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2010 PLUS International Conference Foreign Corrupt Practices Act: Unexpected Liabilities For D&O Insurers
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2010 PLUS International Conference The Round-Up… MODERATOR: Joseph P. Monteleone, Esq., Partner, Tressler, LLP PANELISTS: Robert Axelrod, JD, Director, Deloitte Financial Advisor Services, LLP Charles “Trey” W. Branham, III, Esq., Founder, Goldfard Branham LLP Kevin LaCroix, JD, RPLU, Partner, Oakbridge Insurance Services, L.L.C. Lisa A. Prager, Esq., Partner, Wilson Sonsini Goodrich & Rosati
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2010 PLUS International Conference What’s on Tap… Overview Plaintiff’s Perspective Compliance and Risk Management Issues Defendant’s Perspective D&O Insurance Implications Conclusion and Forecast Q&A
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2010 PLUS International Conference Overview Foreign Corrupt Practices Act Defined Anti-Bribery Component Accounting Controls Who Can Bring an Active Pursuant Relief Granted and How Measured Bribe-to-Fine Ratios
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2010 PLUS International Conference Plaintiff’s Perspective Impact on Securities Fraud Class Actions Impact on Shareholder Derivative Litigation Other Impacts on Civil Litigation
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2010 PLUS International Conference Plaintiff’s Perspective “The failure of a board of directors to ensure that its company had an adequate corporate compliance information and reporting system in place can “render a director liable for losses caused by non-compliance with applicable legal standards.” In Re Caremark Int’l Derivative Litigation, 698 A.2d 959, 970 (Del. 1996)
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2010 PLUS International Conference Plaintiff’s Perspective FCPA requires every issuer to “make and keep books, records, and accounts which in reasonable detail accurately and fairly reflect the transactions and dispositions of assets” 15 U.S.C. §§78m(b)(4)-(5).
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2010 PLUS International Conference Plaintiff’s Perspective Three Types of Record Keeping Offenses 1.Records that fail to record improper transactions at all (e.g. bribes and kickbacks) 2.Records that are falsified to disguise aspects of improper transactions otherwise recorded correctly 3.Records that correctly set forth the amounts paid, but that fail to record aspects which would reveal their illegality Complying with the Foreign Corrupt Practices Act, Cruwer, Donald, 1999
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2010 PLUS International Conference Plaintiff’s Perspective Types of Transactions Implicated 1.Payments to mid- or high-level foreign government officials 2.“Facilitating payments” to low-level foreign governments 3.Commercial bribes or kickbacks 4.Political Contributions 5.Charitable Contributions 6.Smuggling Activities 7.Income Tax Violations 8.Customs Violations 9.Extraordinary Gifts Foreign Corrupt Practices Handbook, Tarun, Robert W., p.20
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2010 PLUS International Conference Plaintiff’s Perspective Damage Theory 1.Investigation Costs 2.Lost Earnings 3.Lost Revenue 4.Civil Fines
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2010 PLUS International Conference Plaintiff’s Perspective White v. Avon Products, Inc. Initial Damage Model 1.Investigation Costs - $130,000,000 2.Lost Earnings - $74,800,000 3.Lost Revenue - $10,000,000 4.Civil Fines - ???? Total Damages to Date: $214,000,000 +
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2010 PLUS International Conference Compliance and Risk Management Issues Department of Justice Enforcement Securities & Exchange Commission Role Recent Activity Small Cases Big Cases Does It Pay to Self Disclose Foreign Equivalents
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2010 PLUS International Conference Defendant’s Perspective Coordination Differing Impacts Impact on Loss Causation, Liability and Damages
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2010 PLUS International Conference D&O Insurance Implications Coverage Implications Conduct Exclusions FCPA-Specific Policy Provisions Insurability and Public Policy Concerns Claim Definition Policy Enhancements
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2010 PLUS International Conference Conclusion and Forecast Likelihood of Enhanced FCPA Activity New Legislative Developments
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2010 PLUS International Conference Questions & Answers
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2010 PLUS International Conference Many Thanks To… Joseph P. Monteleone Robert Axelrod Charles “Trey” W. Branham Kevin LaCroix Lisa A. Prager
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