White Collar and Regulatory Enforcement: What to Expect In 2016

One way in which we expect the white-collar/regulatory enforcement regime in 2016 to continue last year’s pattern is that the government’s appetite for extracting enormous fines and penalties from settling companies will likely continue unabated. However, as we discuss below, the manner in which well-advised companies facing criminal or serious regulatory investigations will seek to mitigate such fines and sanctions will likely change in some important respects in 2016. The reason for this expected change is that U.S. Deputy Attorney General Sally Yates announced late in 2015 that DOJ was formalizing a requirement that, in order to get “any” cooperation credit, companies must come forward with all available evidence identifying individuals responsible for the underlying misconduct subject to investigation.

As we explain in greater detail in the body of this post, we have identified six important trends that emerged during 2015. We believe all well-managed corporations and financial institutions, both in the United States and abroad, should pay close attention to these trends as 2016 unfolds:

• DOJ’s New Cooperation Policy—We plan to watch closely how the new DOJ policy on granting “cooperation credit” to companies responding to criminal investigations plays out in practice over the course of 2016 to see how it affects the form, nature and scale of corporate resolutions;
• DOJ’s Heightened Focus on Compliance—The establishment of a new DOJ position—the Fraud Section’s Compliance Counsel—signals DOJ’s commitment to examine more closely the bona fides of corporate compliance systems and controls;
• Criminalization of Regulatory Violations—A worrying new trend that bears close scrutiny is the accelerating tendency of government agencies to pursue criminal charges against companies for violating regulatory prohibitions, including in such diverse areas as automobile safety, EPA compliance, food safety, and climate change;
• Expanding Scope at the SEC—We expect the SEC to continue its relatively new focus on private equity investment managers, and its expansion of the kinds of firms that are subject to scrutiny for insider-trading violations, as well as identifying new types of information that may be market sensitive;
• Continuing Focus on Cross-Border Tax Enforcement—While the effort to prosecute financial institutions that may have facilitated tax evasion by U.S. persons maintaining offshore accounts is not new, we expect the DOJ’s focus will continue expanding beyond European jurisdictions toward Asia, the Caribbean and the Middle East; and
• Expanding FCPA and Other International Enforcement Initiatives—Cross-border cooperation and information sharing among law enforcement agencies has continued to expand, with DOJ likewise continuing to take an expansive view of its jurisdiction through the potential misuse of the U.S. banking system to facilitate money laundering and other illegal conduct, trends we expect to expand into new areas during 2016.

The stakes in these controversies are of course very high: DOJ announced late last year that it had collected $23.1 billion in civil and criminal cases resolved in FY2015, only slightly below FY2014’s staggering $24.7 billion. As in the past, the breadth of these resolutions was also striking: significant cases ran the gamut from the FX market manipulation resolutions (in which five major banks were forced to plead guilty, and paid criminal fines totaling more than $2.5 billion) to the General Motors resolution, through a deferred prosecution agreement, of the ignition switch and air bag deployment defects in certain automobiles, as well as to DOJ’s innovative Swiss Bank program, which to date has brought in more than $1.3 billion in penalties from at least 76 Swiss financial institutions for facilitating the evasion by U.S. persons of their U.S. tax obligations.

Below, we review in greater detail some of the most important developments of the past year, and what we can expect to see unfold in 2016.

The Yates Memo

As noted above, DOJ announced revisions to its Principles of Federal Prosecution of Business Organizations in September 2015. The new policies, set out in a memorandum authored by DAG Yates, instruct prosecutors to focus their efforts on obtaining evidence against individuals responsible for corporate wrongdoing. The memo also establishes additional guidelines that federal prosecutors and civil enforcement attorneys must follow in conducting and resolving corporate investigations. It is now DOJ policy that in order to qualify for any cooperation credit, a corporation must identify “all relevant facts relating to the individuals responsible for the misconduct.” According to the Yates Memo, only if a company satisfies that initial requirement will DOJ give a company credit for cooperation and assess the remaining elements of the company’s cooperative efforts (e.g., by weighing the timeliness and proactive nature of the company’s internal investigation, the diligence, thoroughness and speed of the investigation, etc.). In other words, as Ms. Yates explained in a speech following the announcement of the new policies, cooperation credit is now “all or nothing,” and there is “[n]o more partial credit for cooperation that doesn’t include information about individuals.”

