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I am currently an assistant professor of Criminal Justice and National Security and an Assistant Dean in the Henry C. Lee College of Criminal Justice and Forensic Sciences at the University of New Haven. I teach courses in statistics, Homeland Security and Terrorism, Transnational Crime, and Criminological Theory, both at the undergraduate and graduate level (both Master’s and Ph.D.). I previously worked as private investigator for nearly three years doing corporate due diligence and competitive intelligence investigations. This consisted of research and intelligence collection, some field investigations, and heavily focused on report writing, database research and use of analytical software such as i2’s Analysts Notebook. I also worked for the Institute for the Study of Violent Groups (ISVG) for 12 years (2003-2014) where I was P.I. on several research grants, running day to day operations, and working on research in terrorism and organized crime.
I earned a Bachelor of Arts in Criminal Justice (1995), and a Master of Arts in Criminal Justice (1999) from the University of Illinois at Chicago. I graduated May 2009 with a Ph.D. from Sam Houston State University. My dissertation was entitled “Suicide Bombing: A Statistical Analysis of Tactics, Techniques and Procedures.” I became an analyst at the Institute for the Study of Violent Groups (ISVG) in 2003, and was appointed as a doctoral teaching fellow in 2005. At ISVG my focus is not only on the nexus between organized crime and terrorism, terrorist financial networks, but also on transnational criminal groups, such as drug cartels, arms and human smuggling networks operating worldwide. The research is collected using open source data and entered and analyzed through a relational database used for modeling terrorist and extremist networks, their tactics, and operations.
Over the past 5 years at the University of New Haven, I have been able to develop these research areas and continue my scholarship through research writings. I have published four articles related to terrorism and transnational crime in the NATO Science for Peace and Security Studies Series on Suicide Terrorism, Financing Terrorism, Terrorism and Organized Crime, and The Nexus between Terrorism and Organized Crime. I have a chapter titled Terrorism and the Female Suicide Bomber, coming out 2016 in Across the Spectrum of Women and Crime: Theories, Offending, and the Criminal Justice System. I have also published an entry on Drug Trafficking for The Encyclopedia of Criminology and Criminal Justice, as well as a chapter entitled The Contemporary Face of Transnational Criminal Organizations and the Threat They Pose to U.S. National Interest: A Global Perspective, published in The “New” Face of Transnational Crime Organizations (TCOs): A Geopolitical Perspective and Implications to U.S. National Security, a white paper by the Department of Defense and the Joint Chiefs of Staff. There is a forthcoming publication in the Wiley-Blackwell Encyclopedia on Crime and Punishment on the subject of Crime and Punishment in Serbia. I am also an editor for the Internal Security Journal published by the Polish National Police Academy in Szczytno, Poland.
In the past 5 years I have also been active in presenting at professional conferences, as well as invited lectures for the NATO Center of Excellence Defense Against Terrorism (COE-DAT) courses, which are offered to ranking military officials from NATO participating countries, NATO Partners for Peace (Pfp), and NATO Mediterranean Dialogue Countries. I was also invited to present on terrorist threats to critical infrastructure at the Public Security Forum in South Korea September 11, 2015. Since the Fall of 2011 I have completed 12 invited lectures for NATO on various areas of terrorism, particularly suicide terrorism; several lectures at international week at Saxion University in Apeldoorn, The Netherlands; an invited lecture on suicide terrorism at the Dutch National Police Academy; an invited lecture to Society of FBI Alumni in Connecticut; and a lecture on suicide terrorism at the Polish National Police Training Center in Leginowo, Poland; as well as presentations at professional conferences.
I have also participated and continue to participate in funded research. The research conducted in the past four years has focused on various topics in terrorism and transnational organized crime. I was a faculty advisor on a $4,000 project that included two University of New Haven students and 6 students from Saxion University for the U.S. Department of State P2P Challenging Violent Extremism. Other projects include: a $30,000 effort for a Department of Defense Strategic Multilayer Assessment (SMA) focusing on violent extremist groups and transnational criminal organizations in Pakistan and South Asia; a $19,500 contract working with the Washington/Baltimore High Intensity Drug Trafficking Area (HIDTA); and a $6,000 contract with the Congressional Research Service (CRS) to study the presence and activities of Mexican drug trafficking organizations within the United States.
