Double-digit investment returns for little-known New York hedge fund Platinum Partners turned out to be too good to be true, according to federal prosecutors.

The New York Times reports that federal agents arrested Mark Nordlicht, a founder and the chief investment officer of Platinum, and six others on charges related to an alleged $1 billion fraud. It is one of the largest such fraud cases since Bernard L. Madoff’s investment firm unraveled in 2008.

“David Levy, the firm’s co-chief investment officer, was also among those arrested in the morning by agents in Texas, Manhattan and New Rochelle, a suburb of New York City,” writes reporter Alexandra Stevenson. “The men were charged with securities fraud and investment adviser fraud, according to an unsealed indictment filed in Federal District Court in Brooklyn. The Securities and Exchange Commission filed a parallel civil case.”

Read the NYT article.

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A new University of Iowa study demonstrates for the first time that financial shenanigans at companies decrease markedly in the years after truth tellers come forward with information about wrongdoing inside their operations, according to a report in The New York Times.

While government whistle-blower programs reward some individuals providing tips about corporate fraud, the costs for those people can be high, due to retaliation from their employers and their industry, writes Gretchen Morgenson. But companies subjected to whistle-blower investigations had less financial wrongdoing after being reported, the Iowa study found.

An analysis of the study found that the decrease lasted for at least two years, the period for which data had been collected for all the companies.

Read the NYT article.

Akin Gump recently hosted the webinar “30 Days Postelection, Reading the Tea Leaves on the U.S. Renewables Market,” looking at the future of renewable energy under the incoming Trump administration. Audio of that webinar now is available om the firm’s website.

Panelists included members of the firm’s global projects and finance and public law and policy practices:

• Former U.S. Senator John Sununu (R-NH), adjunct senior policy advisor, public law and policy
• John Marciano, partner, renewable energy tax
• Jeff McMillen, partner, public law and policy
• Ed Pagano, partner, public law and policy
• Brian Pomper, partner, public law and policy
• Ed Zaelke, partner, renewable energy & chair, global project finance practice

“The speakers addressed several topics of interest to U.S. and European private equity funds invested in renewable energy as well as renewable energy investors, developers, tax equity investors and lenders,” the firm says on its website. “The panel discussed how issues such as tax credits, trade policy and environmental concerns might be addressed during a Trump administration.”

Listen to the webinar audio on-demand.

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An informal guidance from the U.S. Equal Employment Opportunity Commission reminds employers of the commission’s expansive interpretation of what constitutes a reasonable workplace accommodation, reports Seyfarth Shaw LLP in its Employment Law Lookout blog.

Author Bridget M. Maricich advises that employers should continue to meaningfully engage in the interactive process with any employees seeking workplace accommodations for a physical or mental disability and assiduously document those efforts.

“The informal guidance is a useful primer for understanding the EEOC’s expanding stance on employer obligations to provide reasonable workplace accommodations,” she writes.

Read the article.

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The battle over President-elect Donald Trump’s attorney general nominee, Alabama Sen. Jeff Sessions, is heating up ahead of what promises to be a deeply contested confirmation hearing next year, reports NBC News.

“Sessions has a controversial past on issues of race and immigration, including his failed confirmation of a federal judgeship 30 years ago largely because of racially insensitive remarks,” writes reporter Leigh Ann Caldwell. “In the 1980s, Sessions was considered for a Ronald Reagan-appointed federal district judgeship in Alabama, but was blocked by the Senate after a black former deputy, Thomas Figures, accused him of making racially insensitive statements.”

The Senate Judiciary Committee has scheduled confirmation hearings for Jan. 10-11.

Read the NBC article.

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Practical Law’s Mel Gates and Zach Ratzman on Thursday, January 12, 2017, at 1:00 p.m. Eastern will present a free, 75-minute webinar that will explain recent data breach trends affecting state and local governments and provide tips on how to prepare for and help prevent a data breach or other cyber event . . . before it happens.

Topics will include:

• Why state and local governments should be thinking about data breaches and other cyber events.
• Federal and state laws concerning personal information, data security, and breach notification.
• What reasonable security measures are and how they can impact a government entity’s regulatory and litigation exposure.
• The basics on today’s cyber threats with recent case studies of data breaches that have affected state and local governments.
• Recommendations on how government lawyers can play a key role in protecting their organizations.

