United States: Red Notice Newsletter - February 2018


U.S. Agencies Decline to Prosecute Teradata for Alleged FCPA Violations

On February 26, 2018, Teradata Corporation, an Ohio-based enterprise software database management company, announced in its 10K filing that the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) had both declined to prosecute the company for alleged misconduct at its subsidiary in Turkey. Teradata voluntarily disclosed the misconduct at issue to U.S. authorities in February 2017, informed the agencies of its internal investigation and remedial measures, and fully cooperated with the government's subsequent inquiries.

For more information, see Teradata's 10­K filing here and coverage from the FCPA Blog here.

Recent U.S. Supreme Court Decision Limits Whistleblower Protections Under Dodd­Frank

On February 21, 2018, the U.S. Supreme Court issued a unanimous decision in Digital Reality Trust v. Somers, in which it held that the protections against retaliation for whistleblowers under Dodd­Frank apply only to whistleblowers who report violations to the SEC and not, for instance, to those who report violations of securities laws to their supervisors, as the SEC had interpreted the law to apply in its rulemaking.

For more information, see Akin Gump's Client Alert on this topic, available here.

Former Officials of Venezuelan State­-Owned Energy Company Charged with FCPA Violations and Money-­Laundering

On February 12, 2018, the DOJ unsealed a 20­count indictment against five former officials of Venezuela's state­ owned oil company, Petroleos de Venezuela S.A. (PdVSA), alleging that the officials accepted at least $27 million in bribes from vendors of PdVSA in exchange for winning contracts with the company. The DOJ alleges that the bribes were funneled through Swiss and U.S. bank accounts and laundered through real estate transactions and other investments in the United States. In addition, one of the charged defendants holds dual U.S.­Venezuelan citizenship. Two of the individuals charged face allegations that they conspired to violate the Foreign Corrupt Practices Act (FCPA), and all five were charged with at least one count of money laundering. The DOJ has charged a total of 15 individuals in this case, 10 of whom have pleaded guilty. The case was investigated with the assistance of Spanish and Swiss authorities, U.S. Immigration and Customs Enforcement's Homeland Security Investigations and the DOJ Criminal Division's Office of International Affairs.

In a related lawsuit filed in federal court in Houston on February 16, 2018, Texas energy company Harvest Energy Resources, Inc. claimed that it lost almost half a billion dollars in revenue after refusing to pay bribes to the former head of PdVSA, who was also Venezuela's oil minister. Harvest Energy said that its refusal to pay four separate bribes of $10 million resulted in the ministry withholding its approval for the company to make sales in Venezuela in two different deals.

The DOJ's most recent indictment and related press release are available here. For more information, see coverage from FCPA Blog here and coverage from Compliance Week here.

For more information on Harvest Energy's lawsuit, see coverage from Bloomberg here, from Law360 here and from the Houston Chronicle here.

Latvian-­Based Bank Forced to Close After FinCEN Announces Plans to Block Its Access to U.S. Markets over North Korean Money Laundering Concerns

On February 13, 2018, the Financial Crimes Enforcement Network (FinCEN) announced a notice of proposed rulemaking to block Latvia­based ABLV Bank from accessing U.S. markets after determining that the bank was an institution of primary money laundering concern. FinCEN invoked this rarely used power, citing concerns that ABLV accounts had been used to launder funds connected to illicit activity in Russia, Azerbaijan and Ukraine. In addition, ABLV accounts were purportedly used to funnel money to United Nations­designated entities involved in North Korea's ballistic missile program.

After FinCEN announced its rulemaking to impose the ban against ABLV—which would have taken two months to implement—the European Central Bank (ECB) observed a flood of withdrawals from the bank and sought to impose a moratorium on ABLV transactions. On February 23, 2018, ECB declared ABLV "failing or likely to fail," and, the next day, ABLV announced it would be liquidated.

See FinCEN's press release here and the ECB's press release here. For more information, see coverage from The Wall Street Journal here and here, and from Reuters here.

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