In some respects, this announced policy is more of a codification and strengthening of preexisting DOJ practice than a watershed announcement of a new direction in government policy. As Ms. Yates noted in a later speech, “this concept—that corporate cooperation includes giving all non-privileged information about the conduct of individuals—is nothing new ….What is new is the consequence of not doing it.” As we have previously observed, DOJ has for some time based cooperation credit on whether a corporation’s investigation assisted the government in identifying and prosecuting culpable employees. (See our 2015 post.) Ms. Yates has stressed that as the policy now makes clear, “providing complete information about individuals’ involvement in wrongdoing is a threshold hurdle that must be crossed” before DOJ will consider any cooperation credit at all.

Assessing the actions and mental state of individuals is complex, and making cases against corporate officers and employees is often difficult. Ms. Yates has explained that, in her view, companies do not need to characterize anyone as culpable: “Understand that we’re not asking companies to pin a scarlet letter on their employees or provide us with prosecutable cases against them in order to get the benefits of cooperation.” However, Ms. Yates has also stressed that DOJ expects cooperating companies to investigate “with the goal of identifying the individuals involved,” and that prosecutors will presume that companies “have access to the evidence” affecting individual misconduct.

Thus, there will undoubtedly be increased pressure to identify likely wrongdoers and companies will have to be increasingly sensitive to the risk of unfairly labeling particular employees as wrongdoers in order to satisfy prosecutors’ demands. The recent decision of the Texas Supreme Court in Shell Oil v. Writt highlights those risks. Writt involved a defamation action brought by a former employee based on allegations that Shell’s report to the government of the results of its internal FCPA investigation had falsely accused him of approving the payment of bribes. The court specifically noted DOJ’s policies strongly encouraging self-reporting and cooperation in reversing the judgment of the intermediate appellate court and holding that, at least in Texas, statements made by a company to the government while it is the target of a pending criminal investigation enjoy an absolute privilege against defamation claims by affected employees.

The focus on civil enforcement tools in the Principles suggests that DOJ may make even greater use of this weapon in its arsenal. The January 4, 2016 filing of a civil action against Volkswagen for its alleged EPA violations while a criminal investigation of the same conduct is pending may reflect this new emphasis.

While it is difficult to predict at this point with any degree of certainty the precise impact these new policies will have, there can be no dispute that it is now more important than ever that any corporate internal review or response to a government-initiated probe be carefully designed to maximize the opportunity for the corporation to receive appropriate credit for its cooperation. Where the evidence establishes that particular employees committed wrongdoing, the Yates memorandum makes it clear that those matters must be addressed forthrightly with the prosecutors. But, there will still be investigations in which the results are not crystal clear and the corporation may be unable to provide the kind of evidentiary support sought by prosecutors seeking to bring criminal charges against particular individuals. We hope and expect that prosecutors will recognize that there will always be cases in which individual prosecutions are not warranted. The critical task for any company (and its counsel) is to ensure that the investigation is conducted in a thorough and credible manner so that the prosecutors can be comfortable in reaching that conclusion where appropriate.

Impact of DOJ’s Newly Hired Compliance Counsel

In November 2015, the DOJ’s Criminal Division announced that it had appointed a former federal prosecutor with significant private sector compliance experience in the financial, technology and pharmaceutical industries to serve in the new role of Compliance Counsel within the Fraud Section. In announcing the appointment, DOJ made it clear that the Compliance Counsel would provide expert guidance to help Fraud Section prosecutors (i) assess the existence and effectiveness of compliance programs in place at the time of conduct giving rise to a corporate criminal inquiry as well as subsequent remedial measures taken by a company under investigative scrutiny, (ii) fashion remedial measures as part of resolving a corporate criminal investigation, and (iii) evaluate whether a company has fully satisfied compliance-related undertakings implemented as part of a corporate criminal resolution.