A short Q&A will follow.

Presenters:

Mel Gates, Senior Legal Editor, Privacy & Data Security, Practical Law
Melodi (Mel) Gates, CIPP/US joined Practical Law from Squire Patton Boggs (US) LLP, where she was a senior associate focusing on cybersecurity and privacy issues, including in the health information technology field. Prior to practicing law, Mel worked for over twenty years in the telecommunications industry, last serving as chief information security officer (CISO) for a large network provider. She is also an appointed member of the Department of Homeland Security’s Data Privacy and Integrity Advisory Committee (DPIAC).

Zach Ratzman, Director of Public Sector, Practical Law
Zach Ratzman joined Practical Law from the U.S. Department of Homeland Security’s Office of the General Counsel in Washington, DC, where he advised senior DHS leadership on privacy, information sharing, and congressional oversight matters. Before that, Zach worked for nearly a decade at several major New York City law firms, where his practice focused on securities and accounting fraud litigation. Before entering private practice, he clerked for the late Honorable Harold Baer, Jr. in the Southern District of New York. Zach is the Director of Practical Law’s Public Sector Service.

Register for the webinar.

eSignLive by VASCO and Insurance Networking News will present a complimentary webinar on how updated regulatory laws are allowing companies to improve the process of buying insurance for consumers, while ensuring security, compliance and enforceability, on Dec. 13, beginning at 2 p.m. Eastern time.

Intended to improve the process of buying insurance for consumers, there have been recent updates to laws that allow insurance companies to post policies, forms, and endorsements on a website rather than printing these documents on paper.

As you look to take advantage of this new regulatory environment, questions related to how this can be done in a compliant way will arise.

Webcast highlights:

• E-Posting and E-Delivery defined
• Update from PCIAA on the progress of legislative adoption of e-posting laws
• The intersection between ESIGN, UETA and state insurance laws on e-signatures and records
• How to demonstrate insured consent to do business electronically
• Best practices for ensuring security, compliance and enforceability
• A live demonstration of insurance policy electronic posting

Register for the webinar.

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The U.S. Supreme Court will is hearing arguments in a case that could upend the common practice that ranks lenders, employees and other creditors in order of priority as they try to recover their money when a company files for bankruptcy, according to a New York Times article.

“The case has attracted wide attention from academics, workers’ groups and state tax authorities,” writes Libby Lewis. “A decision could affect how much power bankruptcy courts have to approve settlements that do not follow the conventional order of creditor priority and potentially block some parties, in this case the company’s former employees, from any financial recovery.”

The court is hearing Czyzewski v. Jevic Holding Corporation.

Read the NYT article.

The Wall Street Journal is quoting a Trump transition official as saying that Debra Wong Yang, a former Los Angeles U.S. attorney with close ties to New Jersey Gov. Chris Christie, is under consideration for nomination as chairman of the Securities and Exchange Commission.

Yang, who was the top federal prosecutor in the central district of California from 2002 to 2006, met with President-Elect Donald Trump on Monday, report Dave Michaels and Sara Randazzo.

Trump has said he would try to roll back landmark financial regulations imposed by President Barack Obama’s administration. “But the choice of Ms. Yang might signal that a Trump administration would be more focused on continuing the Obama-era record of pursuing high-profile investigations of Wall Street,” they write.

Read the WSJ article.

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The Federal Reserve looks ready to raise interest rates, predicts The New York Times.

When the Fed increased its benchmark interest rate late last year after keeping it near zero for seven years, Fed officials were in general agreement that they might raise rates as many as four times in 2016, write Binyamin Appelbaum and Kevin Granville. But their meeting on Dec. 13 and 14 gives the Fed the opportunity to raise rates for the first time this year.

The authors discuss life in a low-interest world and explain that the Fed is wrestling with three big, intertwined questions: How many people want jobs? How low are interest rates? And what damage is done by doing nothing?

Read the NYT article.