I have experience in comparative aspects of criminal justice and international programs and speak Serbian [Croatian-Bosnian] I can read and write in both the Cyrillic and Latin alphabet (speaking - non-native fluency).
2016 Gottschalk, P. & Markovic, V. Transnational Criminal Organizations (TCOs): The Case of Combating Criminal Biker Gangs.International Journal of Criminal Justice Sciences (IJCJS). Vol. 11(1): 30-44.
2016 Markovic, V. Terrorism and the Female Suicide Bomber. In S. Sharp, S. Marcus-Mendoza, K. Cameron, E.S. Daniel-Roberson (eds.), Across the Spectrum of Women and Crime: Theories, Offending, and the Criminal Justice System. Carolina Academic Press: Durham, NC.
2016 Markovic, V. Crime and Punishment in Serbia. In W. Jennings (ed.), The Encyclopedia of Crime and Punishment. Wiley-Blackwell: Hoboken, NJ.
2015 Markovic, V. Terrorism and the Possible Threats to Critical Infrastructure. Paper for the Public Security Forum. Yeosu, South Korea.
2013 Markovic, V. Financing Terrorism. In U. Gurbuz (ed.) Capacity Building in the Fight Against Terrorism. NATO Science for Peace and Security Studies Series, E: Human and Societal Dynamics, vol. 112, 74-81.
2013 Markovic, V. Suicide Terrorism: The Special Case of the Suicide Bomber. In U. Gurbuz (ed.) Future Trends and New Approaches in Defeating the Terrorism Threat. NATO Science for Peace and Security Studies Series, E: Human and Societal Dynamics, vol. 111, 31-36.
2013 Markovic, V. Chapter 6: The Contemporary Face of Transnational Criminal Organizations and the Threat They Pose to U.S. National Interest: A Global Perspective. In B. Riley, K. Kiernan (eds.), The “New” Face of Transnational Crime Organizations (TCOs): A Geopolitical Perspective and Implications to U.S. National Security. Department of Defense and Joint Chiefs of Staff White Paper, March, 2013, 106-115.
Markovic, V. (2016). Financing Terrorism. Making Waves Against Financial Fraud Conference, International Association of Financial Crimes Investigators, Ft. Lauderdale, FL.
Markovic, V. (2016). Suicide Bombings: An Overview of Tactics and Trends. Hybrid Targeted Violence Seminar sponsored by UConn P.D., Yale P.D., and the FBI. Yale West Campus.
Markovic, V. (2016). The Special Case of the Female Suicide Bomber. NATO Center of Excellence – Defense Against Terrorism, Defense Against Suicide Bombing Course, Ankara, Turkey.
Markovic, V. (2016). Boko Haram: A Case Study. NATO Center of Excellence – Defense Against Terrorism, Defense Against Suicide Bombing Course, Ankara, Turkey.
2013/14 Principal Investigator. Mexican Drug Trafficking Organizations: Assessing Their Criminal Activities and Presence inside the United States, Contract from the Congressional Research Service (CRS), 1 year project. $6,000.
2013 Principal Investigator. HIDTA WebPMP, Contract from the Washington/Baltimore High Intensity Drug Trafficking Area (HIDTA), 4 month project. $19,500.
2012 Principal Investigator. Pakistan Strategic Multilayer Assessment (SMA) Violent Extremist Organizations and Transnational Criminal Organizations in Pakistan, Kiernan Group, DOD project, 2 month project. $30,000.
Fox61: Should More Be Done to Secure Train, Subway, and Bus Stations?
Jibey Asthappan, associate professor of national security and Vesna Markovic, associate professor of criminal justice and national security, comment on the attempted terrorist attack that occurred on Monday at the New York City’s Port Authority Bus Terminal.
Aleteia: What Can U.S. Do to Prevent Truck Terrorism?
Kenneth Gray, lecturer in criminal justice and retired FBI special agent, comments on how recognizing warning signs and open communication are key in identifying potential terrorists. Vesna Markovic, associate professor and assistant dean of criminal justice, joins Gray in identifying vehicle-related terrorism in the U.S.
Vesna Markovic, associate professor and assistant dean of criminal justice, and Kenneth Gray, lecturer in criminal justice, comment on the current status of the Islamic State.