Among other things, the Compliance Counsel can be expected to focus at a more granular level on whether (i) a compliance program is a “paper program” or has truly been operationalized in the day-to-day conduct of the company’s business, (ii) a true culture of compliance permeates the company—i.e., as we have previously said, whether the “tone-on-the-ground” matches the tone-at-the-top, (iii) a compliance program is tailored to address the real legal and compliance risks faced by a company as its business evolves over time, and (iv) a company has appropriate training programs, monitoring controls and reporting systems in place in support of its compliance program. While discussing the new Compliance Counsel role, Assistant Attorney General for the Criminal Division Leslie Caldwell acknowledged that “no compliance program is foolproof” and that the DOJ is not looking to prosecute “mistakes or accidents, or bad business judgments.” Nevertheless, AAG Caldwell also made clear that the appointment of the Compliance Counsel does not mean that the DOJ is moving toward “recognizing and instituting a ‘compliance defense’” to corporate criminal liability—e.g., such as the adequate compliance procedures defense to corporate criminal liability under the U.K. Bribery Act that the U.S. Chamber of Commerce has argued should be applied in the FCPA context.

The new Compliance Counsel position underscores the ever more important role that questions of effective pre-existing compliance programs and prompt and effective remedial measures will play in the exercise of prosecutorial discretion relating to charging and resolving corporate criminal investigations. Because the Fraud Section plays a critical role in investigating a wide range of economic crimes—i.e., securities and commodities fraud, health care fraud and Foreign Corrupt Practices Act violations—the new Compliance Counsel can be expected to have a potentially significant impact over time in the corporate criminal context. This may well be yet another way in which the stakes have gotten higher for companies facing criminal or regulatory risk and investigations. But we also hope that this turns out to be an opportunity for those companies that have devoted significant effort and resources to developing and implementing thoughtful, robust and appropriately tailored compliance programs, and that take prompt and effective remedial action when potential problematic conduct arises, to get truly meaningful credit, including in the form of a declination.

Criminalization of Regulatory Violations

As political and other forces continue to pressure DOJ and other prosecutorial agencies to act more aggressively against corporate wrongdoers, prosecutors have increasingly focused on situations that traditionally have fallen under the purview of civil regulatory agencies. Specifically, prosecutors, often partnering with civil-side regulators, have begun more and more to use their authority to initiate investigations and to bring criminal or other enforcement actions against companies that have committed violations of regulatory statutes such as the Food, Drug and Cosmetic Act and the Clean Air Act.

Several recent examples illustrate this developing trend:

• Chipotle: Over the past year, several E. coli and norovirus outbreaks have been linked to one of Chipotle’s restaurants. In August 2015, more than 200 people fell ill with norovirus after eating or working at a single Chipotle restaurant in Simi Valley, California. In December 2015, the U.S. Attorney’s Office for the Central District of California, working with the U.S. Food and Drug Administration’s Office of Criminal Investigation, initiated a criminal investigation of Chipotle into the California-based outbreak of the virus.
• Blue Bell Creameries: Also in December 2015, DOJ initiated a criminal investigation arising out of listeria-contaminated ice cream that was linked to three deaths and numerous other illnesses. The company had recalled all of its frozen products in April in response to the contamination, which affected ice cream at all of its main plants. Blue Bell resumed shipping the product again over the summer, with the approval of the FDA. Federal prosecutors are reportedly looking into what company executives knew about the possibility of contamination and what actions they took in response.
• Volkswagen: In the fall of 2015, the Environmental Protection Agency issued two notices of violation of the Clean Air Act alleging that Volkswagen had installed equipment designed to deceive emissions testing in hundreds of thousands of its vehicles, and federal prosecutors as well as attorneys general from numerous states opened investigations. In early January 2016, DOJ brought a civil action against Volkswagen for injunctive relief and civil penalties for violations of the Clean Air Act. Press reports have suggested that penalties are expected to be in the multi-billion dollar range.
• Exxon Mobil: In November 2015, the New York Attorney General initiated an investigation of Exxon Mobil to establish whether the company had deceived its shareholders and the public about how the risks of climate change may harm its business.
• Daily Fantasy Companies: Daily fantasy companies such as DraftKings and FanDuel have faced increased pressure from state governments over the past few months. For example, in November the New York Attorney General declared that daily fantasy sports constituted illegal gambling under New York law and consequently sought injunctions against DraftKings and FanDuel to prevent New York residents from participating in their contests. The injunction was granted; but hours later an appellate court reversed the injunction allowing the companies to continue operating. This move followed shortly after the Nevada gaming commission’s declaration that daily fantasy sports violated Nevada law and shortly preceded a declaration by the Illinois Attorney General that daily fantasy sports violated Illinois law and a declaration by the Texas Attorney General that daily fantasy sports violated Texas law.