As oil prices remain volatile, trade secret and intellectual property protection continues to be a key component of ensuring profitability, according to Orrick’s Trade Secrets Watch. But the law in this area may be evolving quicker than industry insiders would like.

The article discusses a Pennsylvania case, Robinson Township v. Commonwealth, that may make it more difficult for some energy companies to protect the trade secret status of some of their most valuable information. In that case, the Pennsylvania Supreme Court struck down several remaining provisions of the state’s controversial P.L. 87 legislation, the Pennsylvania General Assembly’s short-lived and controversial attempt in 2012 to provide uniform laws and regulations governing oil and gas development in the Commonwealth.

“At the national level, the story is consistent with Pennsylvania’s — in the sense that the law and its direction remains variable,” the article says.

Read the article.

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Many employers received a last-minute reprieve from new federal overtime rules that would have gone into effect Thursday, Dec. 1, entitling thousands of previously “exempt” workers to overtime pay. But the Texas federal judge’s temporary injunction creates uncertainty for businesses preparing for the employment compliance playing field going forward, according to a post on the website of Androvett Legal Media & Marketing.

In a client alert, employment attorney Audrey Mross of Dallas’ Munck Wilson Mandala notes that many employers had already revised workers’ pay to comply with the Department of Labor’s overtime rule. Businesses that have not yet implemented changes now have breathing room to wait for a final ruling from the courts. However, those that have already altered employee pay should think carefully before reversing already announced pay changes.

“If a pay increase was already announced or implemented, and you are considering putting it on hold, there are further considerations that may not apply such as employee relations, an angry or confused employee seeking legal counsel, state laws requiring written notice prior to reducing pay, and collective bargaining on pay issues,” Mross says.

Read the Munck Wilson client alert.

Skadden, Arps, Slate, Meagher & Flom’s Energy Regulation and Litigation Group has produced the fourth edition of the Skadden Energy Law Handbook, which includes a summary of recent developments.

On its website, the firm says the handbook contains 16 chapters covering a broad range of issues arising in the context of FERC, CFTC and antitrust regulation of the energy sector (e.g., market manipulation, merger review, electric reliability and open access transmission tariffs, among others).

The updates cover such topics as compliance programs, audits and investigations, criminal and civil penalties, FERC market manipulation enforcement, CFTC regulation, antitrust enforcement, reliability, affiliate rules, natural gas, false statements, and more.

Download the handbook.

A Texas judge’s decision to block sweeping new overtime rules hadn’t been out for two hours Monday evening before Philadelphia employment lawyer Gina Ameci started getting phone calls from her employer clients, reports The Philadelphia Inquirer.

Now what? “As of today, there is no law,” she said. “Anything is possible.”

“The judge’s decision came as a relief to industry groups, such as the Retail Industry Leaders Association, one of the 50 business groups that had sued the U.S. Labor Department,” writes reporter Jane M. Von Bergen.

“Ameci said her clients, now faced with a period of uncertainty, would now have to weigh their risks. Should they roll back new policies to save money and then face potential liability if the regulation is ultimately upheld? That risk might be worth it, she said, for nonprofits who often have people doing professional work, but earning in the $35,000 a year range,” the report says.

Read The Inquirer‘s article.

By Laura Drossman
Drossman Law

Laura Drossman

Complying with the California Rules of Professional Conduct can be challenging enough for an attorney, but issues can become even more complicated if you are also practicing a dual profession. Engaging in a second occupation may appeal to some attorneys (especially solo practitioners who may enjoy more flexibility in their practice) as they can draw on their legal experience in performing such service, diversify their revenue stream, or sow long-lost creative oats. But lawyers must always consider the practical and ethical challenges involved with actively practicing dual occupations.

Subject to certain restrictions, California state ethics rules generally permit California attorneys to engage in the practice of law and a second occupation. This issue has been addressed by the state bar’s Standing Committee on Professional Responsibility and Conduct in several opinions.¹ Engaging in dual professions may carry traps for the unwary lawyer, however, as such conduct may conflict with a lawyer’s duties of confidentiality, loyalty, and/or violate the Rules of Professional Conduct, which govern an attorney’s actions at all times.

