Ninth Circuit Severely Limits “Rogue Employee” Exception for Corporations in Securities Fraud Cases

In an issue of first impression, the Ninth Circuit Court of Appeals recently held that a rogue corporate officer’s fraudulent intent can be imputed to a corporation even where the defrauding officer acted against the corporation’s interest, known as the “adverse interest exception.” In re ChinaCast Educ. Corp. Sec. Litig., — F.3d  –, 2015 WL 6405680, at *5 (9th Cir. Oct. 23, 2015).  In so holding, the Ninth Circuit created “an exception to the exception” – when an innocent third party relies on a defrauding officer’s apparent authority, the officer’s fraud can be imputed to the corporation even if that fraud was adverse to the corporation’s interest. Continue Reading

It’s (Not) Academic: Cybersecurity Is a Must for Universities and Academic Medical Centers

Cutting-edge research institutions need cutting-edge cybersecurity to protect their IP and critical personal and financial data.  Universities hold vast repositories of valuable information, including student healthcare information, patient information from academic medical centers, and financial and personal data from applicants, donors, students, faculty, and staff. So it’s no surprise hackers have been targeting universities lately—in fact, at least eight American universities have announced cyber intrusions over the past two years. Continue Reading

Contractors Beware: An Overly Broad Confidentiality Agreement Could Cost You!

On October 29, 2015, DOD renewed the DFARS deviation implemented in February, which prohibits contracting with entities that require employees or subcontractors to sign internal confidentiality agreements or statements that prohibit, or otherwise restrict, such employee or subcontractor from lawfully reporting waste, fraud, or abuse.  Defense contractors should review their policies to ensure they meet the requirements of these new clauses. Continue Reading

Suspension and Debarment: A New Government Approach

Contractors and government contracts attorneys are likely to see (if they haven’t already) a rise in the number of cases in which individuals, rather than corporate entities, are targeted by government officials for suspension and debarment.  This is significant because, under the FAR, the misconduct of an individual can be imputed to the contractor, causing the contractor to lose its ability to receive Federal contracts. Continue Reading

Forward to the Past: NYSE Returns to Regulation

Everything old is new again.  On January 1, 2016, the New York Stock Exchange (“NYSE”) – now owned by Intercontinental Exchange, Inc. – will be taking back some of the regulatory responsibilities it yielded to the Financial Industry Regulatory Authority (“FINRA”), starting in 2007 when the NYSE and National Association of Securities Dealers (“NASD”) merged their self-regulatory functions.  The goal then was to address inefficiencies and overlap that often resulted from the concurrent oversight by these two self-regulatory organizations (“SROs”). Continue Reading

With Gratitude

Wednesday, November 11th, is Veterans Day.  The lawyers and staff of Sheppard Mullin worldwide wish to take this opportunity to thank all who have served for the sacrifices they have made in support of our nation’s defenses.  We also wish to thank our many clients who work tirelessly to provide our servicemen and women with the vast array of supplies and services that enable them to do their jobs and to come home safely when they are done.

Been to Confession Lately?

It has been six years since the Government introduced the concept of mandatory disclosure into the contracting calculus. In a recent Government Contractor Briefing Paper,™  John Chierichella and Bruce Casino review the FAR mandatory disclosure rule, what it requires, its inherent (and purposeful) ambiguities, best practices for compliance, and statistical data relating to industry-wide willingness to enter the commercial confessional.  To see how you match up, click here.

Are You Overcomplicating Your Cybersecurity Processes?

Yes. I just asked that.  For many, the response is likely “Yes!  Of course we are!  It’s *&^%$% cybersecurity – it’s complicated!”  To which I would respond “Touché.  It is…but it needn’t be overly complicated.”  So, of course, I set out to find a complicated way to simplify it.  And, in the spirit of National Cyber Security Awareness Month, I thought I would share two complicated ways to simplify your cybersecurity processes. Continue Reading

Have DoD Contractors and Subcontractors Been Drafted? Once Voluntary Defense Industrial Base CS/IA Regulations Now Mandatory and Aligned With New DFARS Cybersecurity Rules

When last we left the Department of Defense, it had issued a rather wide-reaching interim DFARS rule addressing cybersecurity practices, data retention, and cloud services purchasing guidance. Now, effective October 2, 2015, before the ink can dry on those nascent rules (comments are due October 26, 2015), the DoD has applied them to all DoD contractors in regulations governing the once-voluntary DoD-Defense Industrial Base (DIB) Cybersecurity (CS) activities (32 C.F.R. Part 236). That’s right, what was once entitled a “voluntary” program is now a mandatory program; just in time for a host of data retention and cyber-reporting requirements! Continue Reading

Whew! That Was Close – D.C. Circuit Reaffirms Application of Attorney-Client Privilege and Attorney Work Product Doctrine in Internal Investigations

On August 11, 2015, the U.S. Court of Appeals for the D.C. Circuit issued a writ of mandamus supporting the robust applicability of the attorney-client privilege and attorney work product doctrines in the context of False Claims Act (“FCA”) investigations conducted under the direction of corporate and outside counsel. This marks a continuation of its repudiation of a 2014 lower-court decision that significantly eroded these privileges. Interpreting the scope of the privileges in the context of internal investigations of potential FCA violations is especially tricky because of the unique roles played by the parties (the Government as a potential plaintiff, the relator as a bounty hunter, and the corporation-as-defendant). This latest ruling from the D.C. Circuit, in a case arising out of wartime contracts in Iraq run by Kellogg, Brown & Root, Inc. (“KBR”)(formerly part of Halliburton), is a breath of fresh air for companies doing business with the Federal Government. The ruling from the Court of Appeals also sends a signal to the trial court that an overly narrow view of the attorney-client privilege and attorney work product doctrine creates unacceptable uncertainty that will ultimately be rejected on appeal. Continue Reading