The consequences of this trend may be significant. Companies must now be alert to the possibility that what might have been regarded some years ago as an exclusively regulatory matter can be transformed into a criminal investigation. The risk of such a criminal investigation is substantially heightened when, as in many of the examples described above, there is some indication that employees may have acted with intent or with knowledge of the potential harmful effects of their conduct.

SEC Developments

In the SEC’s year-end report on its FY 2015 enforcement activities, the agency emphasized its record of bringing “first-of-their-kind” enforcement actions. The SEC did strike into some new territory in 2015, in ways that highlighted certain of the agency’s programmatic priorities—areas that well-advised companies should pay close attention to going forward in 2016.

For example, while the SEC’s whistleblower program is not new, the Commission put special emphasis during 2015 on its efforts to strengthen protections for whistleblowers. The Commission brought its first case charging violations of Rule 21F-17, which prohibits companies from taking steps to impede whistleblowers from reporting possible wrongdoing to the SEC. The case involved a practice of requiring employees who were interviewed in an internal investigation to sign agreements containing provisions that could have been read to prohibit whistle-blowing activity. In April, the SEC announced its first monetary award to a whistleblower who had been subjected to employer retaliation after having filed a report with the Commission. The Commission received a total of 3,923 whistleblower reports in FY2015, a new high. The largest single category of tips continued to be corporate disclosure and financial reporting. The whistleblower program has become an important source of leads for the SEC, and we expect the agency to continue to look for opportunities to publicize the program and offer reassurance to potential whistleblowers.

In the area of insider trading enforcement, the record for the year was mixed. The Second Circuit’s reversal of criminal convictions in United States v. Newman brought new rigor to the requirement to show a concrete “personal benefit” to prove an insider trading violation.

The Newman opinion, led the SEC, as well as criminal prosecutors, to dismiss certain pending cases in 2015. The SEC nonetheless charged a total of 87 parties with insider trading over the course of the year, a small increase over 2014. The U.S. Supreme Court’s grant of certiorari just a few days ago in a case focusing, at least in part, on whether a banker prosecuted for unlawfully conveying confidential deal information to his brother must have received a significant tangible benefit or whether it was sufficient that he shared a close family relationship with the tippee, may further clarify exactly what kind of “personal benefit” is required to establish insider trading liability in this area.

Press reports have circulated for some time concerning investigations of the activities of political intelligence firms, raising the possibility of insider trading charges premised on improper communication of non-public information by government employees. Late in the year, the SEC announced its first related settlement, but the charge was not insider trading. Rather, a political intelligence firm paid a $375,000 penalty for failing to maintain adequate policies and procedures to prevent misuse of material non-public information. The investigations continue, and, at year’s end, the SEC was litigating a subpoena enforcement action against the House Ways and Means Committee as part of an investigation of whether committee staff leaked information about impending regulatory action affecting the health care industry.

