United States: White Collar Roundup - October 2017

SEC Chair Outlines Cyber Risks Including EDGAR Hack

In a Statement on Cybersecurity, Securities and Exchange Commission (SEC) Chair Jay Clayton described the SEC's involvement with and approach to cybersecurity and related incidents. He began, "Data collection, storage, analysis, availability and protection (including security, validation and recovery) have become fundamental to the function and performance of our capital markets, the individuals and entities that participate in those markets, and the [SEC]." Further, he noted the SEC "is focused on identifying and managing cybersecurity risks and ensuring that market participants – including issuers, intermediaries, investors and government authorities – are actively and effectively engaged in this effort and are appropriately informing investors and other market participants of these risks." The statement also detailed the SEC's internal cybersecurity challenges, including its investigation into attacks on its EDGAR system in which the SEC saw "cyber threat actors attempting to compromise the credentials of authorized users, gain unauthorized access to filings data, place fraudulent filings on the system, and prevent the public from accessing our system through denial of service attacks." And, it appears, the incident the SEC detected in 2016 might have been used in August 2017 to provide the basis for illicit gain through trading. The statement then turns to the SEC's cybersecurity goals in the coming years, including its "objective to contribute substantively to a financial market system that recognizes and addresses cybersecurity risks and, in circumstances in which these risks materialize, exhibits strong mitigation and resiliency."

SDNY's Full-Court Press on College Basketball

Joon H. Kim, the Acting U.S. Attorney for the Southern District of New York, announced the arrest of 10 individuals, including four Division I NCAA men's basketball coaches and senior executives at a major athletic apparel company, charging them with two fraud and corruption schemes. The government alleges that in the first scheme, college basketball coaches took bribes from athlete advisors to influence their players to use the services of the advisors paying the bribes. It alleges that the second scheme involved a senior executive at the apparel company funneling bribe payments to high-school-aged players and their families to secure commitments to attend universities sponsored by the company. The charges include wire fraud, bribery, Travel Act violations and conspiracy. Kim said, "The picture of college basketball painted by the charges is not a pretty one – coaches at some of the nation's top programs taking cash bribes, managers and advisors circling blue-chip prospects like coyotes, and employees of a global sportswear company funneling cash to families of high school recruits."

FOIA Battle Over Monitorship Reports

Back in 2008, Siemens AG entered into a deferred-prosecution agreement (DPA) with the U.S. Department of Justice (DOJ) regarding its involvement in a Foreign Corrupt Practices Act scheme in Argentina, Bangladesh, Venezuela and Iraq. As part of that DPA, Siemens agreed to a corporate monitor, who would report to the DOJ regarding Siemens' compliance with the terms of the DPA. The news outlet 100Reporters filed requests under the Freedom of Information Act (FOIA) to obtain reports and other information about compliance reforms at Siemens, including reports from the monitor to the DOJ. The DOJ refused to provide them, and 100Reporters sued in the U.S. District Court for the District of Columbia. U.S. District Judge Rudolph Contreras ruled in March that the DOJ had properly exempted some material but that some could be disclosed. The DOJ filed for summary judgment and argued that disclosing the information sought would "decrease the amount and accuracy of information that DOJ receives from future monitorships, which will ultimately inhibit DOJ's ability to reduce corporate crime." For more, click here.

False Claims Act's Materiality Standard Strikes Again

The "rigorous" materiality requirement in False Claims Act cases post Universal Health Servs., Inc. v. United States ex rel. Escobar just cost a relator millions of dollars. The U.S. Court of Appeals for the Fifth Circuit recently vacated a $663 million False Claims Act verdict in United States of America ex. rel. Harmon v. Trinity Industries Inc. The court found the fraud allegations could not stand because materiality was lacking. In Harmon, the government did not intervene in the relator's case and even gave a pretrial statement supporting the defendant, Trinity. Nevertheless, the jury found the government had been defrauded and awarded Joshua Harmon $663 million. The Fifth Circuit noted the case should never have made it to the jury because the materiality standard for the falsity to the government was not met.

Briefing to Supreme Court Explores the Scope of Cell Site Searches

This term, the U.S. Supreme Court will hear Carpenter v. United States, which addresses whether law-enforcement officers must obtain a warrant to collect historical cellphone location information. Carpenter filed his brief earlier this summer, and the government responded last month. Carpenter argues the Stored Communications Act and the Fourth Amendment require the government to obtain probable-cause warrants to obtain that information instead of mere subpoenas to the cellphone carriers. In response, the government argues individuals can't claim any right to privacy under the Fourth Amendment because they provide that information to third parties, notably their cellphone carriers. "Cellphone users voluntarily reveal to their providers information about their proximity to cell towers so the providers can connect their calls," the government argued. "Users cannot reasonably expect that the providers will not reveal that business information to the government."

Beware the Ever More Creative E-mail Scam

As has been widely reported, the president's son-in-law and advisor Jared Kushner has retained counsel to assist him with the investigation of Independent Counsel Robert Muller. His lawyer, Abbe Lowell, was apparently duped into responding to e-mails that purportedly came from Kushner but actually came from a prankster. Those e-mails, which came from an e-mail address that was not Kushner's, asked Lowell whether he – meaning Kushner – could lawfully delete e-mails that contained adult content. Lowell responded, "Don't delete. Don't send to anyone. Let's chat in a bit." Fortunately, that advice was sound, but this incident reveals yet again the importance of being ever vigilant when dealing with e-mails and other electronic communications. For more, click here.

Perils of Getting Your Plea Back

Criminal defendants face a stark choice: go to trial or plead guilty. Often, especially in white-collar cases, defendants find themselves willing to admit they did something wrong, but have a difficult time admitting they did what the government alleges against them. Such was apparently the case in United States v. Khazaee, in which the defendant was accused of violating the Arms Export Control Act and agreed to plead guilty. The plea hearing was a rough one in which the district court allowed the defendant an 80-minute break to discuss with his lawyer whether he truly did want to plead guilty. Ultimately, he did so. But on appeal, he sought to withdraw his plea. At oral argument at the Second Circuit (available here), Judge John Walker suggested Khazaee might "rue the day" if he were allowed to withdraw his plea because of the extent of the government's allegations against him. Whether the Second Circuit allows him to withdraw his plea is still to be determined, but if it does, then he will undoubtedly face a trial that might not turn out as he hopes. Only time will tell.

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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.