December 2014

A great deal has been written about the recent reversal of two insider trading convictions.  Specifically, the U.S. Court of Appeals for the Second Circuit threw out the convictions of Todd Newman and Anthony Chiasson, hedge fund traders found guilty at the District Court level.

The press reports have treated the reversal as a major

A few weeks ago – “From the same wonderful folks who brought you conflict minerals (among other things)” – I complained about Senator Blumenthal’s attempt to tell the SEC what to regulate and how to regulate it.  I had an equal and opposite reaction to the recent news that Commissioner Gallagher and former Commissioner Grundfest

money laundering
Photo by Seth M.

In recent years, the Financial Crimes Enforcement Network (“FinCEN”) and federal regulators of the financial services industry have more aggressively enforced the Bank Secrecy Act (“BSA”) and the economic sanctions imposed by the US Treasury’s Office of Foreign Assets Control (“OFAC”).  While this should in of itself be a matter of particular attention to the directors and officers of those entities in the financial services industry, so too should the recent trend toward increased scrutiny for directors and officers failing to address alleged BSA or OFAC compliance shortfalls. An August 2014 agreement reached by FinCEN and a former casino official permanently barring the official from working in any financial institution drives the point home: When it comes to liability for BSA or OFAC violations, FinCEN and federal regulators might not limit penalties to the entity actually committing violations, and instead, may also penalize the individual directors and officers of those entities. 

Even before FinCEN’s August 2014 bar of the casino official, a number of enforcement actions assessed personal monetary penalties against financial institution directors and officers over the past few years. In February 2009, the directors of Sykesville Federal Savings Association were collectively fined
Continue Reading Directors and Officers Beware: You could be individually liable for your entity’s Bank Secrecy Act or Office of Foreign Assets Control violations