Forbes: Infants: The New Terrorist Weapon?
Vesna Markovic, assistant professor of criminal justice and national security, comments on the terrorist attack in which two female suicide bombers in Madagali, Nigeria passed through a security check point by carrying an infant. The op-ed was also featured in News Max World.

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In Faulkinbury v. Boyd & Associates, Inc. (June 24, 2010) --- Cal. App. 4th ---, the Court of Appeal affirmed in part and reversed in part a trial court order denying certification of a class of approximately 4,000 security guards.
The plaintiffs moved for certification of a class of all employees during the applicable period, plus eight sub-classes, and the trial court denied certification without prejudice. The plaintiffs' second motion sought certification of a broad class of all employees and three sub-classes for the following: (1) meal period violations; (2) rest period violations; and (3) failure to include certain expenses and bonus compensation in the class members' regular rates for overtime compensation purposes. The trial court again denied certification.
The order denying plaintiffs' first motion was not res judicata as to plaintiffs' second motion because the court's ruling was made without prejudice. Slip op. at 4-5.
Plaintiffs' motion to re-designate the case as non-complex following denial of class certification did not evidence an intent to abandon the class action remedy and did not render the appeal moot. Slip op. at 5-6.
The fact that defense counsel made arguments as to the merits of plaintiffs' claims at the certification hearing did not mean that the Court improperly relied on such arguments in denying certification. The trial court expressed permissible reasons for denying certification. Slip op. at 6-8.
On plaintiffs' meal period claim, substantial evidence supported the trial court's finding that common issues of law or fact did not predominate over individual issues. Although the defendant required all class members to sign on-duty meal period agreements and take on-duty meal periods, defendant's evidence established that "the conditions and nature of security guard services vary from location to location and often from shift to shift," such that individual issues predominated. Slip op. at 10-16.
On plaintiffs' rest period claims, substantial evidence also supported the trial court's finding that common issues did not predominate. The defendant's declarations showed that employees sometimes took rest periods, destroying commonality. Slip op. at 16-17.
The trial court abused its discretion in refusing to certify the overtime sub-class, as the overtime sub-class claims "are governed by common legal principles set forth in the Labor Code and case authority." Whether an employer must include reimbursement items and bonus compensation in the calculation of its employees' overtime rate of pay "can be decided on a class-wide basis as a legal matter based on common proof." The fact that damages must be calculated individually does not destroy commonality. Slip op. at 17-18.
The US Supreme Court has granted certiorari to review the Ninth Circuit's decision in Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. October 27, 2009). In Laster, the Ninth Circuit affirmed a District Court decision that a class arbitration waiver was unconscionable and unenforceable. The Court also held that the Federal Arbitration Act does not preempt California unconscionability law. Our post on Laster is here.
The Supreme Court case is entitled AT&T Mobility, LLC v. Concepcion (No. 09-893). The Court's docket is here. I am adding this case to our watch list.
The United States Department of Labor ("DOL") Wage and Hour Division ("WHD") has issued its second "Administrator Interpretation" (No. 2010-2) addressing certain donning and doffing issues.
First, WHD clarified the term "clothes" in relation to Section 3(o) of the Fair Labor Standards Act ("FLSA"). 29 U.S.C. § 203(o).
Section 3(o) of the Fair Labor Standards Act (FLSA) provides that time spent “changing clothes or washing at the beginning or end of each workday” is excluded from compensable time under the FLSA if the time is excluded from compensable time pursuant to “the express terms or by custom or practice” under a collective bargaining agreement. 29 U.S.C. § 203(o). After a careful analysis of the statutory provision and a thorough review of the legislative history and case law, the Administrator is issuing this interpretation of the term “clothes” in § 203(o), and of whether clothes changing covered by § 203(o) is a principal activity, to provide needed guidance on these important and frequently litigated issues.
WHD found that "protective equipment worn by employees that is required by law, by the employer, or due to the nature of the job" does not constitute "clothes" under section 203(o). See Alvarez v. IBP, Inc., 339 F.3d 894, 905 n.9 (9th Cir. 2003), aff’d on other grounds, 546 U.S. 21 (2005). As such, time spent donning or doffing such protective equipment is compensable time.