Providing non-legal services to a client is considered a business transaction, but one that creates actual and potential conflicts of interest. A client for whom a lawyer provides non-legal services is nonetheless considered a legal client with respect to the applicability of the Rules of Professional Conduct. Therefore, prior to entering into any such transaction, the attorney must determine all actual and potential conflicts, and if such conflicts are waivable. If so, the attorney must disclose the conflicts and risks and obtain written client informed consent and waiver. If not, the attorney must forego the deal.

Conflicts present even greater risk where attorneys perform “law-related” occupations, such as real estate brokerage or financial services to non-legal clients. In those situations, the lawyer is bound by the Rules of Professional Conduct as well as the rules and regulations governing the second occupation, and is responsible for reconciling the two. This can be challenging and potentially impossible where, for example, a lawyer providing real estate brokerage services must reconcile his or her duty to keep all information relating to the representation of a client confidential with the robust disclosure obligations imposed on brokers by the Bureau of Real Estate regulations.

An attorney must continue to comply with the Rules, even in promoting their second occupation. Advertising for the provision of non-legal services that imply clients will benefit from the attorney’s legal expertise is governed by the Rules of Professional Conduct and must conform to all rules governing lawyer advertising. Further, lawyers must be careful to not use their side occupation as a way to solicit legal clients in a manner that may violate the rules prohibiting in-person solicitation.

Finally, in structuring partnership or other shared business arrangements for non-legal deals, lawyers must be sure they maintain full control over their legal practice, and avoid any sharing of legal fees.

Footnote
1. California State Bar Formal Opinion Numbers 1982-69, 1995-141 and 1999-154.

Laura Drossman is the principal attorney at Drossman Law, a real estate and business law firm based in San Francisco. She is also a licensed real estate broker.

Practical Law will present a free 75-minute webinar in which Mark A. Bodron, Baker Botts LLP, Gia G. Norris, Practical Law, Elizabeth A. Gilman, K&L Gates and Judy Hensley, Roberts & Holland, will provide a practical roadmap for counsel to employers on best practices for advising clients on pension and welfare plan overpayments.

The event will be Tuesday, Dec. 6, at 1 p.m. Eastern time. See the registration page for CLE status.

Participants of this program will:

• Review common scenarios in which pension and welfare plan overpayments arise.
• Gain an understanding of the legal framework and correction procedures governing pension plan overpayments, including potentially thorny tax issues that impact your employees.
• Learn practical strategies to protect your clients from the most recent wave of litigation in the self-funded group health plan context.

A brief Q&A session will follow.

Presenters:

Mark A. Bodron, Partner, Baker Botts LLP
Mark Bodron is a partner in the Houston office of Baker Botts. His practice concentrates on the areas of employee benefits and executive compensation. Bodron advises clients on all aspects of qualified retirement plans, including 401(k) plans, ESOPs and cash balance plans, nonqualified plans, stock-based plans and deferred compensation and other executive compensation arrangements, including issues related to Section 409A deferred compensation rules and Section 162(m) performance-based compensation. Bodron’s practice also includes advising clients on health and welfare plan matters, including compliance and reporting issues related to the Affordable Care Act, COBRA and HIPAA. He frequently advises clients on ERISA fiduciary and prohibited transaction matters and represents clients before the IRS, DOL and PBGC on matters related to employee benefits.

Gia G. Norris, Senior Legal Editor, Practical Law Employee Benefits & Executive Compensation
Norris joined Practical Law from Roberts & Holland LLP, where she was a senior employee benefits and executive compensation associate. Previously she was an employee benefits and executive compensation associate at both White & Case LLP and Proskauer Rose LLP. Norris is the Website & Technology Chair of the Employee Benefits Committee of the America Bar Association’s Section of Taxation. She is also a member of the Employee Benefits Committee of the Tax Section of the New York State Bar Association.

Norris received her Juris Doctorate from the University of Pennsylvania Law School and her Bachelor of Arts from Johns Hopkins University in Political Science and Women’s Studies.

