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  • Global bank settles FCPA allegations concerning “sons and daughters” investigation into hiring practices

    Financial Crimes

    On June 6, a global bank announced it had entered into a non-prosecution agreement with the DOJ to resolve an FCPA investigation into hiring practices in the Asia Pacific region between 2007 and 2013. As part of the agreement, the bank agreed to pay a $46 million penalty to the DOJ. According to the bank, it has already provisioned for the penalty and expects the payment to have “no material impact” on its second quarter financial results. The bank further stated that it has implemented multiple enhancements to its compliance and control functions since 2013. 

    U.S. authorities have investigated several other financial services institutions over their hiring practices in Asia, which have become known as the “sons and daughters” investigations because of the allegations that banks widely hired the children of elite Chinese political families to secure an advantage in obtaining business. Prior Scorecard coverage of those investigations can be found here.

    Financial Crimes DOJ FCPA Sons and Daughters

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  • Baltimore-based investment management firm settles FCPA allegations with DOJ

    Financial Crimes

    On June 4, the DOJ announced that a Baltimore-based investment management firm, had entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve FCPA allegations in connection with the firm’s involvement in Libya through a London-based fund purchased by the firm. Between 2004 and 2010, Permal, subsidiary of the Baltimore firm, partnered with a Paris-based multinational bank, “to solicit business from state-owned financial institutions in Libya.” As admitted by the bank in its own resolution with the DOJ, the bank paid bribes of over $90 million through the use of a Libyan broker with respect to 14 investments made by Libyan state-owned financial institutions. For seven of the transactions, the bank made payments to the Libyan broker to benefit the firm, through its subsidiary. The subsidiary managed the investments and earned profits of approximately $31 million.

    The firm’s resolution includes a penalty of $32.625 million and disgorgement of $31.617 million. As part of the agreement, the firm agreed to continue to cooperate with the DOJ in related investigations and prosecutions, as well as to enhance its compliance program. According to the DOJ, the resolution is based on factors including the firm’s cooperation in the investigation, as well as the fact that the company “did not voluntarily and timely disclose the conduct at issue.” The DOJ also found that the misconduct was “not pervasive throughout the firm or its subsidiary,” but rather that the bank was responsible for running the scheme, noting that the firm and its subsidiary earned less than one-tenth of the profits earned by the bank.

    As FCPA Scorecard previously reported, the firm had announced the near completion of the agreement in a recent SEC filing.

    Financial Crimes DOJ FCPA

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  • Paris-based multinational bank settles FCPA allegations concerning bribery of Libyan officials

    Financial Crimes

    On June 4, the DOJ announced that a Paris-based multinational bank and its wholly owned subsidiary agreed to pay $585 million to resolve charges in the United States and France involving bribes to Libyan officials. According to the DOJ, the bank will enter into a deferred prosecution agreement related to charges of conspiracy to violate the FCPA’s anti-bribery provisions. The bank’s subsidiary will also plead guilty in the Eastern District of New York to similar charges. Almost $293 million of the resolution will be paid to France and credited by the U.S. This is the first coordinated anti-bribery enforcement action by the DOJ and French authorities. 

    The bank admitted that it had paid over $90 million in bribes through a Libyan broker in connection with 14 investments made by state-owned financial institutions in Libya. For each transaction, the bank paid the Libyan broker a commission, some of which the Libyan broker then paid to high ranking Libyan officials to secure the investments for the bank from the state institutions. This scheme resulted in the bank obtaining 13 investments and one restructuring from the Libyan state institutions, and earning approximately $523 million in profits. The scheme also involved payments for the benefit of a a Baltimore-based investment management firm subsidiary; the firm resolved its FCPA issues with the DOJ on the same day.

    As part of the same deferred prosecution agreement, the bank also agreed to pay $275 million to resolve charges arising from manipulation of U.S.-dollar and Japanese yen LIBOR.

    Financial Crimes DOJ Bribery

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  • Baltimore-based investment management firm preparing for FCPA settlement

    Financial Crimes

    On May 30, a Baltimore-based investment management firm, announced in a 10-K SEC filing that it will soon complete negotiations with the DOJ and SEC to resolve FCPA allegations stemming from how a London-based fund purchased by the firm in 2005, managed assets of Libyan governmental entities in 2005-2007. The firm reserved $67 million for the settlement, which reflects, in part, the net revenues of approximately $31 million earned by the fund for managing the assets.

    Financial Crimes DOJ SEC FCPA

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  • Superior Court rules phone calls, email are not alternatives to an ADA-compliant website

    Courts

    On May 21, a California Superior Court granted summary judgment to a visually-impaired plaintiff, ruling that “auxiliary aids” in the form of phone calls or email replies do not meet the Americans with Disabilities Act’s (ADA) burden of providing “full and equal enjoyment of…any place of public accommodation.” According to the order, the defendants, who operate a restaurant and website, argued in part that the plaintiff could have called or emailed the restaurant to obtain information from the website. However, the judge ruled that “email and telephone options do not provide effective communication ‘in a timely manner’ nor do they protect the independence of the visually impaired” because they force a wait for a call back or reply email. As to whether the defendants’ website qualified as a “place of public accommodation within the meaning of the ADA,” the judge ruled that—while courts are split about whether “public accommodations” are limited to physical spaces—the defendants’ restaurant website fell within the category of a public accommodation under a “plain reading” of the statute, and the DOJ’s interpretation of websites under Title III of the ADA. In addition to awarding $4,000 in statutory damages, the court issued an injunction to the defendants, ordering them to comply with Web Content Accessibility Guidelines 2.0 AA to ensure their website is ADA compliant.