Second, WHD considered whether non-compensable time spent changing clothes is a "principal activity" that begins the "continuous workday."
Generally, donning and doffing, which may include clothes changing, can be a “principal activity” under the Portal to Portal Act, 29 U.S.C. § 254. IBP v. Alvarez, 546 U.S. 21, 30 (2005). The Supreme Court in Alvarez explicitly held that activities that are integral and indispensable are principal activities, and activities occurring after the first principal activity and before the last principal activity, are compensable. Alvarez, 546 U.S. at 37. Thus time spent in donning and doffing activities, as well as any walking and waiting time that occurs after the employee engages in his first principal activity and before he finishes his last principal activity, is part of the “continuous workday” and is compensable under the FLSA. Id. at 37.
WHD sided with the "weight of authority" and found that changing clothes covered by section 203(o) "may be a principal activity. Where that is the case, subsequent activities, including walking and waiting, are compensable."
WHD's web page for Administrator Interpretations is here. You can sign up to receive automated email alerts from DOL here.
written and recorded witness statements, including not only those produced by the witness and turned over to counsel but also those taken by counsel, are not attorney work product. Because such statements are not work product, neither is a list of witnesses from whom statements have been obtained (the list requested by form interrogatory No. 12.3).
Our post on the Court of Appeal's decision is here, and the Supreme Court's case summary page is here. Although Coito is not a wage and hour or class action case, we deal with these issues frequently, and I have added it to my watch list.
[I]t is apparent to the court that defendant's conduct has been inconsistent with an intent to arbitrate. Related to this is the 6 months of delay from the filing of Plaintiff's complaint to the instant petition to compel. In that time period defendant filed two demurrers, accepted and contested discovery request [s], engaged in efforts to schedule discovery, omitted to mark or assert arbitration in its case management statement.
The effect of these inconsistent actions by defendant has resulted in more than merely participating in litigation or expending legal cost[s] but in prejudice to the plaintiff by substantially undermining plaintiff's ability at this late date to take advantage of the benefits and cost savings provided by arbitration. It is clear to the court that defendants intended by their conduct to proceed with their court action. It was only until defendant's second demurrer was overruled that it now request[s] this court that it litigate now in another forum to which all appearances it hopes that it will limit its litigation risk and expense. It will also increase plaintiff's expenses and burdens, having already required plaintiff to expend its efforts and resources in vigorously litigating this case in court. To allow defendant at this time with a trial set for May when it has known of its right to arbitrate this matter since June 2008 yet remained silent until it lost its motion to now go to arbitration would in this court's view cause an unnecessary waste of time and effort to all concerned but more importantly is unfair and prejudicial to plaintiff. Simply put as one court stated "[t]he courtroom may not be used as a convenient vestibule to the arbitration hall so as to allow a party to create his own unique structure combining litigation and arbitration."


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Chapter 1: "Finance." of Part VI: "Finance, Property, Contracts and Suits"
(1) Within six months of the commencing day and thereafter at intervals not exceeding five years, the President shall 375 constitute a National Finance Commission consisting of the Minister of Finance of the Federal Government, the Ministers of Finance of the Provincial Governments, and such other persons as may be appointed by the President after consultation with the Governors of the Provinces.
(3A) The share of the Provinces in each Award of National Finance Commission shall not be less than the share given to the Provinces in the previous Award.
(3B) The Federal Finance Minister and Provincial Finance Ministers shall monitor the implementation of the Award biannaully and lay their reports before both Houses of Majlis-e-Shoora (Parliament) and Provincial Assemblies.
(4) As soon as may be after receiving the recommendation, of the National Finance Commission, the President shall, by 379 Order, specify, in accordance with the recommendations of the Commission under paragraph (a) of clause (2), the share of the net proceeds of the taxes mentioned in clause (3) which is to be allocated to each Province, and that share shall be paid to the Government of the Province concerned, and, notwithstanding the provision of Article 78 shall not form part of the Federal Consolidated Fund.
161 Natural gas and hydro-electric power.
(2) The net profits earned by the Federal Government, or any undertaking established or administered by the Federal Government from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated.Explanation -For the purposes of this clause "net profits" shall be computed by deducting from the revenues accruing from the bulk supply of power from the bus-bars of a hydro-electric station at a rate to be determined by the Council of Common Interests, the operating expenses of the station, which shall include any sums payable as taxes, duties, interest or return on investment, and depreciations and element of obsolescence, and over-heads, and provision for reserves.
