United States: White Collar Roundup - November 2016

Last Updated: November 2 2016
Article by Daniel E. Wenner

DOJ Guidance on Export Control Self-Disclosure

The National Security Division (NSD) of the U.S. Department of Justice (DOJ) released Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations. The "NSD has made it a priority to pursue willful export and sanctions violations by corporate entities and their employees." In that vein, it issued this guidance to help companies understand the benefits of voluntary self-disclosures of improper conduct because "business organizations and their employees are at the forefront of [NSD's] enforcement efforts." The guidance is similar to other DOJ guidance regarding self-disclosure programs and relies heavily on the November 2015 revisions to the Principles of Federal Prosecution of Business Organizations that are set forth in the U.S. Attorneys' Manual §§ 9-28.000, 9-28.900. Most illuminating are the four hypothetical examples provided at the end of the guidance. Each sets forth a series of events and ties the benefits of an organization's self-disclosure to the timeliness of the disclosure and the extent of the cooperation.

Internal Investigation of Alleged Sexual Assault Not Privileged

In the wake of a reported sexual assault, the attorneys for Phillips Exeter Academy hired attorney Kai McGintee as an "independent investigator" to "perform an investigation into" the complaint of the alleged victim, Jane Roe. Ms. McGintee interviewed witnesses, including students, and prepared two reports for the school and its outside counsel. In those reports, Ms. McGintee recounted her findings and conclusions. The school ultimately placed the alleged assailant, John Doe, on leave and requested that he withdraw from the school. His parents sued the school and, in discovery, sought the McGintee reports. Phillips Exeter moved for a protective order on the basis that the reports were protected by the attorney-client privilege. In his decision on that motion, U.S. District Judge Joseph N. Laplante of the District of New Hampshire held that the report was not privileged. He reasoned that the report was commissioned not by Phillips Exeter but by its outside counsel. Further, while the school claimed the report was designed to provide legal advice, Judge Laplante found that it (1) contained factual findings and (2) provided business advice, neither of which is protected by the privilege. Weighing heavily in Judge Laplante's conclusion was the fact that Ms. McGintee was repeatedly referred to as an "independent investigator" or an "external investigator" and not as a lawyer who was hired to provide legal advice to the school. Finally, and perhaps significantly, Judge Laplante concluded that even if the reports had been privileged, the school waived that privilege by disclosing portions of them to John Doe's parents when justifying the discipline imposed on him.

But Disclosure of Internal Investigation of Alleged Accounting Fraud to SEC Not a Work-Product Waiver

In In re Symbol Technologies, Inc. Securities Litigation, pending in the U.S. District Court for the Eastern District of New York, Magistrate Judge A. Kathleen Tomlinson held that the plaintiffs were not entitled to documents from an internal investigation into possible violations of the securities laws that the defendants provided to the Securities and Exchange Commission (SEC). In the case, the plaintiffs filed a motion to compel the production of certain documents related to an internal investigation conducted by attorneys for Symbol regarding its alleged misstatement of revenues. Symbol objected, arguing that the documents were protected by the work-product doctrine. The plaintiffs argued that the doctrine was inapplicable because the documents were prepared not in anticipation of litigation but to discover what had happened. They further argued that even if the doctrine did apply, Symbol waived its protection by disclosing the documents to the SEC. The court found that the documents were entitled to protection under the work-product doctrine because the investigation was influenced by the expectation of litigation. The court also rejected the plaintiffs' waiver argument, noting that "based on the facts of the instant case, the Court finds that Symbol and the SEC shared a common interest in ensuring that the terms of the [previously entered] consent judgment were adhered to and that Symbol's accounting practices . . . were sound."

What Does a Criminal Defendant Have to Do to Get a Subpoena Response?