    Courts Americans with Disabilities Act State Issues DOJ

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  • California branch sentenced in BSA/AML obstruction case

    Financial Crimes

    On May 18, the U.S. District Court for the Southern District of California sentenced a Netherlands-based financial institution’s U.S. subsidiary for “impairing, impeding and obstructing” the OCC during its 2012 examination by concealing deficiencies in its Bank Secrecy Act and anti-money laundering (BSA/AML) compliance programs. As previously covered by InfoBytes, the branch plead guilty in February to one count of conspiracy to defraud the U.S. Government and agreed to pay over $368 million as a result of allowing “hundreds of millions of dollars in untraceable cash, sourced from Mexico and elsewhere, to be deposited into its rural bank branches” without conducting adequate BSA/AML review. In addition to the February plea agreement, the court sentenced the bank to a two-year term of probation and fined the bank $500,000, the maximum statutory fine.

    Financial Crimes OCC DOJ Bank Secrecy Act Anti-Money Laundering Settlement

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  • DOJ, CFPB agree to early termination of consent order with indirect auto lender

    Lending

    On May 15, the auto lending branch of an international automobile company (indirect auto lender) reported in an 8-K filing that the DOJ and CFPB had reached an agreement that the indirect auto lender has met the requirements for early termination of a consent order entered into in 2016 over allegations of unfair lending practices. As previously covered in InfoBytes, a joint agency investigation under ECOA found that the indirect auto lender’s policies allowed for dealers to mark up a consumer’s interest rate on the retail installment contract above the established risk-based buy rate. The parties currently await final court approval of a joint stipulation and proposed order for early termination of the consent order from three years to two years in the U.S. District Court for the Central District of California.

    Lending Fair Lending DOJ CFPB ECOA Auto Finance Consumer Finance

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  • DOJ issues new policy against “piling on” in corporate enforcement, FCPA cases

    Financial Crimes

    On May 9, the DOJ issued a new policy to discourage “piling on” in corporate enforcement cases, including those involving the FCPA. The new policy directs the DOJ to “consider the totality of fines and penalties” being imposed by the DOJ and other law enforcement agencies on a company for the same misconduct. In a speech delivered to a New York City bar organization, Deputy Attorney General Rod Rosenstein described the new policy as encouraging “coordination among Department components and other enforcement agencies” with the aim of “avoiding unfair duplicative penalties.”

    The new policy contains four main elements. First, the DOJ should not threaten criminal prosecution solely to persuade a company to pay a larger settlement in a civil case. Second, DOJ components must coordinate with one another to achieve an overall equitable result. Third, the DOJ should coordinate with other federal, state, local, and foreign enforcement authorities. Finally, the DOJ should consider several factors, including the egregiousness of the wrongdoing and the adequacy of the company’s cooperation with the DOJ, in determining whether multiple penalties serve the interests of justice in a particular case.

    Rosenstein specifically noted in his address that the DOJ’s “FCPA Unit [had recently] announced its first coordinated resolution with . . . Singapore.” See FCPA Scorecard postThe new policy does not prohibit the DOJ from considering additional remedies in “appropriate circumstances.” 

     

    Financial Crimes FCPA DOJ

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  • DOJ settles with Minnesota community bank to resolve fair lending violations

    Lending

    On May 8, the Department of Justice announced a settlement with a Minnesota community bank to resolve allegations that the lender excluded predominantly minority neighborhoods from its mortgage lending service in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA). According to the complaint filed in 2017, between 2010 and 2015, the bank engaged in unlawful redlining in and around Minneapolis-St. Paul, Minnesota by meeting the residential credit needs of individuals in majority-white census tracts, but avoided serving similar needs in majority-minority census tracts. The settlement requires the bank to expand its banking services in predominantly minority neighborhoods, including opening one full service branch within the specified census tract. In addition to compliance monitoring and reporting requirements, the bank is also required to (i) employ a Community Development Officer and an Executive leader; (ii) spend a minimum of $300,000 on advertising, outreach, and education and credit repair initiatives; (iii) invest a minimum of $300,000 in a program for special purpose loan subsidies; and (iv) continue to provide fair lending training to all employees.

     

    Lending DOJ Fair Lending Redlining ECOA Fair Housing Mortgage Lenders Mortgage Origination

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  • Outdoor advertising company discloses potential FCPA violations

    Financial Crimes

    On April 30, one of the world’s largest outdoor advertising companies, disclosed that it had self-reported potential FCPA violations to the SEC and DOJ. The San Antonio-based company had previously disclosed that Chinese police were investigating “several employees” of its subsidiary for the misappropriation of funds in China. A related internal investigation purportedly found that three unauthorized bank accounts were opened in the name of the subsidiary and “certain transactions were recorded therein.” In the most recent disclosure, the company newly reported that: (i) “discrepancies” related to the misappropriation resulted in more than $10 million in “accounting errors”; (ii) it determined that there was a “material weakness” in the subsidiary’s internal controls over financial reporting, namely “falsification of bank statements and other supporting documentation used to complete bank reconciliations,” “collusion,” and “circumvention of controls”; and (iii) these issues “could implicate the books and records, internal controls and anti-bribery provisions” of the FCPA, making “possible . . . monetary penalties and other sanctions.” The company said it would cooperate with any investigation by the SEC or DOJ.

    Financial Crimes DOJ SEC FCPA

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