Among the year’s other “firsts” were cases involving market structure issues, a settlement with a credit rating agency, and an FCPA case against a financial institution. The SEC also brought the first enforcement actions arising from its recent focus on investment managers in the private equity space. The cases included settlements with KKR over misallocation of “broken deal” expenses and with Blackstone for inadequate disclosure of certain fees. In the coming year, we can expect the SEC to look for additional opportunities to reinforce the enforcement messages of 2015, while also staying alert for new areas in which the agency can have an impact in 2016.

Cross-Border Tax Enforcement

Continuing a trend dating back to 2008, the government remained extremely active in 2015 in the area of cross-border tax enforcement. Perhaps the most significant development in this area was the success of the DOJ Program for Swiss Banks. That Program, announced in August 2013, provided a pathway for Swiss banks to resolve through an NPA or Non-Target Letter the consequences of past conduct involving undeclared U.S. accountholders. By the beginning of 2016, DOJ had announced the conclusion of 76 non-prosecution agreements with Swiss financial institutions, with total fines over $1.3 billion. Beyond the dollars, the NPA resolutions require the banks to implement steps to ensure no further business with undeclared U.S. clients and to provide information concerning former client accounts, including the identity of banks in Switzerland or elsewhere to which accounts or assets were transferred. The apparent winding down of the DOJ Swiss Bank Program likely means that DOJ will be able to turn its attention to the remaining eleven so-called Category 1 Swiss banks (i.e., those banks already under criminal investigation prior to announcement of the DOJ Swiss Bank Program). And, as if right on cue, in December 2015, Julius Baer Group announced that it had reached an “agreement in principle” with the Manhattan U.S. Attorney’s Office to resolve DOJ’s long-running cross-border tax investigation of the bank; at the same time, the bank raised its reserve levels to $547 million for the matter and indicated that it expected a resolution in the first quarter of 2016.

In related enforcement efforts, the IRS announced in October 2015 that more than 54,000 U.S. taxpayers had participated in the IRS’s various offshore voluntary disclosure programs implemented since 2008, resulting in the collection of more than $8 billion in back taxes and fines. Beyond the significant dollars recovered, the IRS’s offshore compliance programs serve as another source of substantial additional information from which U.S. authorities can develop new leads against accountholders, financial institutions that hold undeclared accounts and third-party service providers who aid undeclared U.S. taxpayers. Moreover, the DOJ and IRS continued to pursue offshore tax evaders and their facilitators in India, Israel, Panama and the Caribbean, among other locations. In September 2015, for example, the IRS issued John Doe Summonses to the U.S. correspondent banks for Belize Bank International Limited and Belize Bank Limited seeking U.S.-located records and information relating to accounts and financial transactions involving undeclared U.S. clients of the two Belize banks. And in December, Cayman National Corporation disclosed that it was setting aside some $6 million in anticipation of resolving an ongoing DOJ cross-border tax evasion investigation focused on past misconduct involving undeclared U.S. taxpayer clients of its Cayman National Securities and Cayman National Trust subsidiaries. On the regulatory front, 2016 will see the continued implementation of the reporting requirements under the Foreign Account Tax Compliance Act (“FATCA”) as well as the Common Reporting Standard (“CSR”). These initiatives will further enhance the information available to authorities in the U.S. and abroad to help reduce offshore tax evasion and to pursue undeclared taxpayers and their facilitators.

Against this backdrop, it remains important for foreign financial institutions and service providers, particularly those with operations in what may be viewed as tax haven jurisdictions, to consider steps to ensure that they are aware of the full scope of their past and ongoing business involving accounts in which U.S. persons hold a direct financial or indirect beneficial interest, and have adequately documented those accounts and remediated any issues that may have been identified.

FCPA Update

The FCPA continues to be an enforcement priority for both DOJ and the SEC. In 2015, the DOJ resolved 8 FCPA cases (2 corporate and 6 individual) with total fines of some $26.3 million, and the SEC resolved 9 cases involving 8 corporations and 2 individuals with total penalties of approximately $113.7 million. This year, there was no blockbuster penalty: the largest fine was the $25 million paid by BHP Billiton to the SEC in a case arising from the company’s failure to implement adequate internal controls over its global hospitality program pursuant to which it sponsored attendance at the 2008 Beijing Summer Olympics by government officials in a position to influence company business or regulatory matters.