162 Prior sanction of President to Bills affecting taxation in which Provinces are interested.
No Bill or amendment which imposes or varies a tax or duty the whole or part of the net proceeds whereof is assigned to any Province, or which varies the meaning of the expression "agricultural income" as defined for the purpose of the enactments relating to income-tax, or which affects the principles on which under any of the foregoing provisions of this Chapter moneys are or may be distributable to Provinces, shall be introduced or moved in the National Assembly except with the previous sanction of the President.
163 Provincial taxes in respect of professions, etc.
164 Grants out of Consolidated Fund.
The Federation or a Province may make grants for any purpose, notwithstanding that the purpose is not one with respect to which 382[Majlis-e-Shoora (Parliament)] 382 or, as the case may be, a Provincial Assembly may make laws.
165 Exemption of certain public property from taxation.
(1) The Federal Government shall not, in respect of its property or income, be liable to taxation under any Act of Provincial Assembly and, subject to clause (2), a Provincial Government shall not, in respect of its property or income, be liable to taxation under Act of 383[Majlis-e-Shoora (Parliament)] 383 or under Act of the Provincial Assembly of any other Province.
(2) If a trade or business of any kind is carried on by or on behalf of the Government of a Province outside that Province, that Government may, in respect of any property used in connection with that trade or business or any income arising from that trade or business, be taxed under Act of 384[Majlis-e-Shoora (Parliament)] 384 or under Act of the Provincial Assembly of the Province in which that trade or business is carried on.
(3) Nothing in this Article shall prevent the imposition of fees for services rendered.
165A Power of Majlis-e-Shoora (Parliament) to impose tax on the income of certain corporations, etc.
(1) 386[Majlis-e-Shoora (Parliament)] 386 has, and shall be deemed always to have had, the power to make a law to provide for the levy and recovery of a tax on the income of a corporation, company or other body or institution established by or under a Federal law or a Provincial law or an existing law or a corporation, company or other body or institution owned or controlled, either directly or indirectly, by the Federal Government or a Provincial Government, regardless of the ultimate destination of such income.
(2) All orders made, proceedings taken and acts done by any authority or person, which were made, taken or done, or purported to have been made, taken or done, before the commencement of the Constitution (Amendment) Order 1985, in exercise of the powers derived from any law referred to in clause (1), or in execution of any orders made by any authority in the exercise or purported exercise of powers as aforesaid, shall, notwithstanding any judgment of any court or tribunal,including the Supreme Court and a High Court, be deemed to be and always to have been validly made, taken or done and-shall not be called in question in any court, including the Supreme Court and a High Court, on any ground whatsoever.
(3) Every judgment or order of any court or tribunal, including the Supreme Court and a High Court, which is repugnant to the provisions of clause (1) or clause (2) shall be, and shall be deemed always to have been, void and of no effect whatsoever.
375 For the notification constituting the National Finance Commission, see Gazette of Pakistan, 1974, Extraordinary, Part II, pages 191-192.
376 Substituted by Revival of Constitution of 1973 Order, 1985 (President's Order No. 14 of 1985), Art 2, Sch. item 1 (with effect from March 2, 1985) for "Parliament".
378 Inserted by Constitution (Eighteenth Amendment) Act, 2010, Section 59 (with effect from April 19, 2010).
379 For such Order, see the Distribution of Revenues and Grants-in-Aid Order, 1975 (President's Order No.2 of 1975).
381 Substituted by Revival of Constitution of 1973 Order, 1985 (President's Order No. 14 of 1985), Art 2, Sch. item 1 (with effect from March 2, 1985) for "Parliament".
382 Substituted by Revival of Constitution of 1973 Order, 1985 (President's Order No. 14 of 1985), Art 2, Sch. item 1 (with effect from March 2, 1985) for "Parliament".
383 Substituted by Revival of Constitution of 1973 Order, 1985 (President's Order No. 14 of 1985), Art 2, Sch. item 1 (with effect from March 2, 1985) for "Parliament".
