Compliance Bricks and Mortar for June 21

compliance bricks and mortar

These are some of the compliance-related stories that recently caught my attention:

SEC Buys Itself a Headache by David Smyth in Cady Bar the Door

If you’re reading this, you’re surely aware of the several-years-old-now fight between the SEC and some federal judges regarding the SEC’s policy of settling cases while allowing defendants to neither admit nor deny the claims against them.  Very briefly, the SEC contends that its policy allows it to settle cases against companies that would otherwise take on vast liability in follow-on private litigation if it were forced to admit bad conduct that hurt shareholders.  Otherwise, the SEC says, the litigation burden would be almost overwhelming.

Recent FCPA Enforcement Actions Show Increased Scrutiny on Financial Services Sector (.pdf) by Ruti Smithline and Jarod G. Taylor of Morrison & Foerster

Last week, the U.S. Department of Justice (DOJ) announced the indictment of a managing partner of U.S. broker-dealer Direct Access Partners (DAP) for violations of the Foreign Corrupt Practices Act (FCPA), the Travel Act, and money laundering statutes. This indictment follows on the heels of last month’s indictment of two other DAP employees for the same alleged conduct, as well as the foreign official who received the bribes at issue.

The investigation into DAP was prompted by information discovered during a routine, periodic examination by the U.S. Securities and Exchange Commission’s (SEC’s) New York office broker-dealer examination staff. The discovery of the alleged conduct without the involvement of any whistleblower, self-reporting, or regulator tasked directly with FCPA enforcement should serve as a wake-up call for the need for anticorruption compliance by regulated companies.

Justice Department Fought to Conceal NSA’s Role in Terror Case From Defense Lawyers by Keven Poulsen in’s Threat Level

When a senior FBI official told Congress the role the NSA’s secret surveillance apparatus played in a San Diego terror financing case today, nobody was more surprised to hear it than the defense attorney who fought a long and futile court battle to get exactly the same information while defending the case in court.

If You Pay More, Do You Actually Get More? by Keith Paul Bishop in California Corporate & Securities Law

The typical private fund is organized as a limited partnership or limited liability company that is managed by a general partner or manager.  The fund manager is usually compensated in three ways – an annual management fee (often 2%), a carried interest (often 20%), and an investment in the fund (often 1%).  In a recently presented paper, Professors David T. Robinson and Berk A. Sensoy tackled the question of whether private fund managers actually earn their keep.

Given the limited rights of limited partners and members and asymmetrical access to information, one might expect that these professors would conclude that fund managers who charge more, actually under perform.  Based on an analysis of 837 buyout and venture capital private equity funds from 1984-2010 to, the two scholars reach the opposite conclusion:


Curvy bricks by Orange Steeler

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