We caution, though, against taking too much comfort from this year’s more moderate statistics. The DOJ and SEC have numerous ongoing enforcement actions, and the SEC’s whistleblower program continues to incentivize employees, here and overseas, to report questionable conduct and practices. Beyond that, the DOJ has added three new squads to the FBI’s International Corruption Unit that are focusing on the FCPA, among other things, and is preparing to add ten new prosecutors to the Fraud Section’s FCPA unit, increasing its size by 50%. And while the DOJ brought fewer FCPA cases last year than it did in 2014, those cases reflected the agency’s enhanced focus on individual prosecutions. Andrew Ceresney, the SEC’s Director of Enforcement, has stated that he expects FY 2016 to be “another active year for FCPA cases.”

In a November 2015 speech, Mr. Ceresney articulated the SEC’s new policy with respect to the resolution of FCPA cases: “a company must self-report misconduct in order to be eligible for the [Enforcement] Division to recommend a DPA or NPA to the Commission in an FCPA case.” As Mr. Ceresney has acknowledged, requiring an entity to self-report does not fundamentally change the Commission’s actual practice since it introduced its formal cooperation program in 2010. We have written in the past about whether the DOJ and SEC were effectively incentivizing self-reporting and cooperation by making the benefits of doing so—i.e., the “carrot”—tangible enough for companies in light of the consequences of self-reporting (including undertaking a potentially long and costly internal investigation). Mr. Ceresney explicitly addressed the “carrot” and the “stick” in his recent speech, emphasizing that “[c]ompanies should understand that the benefits of cooperating with the SEC are significant and tangible.” He referred to recent settlements—Layne Christensen from 2014 and the PBSJ settlement in 2015—where the penalty was a small percentage of the disgorgement—and most important, the Goodyear settlement in early 2015, which was, according to Mr. Ceresney, “the first case where the Commission agreed not to seek any penalty in recognition of the company’s significant cooperation.” As to the “stick,” Mr. Ceresney underscored that if a company does not self-report and the government finds out about the FCPA problem through its own investigation or a whistleblower, the consequences “will likely be worse.”

The DOJ too made an effort to promote the “carrot.” In a May 2015 speech, the Chief of the Criminal Division’s Fraud Section, Andrew Weissmann, emphasized that the DOJ is working on becoming increasingly transparent as to the benefits of self-disclosure and cooperation. As he explained, companies will see “a meaningful gap” in the nature of resolutions for those companies that self-disclose and those that do not, and self-disclosure and cooperation “will greatly increase the odds of a declination, no monitor or a significantly reduced fine.” As to the “stick,” Mr. Weissmann was equally clear that if the DOJ finds an FCPA violation on its own, companies should not expect to make up the benefits of self-disclosure through cooperation. Importantly, Mr. Weissmann also addressed the sometimes disproportionate costs of FCPA investigations, noting that the DOJ does not “require, or want, a company to embark on an unnecessarily broad or costly investigation;” companies should instead take appropriate and reasonable steps to be in a position to provide the DOJ with a “full and accurate picture of what happened.”

We view these efforts by the DOJ and SEC to make the “carrot” more real, as well as their recognition that unduly costly or burdensome internal investigations are not a prerequisite for the “carrot,” as positive steps in this area. We believe it to be in the public interest to give maximum benefit to companies that self-report, and maximum assurance that companies will not be penalized if they appropriately control the scope and costs of an internal investigation.

One final point of note—as discussed above, the FCPA is an area in which we expect the DOJ Fraud Section’s new Compliance Counsel to be active. Given that we believe a strong compliance program will typically be another key component to obtaining the “carrot,” companies doing business overseas have greater incentives than ever to be able to demonstrate that they have robust anti-corruption compliance programs appropriately tailored to their business activities and the actual anti-corruption risks they face, and that their programs have been operationalized. Such programs should be supported by a strong tone-at-the-top, and an equally strong tone-on-the-ground in foreign business locations, as well as effective training, monitoring, and communication systems.