Michael Rand filed a petition for certiorari with the U.S. Supreme Court in the wake of the U.S. Court of Appeals for the Fourth Circuit's judgment affirming his conviction. Mr. Rand seeks review on two questions: (1) "[w]hether a criminal defendant seeking pretrial production of documents from a third party by subpoena under Federal Rule of Criminal Procedure 17(c) must satisfy the heightened standard applied in United States v. Nixon, 418 U.S. 683 (1974)—a question that Nixon expressly left open"and (2) "[w]hether the principles of loss causation" that apply to civil securities cases "apply in federal criminal cases when a defendant's guidelines sentence is based on calculating losses to investors," which is subject to a circuit split. The petition is notable for a few reasons. The first is that the counsel of record is former Solicitor General Seth P. Waxman. The second is that it addresses one of the most frustrating aspects of federal criminal defense: the inability to obtain evidence from third parties. As any seasoned federal criminal defense attorney knows, Nixon severely limits the permissible scope of a Rule 17(c) subpoena, and courts often hold defendants to that standard when ruling on motions to quash such subpoenas. While the odds of the Supreme Court's granting cert are pretty slim, this one might have a better chance than most.

What Goes Around . . . Former IRS Special Agent Charged for Tax Fraud

Benjamin Franklin famously said, "In this world, nothing can be said to be certain, except death and taxes." The Internal Revenue Service (IRS) is charged with ensuring the latter. To do so, it employs special agents to investigate people for undertaking criminal efforts to shirk their responsibilities to pay. One such special agent, Alena Aleykina, was recently indicted for her own criminal conduct. The government alleges she "claimed false filing statutes, dependents, deductions and losses" for certain tax years. For other tax years, the indictment alleges, she "attempted to obstruct the IRS by preparing false tax returns for herself, family members, trusts and partnerships and by making false statements to representatives of the Department of the Treasury." The indictment also alleges she "attempted to obstruct a federal investigation by destroying evidence on a government computer." Undoubtedly, those defendants she helped prosecute have discovered an extra spring in their step. Here is a link to DOJ press release.     

A New Justice League: Banks Join Forces to Fight Cybercrime

Hacking and cyberattacks are becoming more and more prevalent. In response, eight of the largest banks in the United States are coming together to tackle the threat. According to a report, the group plans to "share more information with each other about cybercrime threats, prepare comprehensive responses for when attacks occur and conduct war games designed for the issues facing the biggest institutions." While the banks are part of a wider group dedicated to fighting such attacks, the bank-only group is coming together because the banks see themselves as "more likely" targets of such attacks. Hopefully, this new Justice League will have success against the likes of Lex Luthor and the rest of the Legion of Doom.

New York Fed Presses Banks to Dispose of Culture of Silence

The New York Federal Reserve Bank held a forum on improving bank culture. The goal of the forum was to address the "deep-seated cultural and ethical problems" that "have plagued the financial services industry in recent years," according to William C. Dudley, president and chief executive officer. He noted that these issues have "eroded the industry's trustworthiness," which "impedes the ability of the financial services industry to do its job." And what is that job? "[F]inancial intermediation—to facilitate the efficient transfer of resources from savers to borrowers, and to help customers manage the financial risks they face." Further, Mr. Dudley expressed his "worry that, in the long term, an industry that develops a reputation for dubious ethics will not attract the best talent." He also urged that a more trustworthy financial sector would be "more productive and better able to support the economy." Among the speakers at the forum was Preet Bharara, the U.S. Attorney for the Southern District of New York. For the text of Mr. Dudley's opening remarks, click here.

Sour Grapes? DOJ Seeks Full-Court Review in Microsoft Case

Further to our earlier report, the Department of Justice has sought rehearing before the en banc Second Circuit in response to the panel's decision to prohibit the government from using a search warrant to obtain information about a third-party account holder whose data the company maintains overseas. In its petition, the government argues that the panel made two mistakes. First, it argues that the panel improperly focused on the storage of the emails, which occurs overseas. The government claims this is erroneous because the focus of section 2703 of the Stored Communications Act is on disclosure of the stored information, which occurs in the United States. Therefore, according to the government, the panel erred in its extraterritoriality analysis. Second, the government argues that the panel "contravenes" the will of Congress that disclosure of stored communications be permitted to further criminal investigations. Pursuant to the local rules of the Second Circuit, no response is required "unless the court orders." Stay tuned . . .

Click here to read further Insights from Day Pitney

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Daniel E. Wenner
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions