Friday Reading: Corporate Compliance Round-Up

For your reference, here is a Friday round-up of recent corporate compliance updates published by leading law firms on JD Supra:

NAIC Releases Draft White Paper On Corporate Governance; At Odds With Existing Bodies of U.S. Law (Sutherland Asbill & Brennan LLP)

“This Legal Alert addresses the “White Paper on High-Level Corporate Governance Principles for Use in U.S. Insurance Regulation” Click here for White Paper exposed for comment at the Spring NAIC Meeting in Austin, Texas. The White Paper is controversial in several ways as discussed below. We first provide a summary of the White Paper and highlight problematic provisions. Then, we summarize selected Delaware corporate governance case law and analyze how the White Paper appears to conflict with existing law.” Read more »

June 2011: White Collar Litigation Update (Quinn Emanuel Urquhart & Sullivan, LLP)

“SEC Exercises Expanded Power to Bring Administrative Enforcement Proceedings: The passage of the Dodd-Frank Act in July 2010 broadened the SEC’s power to bring administrative proceedings rather than civil actions in federal court for violations of securities laws. The SEC has now begun exercising that expanded power.” Read more »

Implementing a Values-Based Approach to Your Compliance Program (Thomas Fox)

“In an article in the March issue of Inside Counsel entitled, “Interactive Ethics” author Brian Martin, Senior Vice President and General Counsel of KLA-Tencor Corp., discussed some of the lessons learned when his company transformed its compliance and ethics training from a rules- based training program to an ethics-based training program. I found it to be a useful review of training for the compliance practitioner.” Read more »

Department of Labor Panel Adopts Liberal Pleading Standard for SOX Whistleblower Cases (Katten Muchin Rosenman LLP)

“The ARB reversed the ALJ’s dismissal order on the ground that subject matter jurisdiction ’clearly existed.’ The ARB held that the burden of establishing subject matter jurisdiction in a SOX retaliation case was ‘not particularly onerous’ and that claimants met the jurisdiction test simply by filing a complaint that alleged that Parexel terminated their employment in retaliation for reporting on potentially fraudulent misconduct.” Read more »

SEC Proposes Disqualifying “Bad Actors” from Rule 506 Offerings (Duane Morris)

“The U.S. Securities and Exchange Commission (SEC) has announced proposed rules1 that would deny the safe-harbor exemption provided by Rule 506 of Regulation D to securities for any offering involving certain “felons and other ‘bad actors’” under the Securities Act of 1933 (the “Securities Act”). The period for comments on the proposed rules expires on July 14, 2011.” Read more »

FCPA Risk Assessments: New Input into Current Best Practices (Thomas Fox)

“We believe that Risk Assessment is a tool and is one with which a company should begin to craft its Foreign Corrupt Practices (FCPA) or UK Bribery Act compliance program. The simple reason is straightforward; one cannot define, plan for, or design an effective compliance program to prevent bribery and corruption unless you can measure the risks you face.” Read more »

Beauty Is In The Eye Of The Beholder And New Commercial Privacy Legislation Is Before The U.S. Senate (Sheppard Mullin Richter & Hampton LLP)

“On April 12, 2011, United States Senators John Kerry and John McCain formally proposed the Kerry-McCain Commercial Privacy Bill of Rights Act of 2011 (“CPBRA”). This proposed legislation would apply to all retailers, including those in the fashion, beauty, and apparel industries, that request and record their customers’ personal information. If passed in its current form, the CPBRA would preempt similar state laws, would not provide a private right of action upon which an individual claim could be based, and would cap penalties at $3 million. While that is good news in light of the burgeoning class action privacy-related litigation filed against companies by private plaintiffs under state consumer protection laws, compliance with the CPBRA could potentially be onerous because the CPBRA replaces industry self-regulation with government regulation.” Read more »

Preet Bharara on the Principles of Ethics, Integrity and Corporate Culture (Thomas Fox)

“At the recent Compliance Week 2011 Conference one of the Key Note Speakers was Preet Bharara, United States Attorney for the Southern District of New York. His topic was the general principles of ethics, integrity and corporate culture. I found his remarks very appropriate for the compliance professional in evaluating a company’s overall compliance program.” Read more »

Are Reverse Mergers A Nevada Problem? (Allen Matkins Leck Gamble Mallory & Natsis LLP)

“[T]he Securities and Exchange Commission issued this bulletin on the risks of investing in reverse merger companies. In this post from the week before, I wrote about a recent article that found that Nevada is second only to Delaware in attracting out-of-state publicly traded corporations. The article by Professors Michal Barzuza and David C. Smith looked at the number of accounting restatements and found: ‘Our results suggest that Nevada corporate law attracts a certain class of firms that are prone to financial reporting failures and that these failures are followed by significant losses to shareholder value.’” Read more »

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