International Enforcement

The past year may prove to be the high water mark in the long-running, global law enforcement effort to mount cases against major financial institutions. It surely brought intensified international cooperation among law enforcement agencies, and set new records for criminal and civil fines and penalties.

Most significantly, U.S. prosecutors secured criminal felony pleas from five of the world’s major banks. Four banks—Citicorp, JPMorgan Chase & Co., Barclays PLC and The Royal Bank of Scotland plc—agreed to plead guilty to conspiring to manipulate the price of US dollars and euros exchanged in the foreign exchange (FX) spot market and to pay criminal fines totaling more than $2.5 billion. A fifth bank, UBS AG, agreed to plead guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and to pay a $203 million criminal penalty for, among other things, breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation.

In announcing these settlements, U.S. officials emphasized all five resolutions were “parent-level guilty pleas” designed to “communicate loud and clear” that financial institutions will be held accountable for financial misconduct affecting U.S. markets. That two of the parent entities were domiciled abroad and faced global collateral consequences from a U.S. criminal plea apparently failed to move prosecutors. They stressed in their announcement that “[i]f appropriate and proportional to the misconduct and the company’s track record, we will tear up an NPA or a DPA and prosecute the offending company,” explaining that they tore up the 2012 non-prosecution agreement with UBS because the agreement obligated the bank to “commit no further crimes” and the bank’s “post-LIBOR compliance and remediation efforts failed to detect its illegal conduct until an article was published pointing to potential misconduct in the FX markets.” On the year, DOJ tripled its 2014 record for criminal fines and penalties, with the FX settlements contributing some 70% of the total.

But this was not all. The FX investigation precipitated Federal Reserve fines against the five banks totaling $1.6 billion and a Barclays settlement with the New York State Department of Financial Services, the Commodities Futures Trading Commission and the United Kingdom Financial Conduct Authority for an additional combined penalty of $1.3 billion. Altogether, in addition to previously announced resolutions with the Office of the Comptroller of the Currency and Swiss Financial Market Supervisory Authority, the five banks wound up acceding to nearly $9 billion in fines and penalties for their conduct in the FX spot market.

Even if such settlements ultimately prove anomalous in sweep and scale, as we expect, the past year illustrates the ease and efficacy with which international authorities are able to cooperate, and augurs greater “globalization” in corporate law enforcement. U.S. and foreign authorities—especially in the United Kingdom, Germany, Switzerland, Holland, Singapore, Hong Kong, Japan and Australia—showed that they were able to work together effectively to pursue joint cases and to exact unprecedented fines and penalties in criminal and civil actions all over the world. We see no reason to expect that this trend will abate any time soon.

Notably too, 2015 was the year of the worldwide football scandal. The U.S. investigation has focused on dealings between sports marketing executives and officials from soccer’s governing bodies in South and Central America, the Caribbean and North America, and chiefly involved corruption in connection with the sale of media and marketing rights to international soccer competitions. U.S. prosecutors lauded investigative cooperation from Switzerland and several other countries. Sports fans and those involved in the business of international soccer received a sudden education in the reach and power of international law enforcement as the Swiss made dramatic arrests; the U.S. brought racketeering conspiracy charges against numerous soccer officials and corporate executives of sports marketing firms and successfully secured extradition of many of those charged who were located abroad; and Switzerland, Honduras, Colombia, Germany and other countries pursued separate corruption probes.

All of this will place a greater burden on in-house and outside counsel to “see around corners” and anticipate business practices that may be ripe for regulatory attack. Lawyers advising companies will need to follow regulatory developments in multiple countries and be prepared to manage matters across an ever-wider range of jurisdictions where the rules and norms of cooperation, discovery and administrative or judicial challenge often still conflict.