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The FCPA is the topic of the week following the New York Times article detailing claims of violations in the Mexican subsidiary of Walmart which supposedly have been ignored for years. While that matter is under investigation, the DOJ and the SEC settled another FCPA action which at the moment may be more significant. It was against a former Morgan Stanley employee who pleaded guilty in the criminal case and settled the civil action. Its significance lies in the discussion of the reasons for not prosecuting the firm. At a time when there is a large debate regarding a procedures defense, DOJ states that its declination was based in part on Morgan Stanley's internal compliance procedures. The procedures are summarized in the release and outlined in the SEC's complaint.
The SEC Chairman testified before Congress, reviewing the work of the agency and arguing in support of its proposed budget increrase. SEC enforcement brought a significant action against a rating agency claiming that the firm misrepresented its experience in an application. Another market crisis case charged the mortgage subsidiary of a prominent accounting firm with making false representations. The former CEO of CalPERS was also charged in a pay-to-play scheme involving his former employer and a hedge fund. Finally, the Commission brought an unusual pump-and-dump case against two UK twins who began their scheme to market a "stock picking robot" through a web site when they were sixteen.
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For more cutting edge commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.
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