By Yin Wilczek

The Department of Justice and the Securities and Exchange Commission Dec. 13 announced parallel charges under the Foreign Corrupt Practices Act against former senior Siemens AG executives over an alleged decades-long bribery scheme to retain a $1 billion contract to produce national identity cards for Argentine citizens (United States v. Sharef, S.D.N.Y., No. 1;11-cr-01056-DLC-1, 12/12/11; SEC v. Sharef, S.D.N.Y., No. 11 Civ. 9073, 12/13/11).

According to DOJ and the SEC, the executives and their co-conspirators engaged in an elaborate scheme between 1996 to early 2007 that caused Siemens to commit nearly $100 million in bribes to Argentine officials, members of the opposition party, political candidates, and others.

At a press conference, SEC and DOJ officials said the cases against the Siemens executives are noteworthy in many respects: this is the first time that a former board member of a Fortune Global 50 company has been charged with FCPA violations. In addition, the SEC sued more individual defendants in its suit than ever before in an FCPA action. Moreover, this is largest number of foreign defendants that the SEC and DOJ have seen in a single case.

“Today’s charges exemplify our FCPA enforcement strategy of holding both companies and individuals accountable,” said Lanny Breuer, Assistant Attorney General of DOJ’s Criminal Division…

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The Securities and Exchange Commission June 29 unanimously agreed to propose new rules to establish business conduct standards for security-based swap dealers and major SBS participants that enter into swap transactions with counterparties.

The proposal also would impose additional requirements for dealing with counterparties that are “special entities,” which include employee benefit plans under the 1974 Employee Retirement Income Security Act, endowments, and state and federal agencies.

Under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC and the Commodity Futures Trading Commission are required to create a framework for regulating over-the-counter derivatives. Very broadly, the SEC has jurisdiction over SBSs, while the CFTC has jurisdiction over other kinds of swaps.

More specifically, the reform statute’s Section 764 authorizes the SEC to promulgate business conduct rules for SBS entities. SEC staff previously estimated that SBSs constitute 5 percent to 10 percent of the overall $600 trillion swaps market.

CFTC Proposal

The CFTC proposed its corresponding business conduct standards for swap dealers and major swap participants in December (42 SRLR 2368, 12/13/10). The rulemaking has been controversial, with pension plan participants in particular voicing fears that the CFTC’s proposed broad definition of “advisor,” together with a proposal by the Department of Labor to expand the definition of “fiduciary” under ERISA, could threaten their ability to enter into swap transactions (43 SRLR 717, 4/4/11)…

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In a long-awaited ruling, the U.S. District Court for the Southern District of New York Feb. 22 significantly narrowed class securities fraud charges against Vivendi Universal S.A. and two former executives who allegedly made material misstatements about the French media conglomerate’s finances, causing its stock to trade at artificially high levels between 2000 and 2002.

Citing the U.S. Supreme Court’s decision last year in Morrison v. National Australia Ltd., that 1934 Securities Exchange Act Section 10(b) applies only to transactions in securities listed on U.S. exchanges, or to securities transactions that take place in the United States, the court dismissed allegations by U.S. purchasers of Vivendi’s ordinary shares on overseas exchanges.

Writing for the court, Judge Richard J. Holwell concluded that the Section 10(b) claims by U.S. purchasers of Vivendi’s ordinary shares, “like the claims of foreigners who purchased Vivendi’s ordinary shares, do not survive Morrison. … Going forward,” it wrote, “the class shall consist of all persons from the United States, France, England and the Netherlands who … acquired American Depositary Shares of Vivendi” during the class period.”…

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The hedge funds that held swap agreements tied to German corporation Volkswagen’s shares cannot pursue U.S. securities fraud claims that Porsche Automobil Holding SE, also a German corporation, and two of its executives manipulated the price of VW’s shares, the U.S. District Court for the…

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The Securities and Exchange Commission believes that the financial reform legislation effectively overturned the U.S. Supreme Court’s landmark decision in Morrison and restored the so-called “conduct and effects” test for commission enforcement actions, a senior official said…

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The Securities and Exchange Commission Nov. 30 announced that it and the U.K.’s Financial Services Authority disrupted what they believe to be a multi-million dollar insider trading network anchored by a…

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Insider trading “is rampant and may even be on the rise,” Preet Bharara, U.S. Attorney for the Southern District of New York, declared…

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The Securities and Exchange Commission Oct. 25 began the process, mandated by the recent financial reform law, of examining whether the…

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In a first-of-its kind action, the Securities and Exchange Commission recently denied the application of…

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A motion by Swiss bank UBS AG to dismiss a class securities case—filed in the U.S. District Court for the Southern District of New York—is testing the boundaries of the U.S. Supreme Court’s recent ruling in…

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