2016 Year-End Cross-Border Government Investigations and Regulatory Enforcement Review

Alerts / March 28, 2017

The increasing interconnectivity of global markets has become a significant driver of the regulatory and enforcement trends of U.S. and foreign nations. In 2016, U.S. authorities continued their aggressive approach to investigating and charging individuals and entities, both foreign and domestic, on the basis of alleged misconduct that occurred substantially outside of the U.S. But the U.S. did not pursue these cases on its own. Increasingly, individuals and entities caught in the cross-hairs of a cross-border investigation have become subjects of investigations and enforcement actions brought by multiple jurisdictions. As evident in 2016, the U.S. authorities often work together with their foreign counterparts in investigating and prosecuting alleged misconduct. In other instances, U.S. and foreign authorities maintain separate but parallel investigations and enforcement actions that concern the same cross-border conduct. Similarly, certain conduct has become the focus of overlapping legislation and regulation by the U.S. and foreign nations.

BakerHostetler’s 2016 Year-End Cross-Border Government Investigations and Regulatory Enforcement Review delivers highlights and analysis of important legislative, regulatory, and enforcement activities that crossed national borders in the second half of 2016. Section I of this report focuses on the attempts of U.S. and foreign authorities to curtail alleged sophisticated manipulative securities trading tactics in the areas of “spoofing,” benchmark rates, and credit derivative swaps. Section I also reports on the increasingly cross-border nature of insider trading regulation and enforcement, including the interplay between insider trading and cyber-crime by overseas hackers. Section I further addresses cross-border regulations and enforcement in the areas of accounting fraud, anti-money laundering, trade sanctions and export controls, and international sports matters.

Section II of this report discusses the similar manner in which U.S. and foreign authorities seek to identify and combat alleged misconduct, including through the use of whistleblowers and deferred prosecution agreements and by increasing emphasis on executive prosecutions. Section II also discusses recent developments in case law and under the Federal Rules of Criminal Procedure concerning the DOJ’s ability to obtain data stored overseas for use in its investigations and prosecutions and the advent of data sharing agreements between U.S. authorities and their overseas counterparts. This report examines all of these issues against the backdrop of the anticipated policies and priorities of the new Trump administration.

Finally, Section III of this report examines certain practical considerations concerning cross-border investigations and enforcement actions of which companies and their counsel should be aware as we enter 2017 and beyond. Companies and their counsel must know and comply with the data privacy rules of the jurisdictions in which they conduct internal investigations. These rules can be more stringent than data privacy rules in the U.S. and companies who mishandle private employee data can be subjected to significant penalties. Companies and their counsel also need to assess the attorney-client privilege rules of the countries in which they conduct internal investigations, as new developments in 2016 highlight the significant differences between the privilege laws of the U.S. and certain other countries.

We hope this report offers guidance to readers on how to navigate these issues and understand the various frameworks and their implications permeating a variety of industries in our transnational marketplace. We encourage you to read this report in conjunction with BakerHostetler’s other year-end reviews that address cross-border regulatory and enforcement issues, including: Foreign Corrupt Practices Act 2016 Year-End Update and 2016 Year-End Securities Litigation and Enforcement Highlights. Please feel free to contact any member of the BakerHostetler White Collar Defense and Corporate Investigations team.

The 2016 Year-End Cross-Border Government Investigations and Regulatory Enforcement Review is edited by Jonathan B. New, Patrick T. Campbell and David M. McMillan. Contributing writers are Shawn P. Hough, Samuel M. Light, Marco Molina, Emily R. FedelesFrank M. Oliva and Darley Maw.

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