technology, and manufacturing process sharing;
  
• Internal investigations, voluntary disclosure, negotiation of settlements, and litigation in enforcement proceedings before administrative agencies and the courts;
  
• ITAR registrations, notifications, and Part 130 reporting, Part 129 brokering assistance, and Part 130 reporting on fees, commissions, and political contributions;
  
• Encryption and technology transfers, and software export/re-export rules, including de minimis software filings to the Commerce Department; and
  
• Deemed export and deemed re-export advice and compliance services for information/technology sharing with foreign national visitors and employees.

Economic Sanctions. The area of economic sanctions, whether unilateral or multilateral in scope, is one of our firm's mainstay compliance practices. With international business transactions requiring increasing focus on customer/partner due diligence, "screening," and anti-terrorism/anti-proliferation compliance, we help clients understand the scope of their responsibilities under US economic sanctions laws and policies, and take appropriate steps to mitigate legal, reputation, and commercial risks arising from these regulatory regimes. Our attorneys:

• Advise on the regulatory prohibitions that apply to countries sanctioned by the United States, the European Union, Japan, and the United Nations;
  
• Know the jurisdictional issues involved in administering US economic sanctions, including extraterritorial aspects of export, reexport, investment, financial, and transactional controls;
  
• Set up compliance programs for multinational corporations and organizations with multiple levels of US management and expatriate programs, inter-connected corporate structures through common officers and directors, and intra-corporate support via enterprise resource management systems;
  
• Counsel clients on specific transactions, mergers and acquisitions, and corporate policies to permit commercial activity consistent with regulatory compliance;
  
• Regularly prepare advisory opinions, interpretations, and license applications for clients; and
  
• Conduct privileged internal investigations, prepare voluntary disclosures when appropriate, and defend enforcement proceedings.

Anti-Boycott Regulation. We assist clients with the types of matters pertaining to the regulatory regimes that prohibit or penalize cooperation with foreign economic boycott of countries friendly to the United States, as set forth in the Anti-Boycott Amendments to the Export Administration Regulations and Section 999 of the Internal Revenue Code. Our attorneys:

• Advise on Commerce Department anti-boycott regulations and interpretations, including jurisdictional requirements, knowledge and intent standards, letter of credit transactions, substantive prohibitions and exceptions, and reporting obligations;
  
• Advise on Treasury Department Guidelines and interpretations, including jurisdictional issues, scope of penalizable agreements, separate and identifiable operations, calculations of the international boycott factor, and tax return filing requirements;
  
• Assist with record-keeping, internal and external audit, and enforcement proceedings, including prior disclosure, mitigation of liability, and negotiation of settlements;
  
• Monitor legislative and regulatory developments, and enforcement actions, and provide alerts on interpretations and agency activities relevant to compliance; and
  
• Establish internal compliance systems, corporate education programs, and reporting channels consistent with regulatory deadlines.

Foreign Investment Review and Regulation. We assist domestic and foreign clients with the intricacies of the Exon-Florio foreign investment review process and the facility clearance/FOCI procedures under the DoD Industrial Security Program. Our attorneys have special industry experience in defense industries, electronics, telecommunications, aviation and transportation, space, and satellite. With detailed familiarity with all relevant regulatory programs, statutory and regulatory language, and policy considerations, they assist in the following matters:

• Write Exon-Florio opinion letters and notifications,
• Assess Industrial Security Program/FOCI assessments,
• Develop and implement FOCI-reducing mechanisms,
• Ensure Hart-Scott-Rodino pre-merger notifications and antitrust compliance, and
• Manage Executive Branch and congressional inquiries into foreign investment transactions.

Data Protection and Privacy. We advise numerous companies on data protection and privacy issues, including under the EU Data Protection Directive and Privacy and Electronic Communications Directive; the national data protection legislation of EU member states; US sectoral regulation applicable to banking, health, and children; and the data protection and privacy laws of other jurisdictions. We also advise on the conflicts that have arisen between Sarbanes-Oxley and EU data protection law, particularly with respect to corporate whistleblower programs.

Electronic Document Management and Retention. Our cross-disciplinary practice assists clients to create or revise document retention policies and e-mail and computer usage policies to comply with Sarbanes-Oxley and similar EU regulations, other similar statutory and regulatory schemes, and evolving electronic discovery obligations.

We assist clients with document retention policies that include retention schedules regarding electronic communications and other electronic documents and that comply with statutory and regulatory requirements, current reported case law, and the Sedona Guidelines, while at the same time allowing for our clients' unique needs, culture, business processes, and IT environment.

We develop implementation, compliance and auditing plans, develop and present extensive e-mail and electronic document retention training programs, and establish litigation hold procedures to meet evolving document preservation requirements being developed by the courts.

Select News & Events

• Jim Moorhead Moderates Panel on Internal Investigations at NAWL Annual Meeting

Publications

• Treasury Department Issues Final CFIUS Regulations
  November 19, 2008
• Corporate Fraud Defense Report (Vol 1 No 5)
  May 2006
• Let's Talk Dirty: How Government Regulators Have Helped and Hindered Redevelopments of Contaminated Property
  December 14, 2004
• Issues for Management on Secondary Buy-Outs
  Mergers & Acquisitions
  August 1, 2003

More Publications »