Elizabeth A. Gilman, Associate, K&L Gates LLP
Elizabeth Gilman is a litigation associate in the firm’s Houston office. She focuses her practice on commercial disputes and is uniquely qualified in disputes involving the energy sector, especially oil and gas. Her technical education and experience enhances the value of her representation and counsel. She earned her undergraduate degree from Purdue University, majoring in industrial management with an emphasis in manufacturing. Gilman excels in her ability to work with clients and experts in complex fields. Gilman has experience in all phases of the dispute process which allows her to provide comprehensive representation for her clients. She has experience in early dispute management, litigation and arbitration through the appellate process and collection. She has tried cases both in front of a jury and an arbitrator. On behalf of her clients, she brings a high level of experience in energy litigation, and both on-shore and off-shore construction disputes. Gilman’s experience in contract negotiation and drafting further contributes to the value of her representation to her clients. Her experience spans many forums, including mediation, state and federal court, and domestic and international arbitration.

Judy Hensley, Associate, Roberts & Holland LLP
Judy M. Hensley concentrates on a wide variety of employee benefits and executive compensation matters in both the transactional and compliance contexts. She advises on tax, ERISA and other legal considerations relating to employee benefit plans, programs and arrangements, including design, administration and compliance of tax-qualified plans. She has advised clients on ERISA fiduciary matters for investment funds and plan fiduciaries. Her experience includes the structuring and design of equity compensation arrangements, including stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock, performance shares and LLC/partnership interests (including profits interests) and nonqualified deferred compensation plans, as well as executive employment, severance and change-in-control agreements. She also has advised clients on compensation and benefits issues unique to bankruptcy and restructuring transactions.

Register for the webinar.

By Patty P. Tehrani
Lawyer and Founder of Policy Patty Toolkit

The cybersecurity regulations keep coming. Following New York’s proposed regulation on cybersecurity, and notice from banking regulators on proposed cybersecurity rules, the Financial Crimes Enforcement Network (FinCEN) has issued an advisory and related FAQ.

The advisory includes key definitions relevant to cyber-related incidents as follows:
• Cyber-Event: An attempt to compromise or gain unauthorized electronic access to electronic systems, services, resources, or information.
• Cyber-Enabled Crime: Illegal activities (e.g., fraud, money laundering, identity theft) carried out or facilitated by electronic systems and devices, such as networks and computers.
• Cyber-Related Information: Information that describes technical details of electronic activity and behavior, such as IP addresses, timestamps, and Indicators of Compromise (IOCs). Cyber-related information also includes, but is not limited to, data regarding the digital footprint of individuals and their behavior.

The advisory explains how BSA requirements apply to cyber-events, cyber-enabled crime, and cyber-related information with guidance on:
• reporting cyber-enabled crime and cyber-events through SARs;
o consider all available information surrounding the cyber-event, including its nature and the information and systems targeted;
o determine monetary amounts involved in the transactions or attempted transactions (should consider in aggregate the funds and assets involved);
o know other cyber-related SAR filing obligations required by their functional regulator;
• including relevant and available cyber-related information (examples provided – IP addresses with timestamps, virtual-wallet information, device identifiers, and cyber-event information) in SARs to:
o provide complete and accurate information, including relevant facts, to the extent available:
 description and magnitude of the event;
 known or suspected time, location, and characteristics or signatures of the event;
 indicators of compromise;
 relevant IP addresses and their timestamps;
 device identifiers;
 methodologies used; and
 other information the institution believes is relevant;
o refer to the FAQs for additional information on reporting cyber-related information in SARs;
• collaborating internally between BSA/Anti-Money Laundering (AML) units and other units to identify suspicious activity to:
o make sure to internally share relevant information from across the organization to help reveal additional patterns of suspicious behavior and identify suspects not previously known to BSA/AML units;
o use cyber-related information to:
 help identify suspicious activity and criminal actors;
 develop a more comprehensive understanding of their BSA/AML risk exposure;
 use information provided by BSA/AML units to help the institution guard against cyber-events and cyber-enabled crime;
 provide for more comprehensive and complete SAR reporting;
• sharing information among financial institutions to guard against and report money laundering, terrorism financing, and cyber-enabled crime to:
o identify threats, vulnerabilities, and criminals; and
o note the extension of Section 314(b) of the USA PATRIOT Act as a safe harbor from liability to financial institutions—after notifying FinCEN and satisfying certain other requirements— to encourage information sharing.
The supplemental FAQs provide additional guidance on reporting obligations for cyber events and cover the following questions:
• What information should a financial institution include in SARs when reporting cyber-events and cyber-enabled crime?
• How should a financial institution complete SARs when reporting cyber-events and cyber-enabled crime
• How should cyber-events and cyber-enabled crime be characterized in SARs?
• How does a financial institution report numerous cyber events in SARs?
• Is a financial institution required to file SARs to report continuous scanning or probing of a financial institution’s systems or network?
• Should a SAR be filed in instances where an otherwise reportable cyber-event is unsuccessful?
• Does FinCEN now require financial institutions’ BSA/AML units to have personnel/systems devoted to cybersecurity?
• Are BSA/AML personnel now required to be knowledgeable on cybersecurity and cyber-events?
• Can financial institutions use Section 314(b) of the USA PATRIOT Act to share cyber-event and cyber-enabled crime information with other financial institutions
Note: These new FAQs replace prior guidance provided by FinCEN.

