Compliance Bits and Pieces for December 18

Here are some interesting stories from the past week:

“Mr. Ruehle, You Are a Free Man”: Judge Carney’s Dramatic Dismissal of the Broadcom Backdating Criminal Case by Kevin M. LaCroix in The D&O Diary

There has been widespread news coverage of the dramatic December 15, 2009 decision of Central District of California Judge Cormac Carney to throw out the options backdating related criminal charges against Broadcom co-founder Henry T. Nicholas III and CFO William Ruehle, based on prosecutorial misconduct.

It’s NOT Just a Fantasy: Company Fires Employees for Running Fantasy Football League, For Real by Daniel Schwartz on the Connecticut Employment Law Blog.

This week, it was reported that Fidelity Investments fired four employees (including relationship managers to various clients) who were running various fantasy football leagues. What was curious about the company’s statement for the rationale for the firing was not so much using company time and resources for the league but rather it’s designation of fantasy football as a form of “gambling”.

SEC Charges FCPA Compliance Officer with Violations by Thomas O. Gorman in SEC Actions

The SEC brought an FCPA action against Bobby Benton, the Vice President of Western Hemisphere Operations of Pride International, Inc. Mr. Benton was responsible for FCPA compliance in his region. Pride is one of the world’s largest offshore drilling companies. SEC v. Benton, Civil Action No. 4:09-cv-03953 (S.D. Tex. Filed Dec. 11, 2009).

Chief Compliance Officer Now a Full-Time Job By Melissa Klein Aguilar for Compliance Week

Two new studies confirm what those tasked with oversight of corporate compliance probably already know: More and more often these days, the chief compliance officer’s job is a full-time, stand-alone gig, rather than a secondary duty one handles while wearing some other title.
A poll from the Open Compliance and Ethics Group found that of 365 respondents, nearly 75 percent said their company has a chief ethics and compliance officer or someone in a similar role with top-level oversight of compliance. That’s up from only 10 percent in a similar poll from 2005.

Recent Opinion Sheds Light on the Relevance Of Due Diligence to the FCPA’s ‘‘Knowledge’’ Requirement(.pdf) by Kenneth Winer and Gregory Husisian of Foley & Lardner LLP

I admit that I included this article because they refer to me as a “prominent commentator.” See Footnote 3. (Referenced source:
Sounding Off About Third Party Compliance even though I did not make the quoted statement.

The U.S. District Court for the Southern District of New York recently issued an opinion that sheds important light on one of those elements – the ‘‘knowledge’’ requirement. The case underscores that while a failure to perform due diligence when entering into an arrangement with an intermediary (such as a consultant, joint venture partner, or distributor) may expose a company or individual to substantial reputational and legal risks, the FCPA does not require such due diligence.

Herrmann’s Farewell Post Mark Hermann is leaving the Drug and Device Law blog (and private practice)