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Civil Complaint Sheds Light On Hollywood Industry Sweep

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Previous posts herehere, here, and here highlighted the so-called industry sweep of Hollywood film studies for its business practices in China. These prior posts were generally from 2012 and 2013 and given the passage of time it appears that this sweep did not yield any Foreign Corrupt Practices Act enforcement actions.

Nevertheless, this recent civil complaint filed in California state court by Christopher Fenton (pictured – a former General Manager and Motion Picture Group President of DMG Entertainment) sheds light on the matter specifically as it relates to DMG Entertainment. In the complaint, Fenton alleges that after a “long, successful tenure with DMG, [and his] prominent role within the organization” DMG Entertainment, related entities and individuals failed to comply with certain contractual obligations and oral promises to compensate him in connection with the company’s eventual initial public offering.

Among the job tasks Fenton alleges in the complaint was his successful handling of the SEC’s FCPA investigation of the company. If nothing else, the allegations make for an interesting read on the alleged impact the FCPA inquiry had on Fenton’s life and career.

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Friday Roundup

Roundup

About time, scrutiny updates, ripple, for the record, just saying, and for the reading and listening stack. It’s all here in the Friday roundup.

About Time

After dinging companies for nearly 40 years for internal controls and risk management failures, the SEC names its first chief risk officer.

As highlighted in this prior post, if the SEC were an issuer there would be many books and records and internal controls issues within the organization.

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Words Matter As Ninth Circuit Concludes In Wadler Matter That The FCPA Is Not A “Rule Or Regulation” Of The SEC

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These pages have closely followed the civil lawsuit of Sanford Wadler (the former General Counsel and Secretary of Bio-Rad Laboratories) against the company and certain executive officers and board members alleging various unfair employment practices including that Wadler was terminated for blowing the whistle on certain potential FCPA issues.

As highlighted in this previous post, Wadler’s claims were fully litigated and in February 2017 a jury awarded Wadler $2.9 million in back pay and stock compensation and $5 million for punitive damages. The district court doubled the compensatory award pursuant to Dodd-Frank for a total award of approximately $11 million. As highlighted in this previous post, Bio-Rad filed an appeal in the Ninth Circuit challenging various aspects of the trial court decision.

Yesterday in this fragmented decision the Ninth Circuit largely ruled in favor of Wadler. Nevertheless, the court did conclude that the Foreign Corrupt Practices Act was not a “rule or regulation of the SEC” as that phrase in used in Section 806 of SOX which prohibits in certain instances issuers from retaliating against an employee who reports misconduct.

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FCPA Flash Podcast – A Conversation With James Noe Regarding FCPA Issues In The Oil And Gas Industry

Podcast Logo

The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from written posts on FCPA Professor.

This FCPA Flash episode is a conversation with James Noe (special counsel with Jones Walker LLP who previously served in various in-house counsel and executive roles with several oil and gas companies). During the podcast, Noe discusses: the easiest and most difficult aspects of FCPA compliance in the oil and gas industry; the extent of facilitating payments in the industry; whether oil and gas companies are too risk averse when it comes to FCPA issues; and civil actions by industry participants when business is lost because of a refusal to make bribe payments.

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Walmart’s $160 Million Ripple

Ripple

The article “Foreign Corrupt Practices Act Ripples” highlights how settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement.

Among other ripples are private shareholder suits.

In the aftermath of the New York Times April 2012 article (an article which did not lead to Wal-Mart’s FCPA scrutiny, but certainly magnified it to a whole new level) numerous shareholder suits rained down on the company.

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