FinCEN hopes the guidance will help reduce cyber risks for financial institutions as serve as a reminder on:
• their Bank Secrecy Act (BSA) obligations regarding cyber-events and cyber-enabled crime;
• how BSA reporting helps U.S. authorities combat cyber-events and cyber-enabled crime;
• compliance with BSA requirements or other regulatory obligations for financial institutions does not absolve them from having to comply with federal and state notice/reporting requirements and guidance on cyber-related incidents;
• encouraging collaboration:
o within financial institutions—between employees combating cyber-crime and employees combating money laundering;
o information sharing between financial institutions to again more effectively combat cyber-crime; and
• filing a Suspicious Activity Report (SAR) does not relieve it from any other applicable notice requirements of events impacting critical systems and information or of disruptions in their ability to operate.

Note: Under the Bank Secrecy Act, financial institutions must file SARs to report suspicious activity.

Mining giant Rio Tinto PLC said it fired one of its most senior operational executives and its head of legal and regulatory affairs based on the findings from a continuing internal probe into $10.5 million in payments to a consultant who helped acquire mining rights in Guinea, reports The Wall Street Journal.

The two executives are  energy and minerals chief executive Alan Davies and legal and regulatory affairs group executive Debra Valentine.

The company is reported to be investigating emails related to payments to a consultant who helped to acquire rights to mine the prized Simandou iron-ore deposit. Rio Tinto has notified law enforcement officials and regulators, including the U.S. Justice Department, the U.S. Securities and Exchange Commission and the U.K.’s Serious Fraud Office, writes Rhiannon Hoyle.

Read the WSJ article.

While at first glance, an engagement with the federal government may appear lucrative, the venture comes with many strings attached, and the cost of compliance with the rules can quickly outweigh the financial benefit of the contract itself, warns Jennifer S. Cluverius in an article on the website of Nexsen Pruet, LLC.

She writes that a lack of experience can lead a federal contractor or subcontractor can encounter these pitfalls.

The article discusses some of the most costly and often-unnoticed employment-related compliance obligations.

Read the article.

Jared Kushner, the son-in-law of President-elect Donald J. Trump, has spoken to a lawyer about the possibility of joining the new administration, a move that could violate federal anti-nepotism law and risk legal challenges and political backlash, reports The New York Times.

“Mr. Kushner, 35, the husband of Mr. Trump’s eldest daughter, Ivanka, and an influential adviser to his father-in-law during the presidential campaign, had been planning to return to his private businesses after Election Day,” report Julie Hirschfeld Davis and Maggie Haberman “But on the morning after Mr. Trump won, Mr. Kushner began discussing taking a role in the White House, according to two people briefed on the conversations who requested anonymity to describe Mr. Kushner’s thinking.”

Kushner has considered putting his holdings into a blind trust and working at the White House without pay, but ethics lawyers in both parties have warned that such an arrangement would violate that 1967 law enacted after John F. Kennedy installed his brother, Robert F. Kennedy, as attorney general.

Read The Times article.