384 Substituted by Revival of Constitution of 1973 Order, 1985 (President's Order No. 14 of 1985), Art 2, Sch. item 1 (with effect from March 2, 1985) for "Parliament".
385 Inserted by Constitution (Amendment) Order, 1985 (President's Order No. 11 of 1985), Art 2 (with effect from February 24, 1985).
386 Substituted by Revival of Constitution of 1973 Order, 1985 (President's Order No. 14 of 1985), Art 2, Sch. item 1 (with effect from March 2, 1985) for "Parliament".

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Real property taxes; issuance of treasurer's tax deed; manner and proof of publication; false affidavit; penalty.
The notice provided by section 77-1834 shall be inserted three consecutive weeks, the last time not less than three months before applying for the tax deed. Proof of publication shall be made by filing in the county treasurer's office the affidavit of the publisher, manager, or other employee of such newspaper, that to his or her personal knowledge, the notice was published for the time and in the manner provided in this section, setting out a copy of the notice and the date upon which the same was published. The purchaser or assignee shall also file an affidavit in the office that a title search was conducted to determine those persons entitled to notice pursuant to such section. The affidavits shall be filed with the application for the tax deed pursuant to section 77-1837. The affidavits shall be preserved as a part of the files of the office. Any publisher, manager, or employee of a newspaper knowingly or negligently making a false affidavit regarding any such matters shall be guilty of perjury and shall be punished accordingly. Section 25-520.01 does not apply to publication of notice pursuant to section 77-1834.
Laws 2012, LB370, § 8.
Notice must be published for three consecutive weeks. Kuska v. Kubat, 147 Neb. 139, 22 N.W.2d 484 (1946).
A tax deed, void for want of proper affidavit of service having been filed with county treasurer, is not validated by filing of subsequent affidavit showing compliance. Brokaw v. Cottrell, 114 Neb. 858, 211 N.W. 184 (1926).
Proof of publication of notice must be made by affidavit, sworn to before officer authorized to administer oaths. Lanning v. Haases, 89 Neb. 19, 130 N.W. 1008 (1911).
Where affidavit of publication was sworn to before notice of publication could have been completed, the proof of publication was insufficient. Lanning v. Musser, 88 Neb. 418, 129 N.W. 1022 (1911).
Notice must be inserted at least three times, first being not more than five months and last not less than three months, before time fixed by law for redemption expires. State ex rel. Richards v. Gayhart, 34 Neb. 192, 51 N.W. 746 (1892).

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The first group will feel the energy of personal and cultural transformation moving through themselves and their lives. The second group will wonder what ever happened to the world they once knew. Together, both groups will create what Thomas Kuhn called the state of incommensurability between old and new legal paradigms.
The answer lies in the nature of the law itself. The law is itself a meta-reality — one of those gigantic, archetypal organizing principles of human life. The law enfolds and expresses our humanity, creates cultural and societal and national context. Those who live and work in the law are unavoidably its guardians and tutors, stewards and caretakers. They will create the law’s future, one way or another.
The Colorado Supreme Court issued its opinion in People v. Porter on Tuesday, May 26, 2015.
Double Jeopardy—Noncapital Sentencing Proceedings—Habitual Criminal Statute.
This case addressed whether the Double Jeopardy Clause of the Colorado Constitution applies to noncapital sentencing proceedings. The Supreme Court overruled its prior holding in People v. Quintana, 634 P.2d 413 (Colo. 1981), based on the U.S. Supreme Court’s holding in Monge v. California, 524 U.S. 721 (1998), and its progeny. The Court held that Colorado double jeopardy law does not apply to noncapital sentencing proceedings. Accordingly, double jeopardy does not bar trial of defendant’s habitual counts in this case. The court of appeals’ judgment was reversed and the case was remanded for reinstatement of defendant’s habitual counts.
The Colorado Supreme Court issued its opinion in Coffman v. Williamson on Tuesday, May 26, 2015.
Uniform Debt-Management Services Act—Legal Services Exemption—CRS § 12-14.5-202(10).
The Supreme Court examined the legal services exemption in the Uniform Debt-Management Services Act (UDMSA) to determine whether the original version of the exemption applies to Morgan Drexen, Inc., a company of non-lawyers. The Court also analyzed whether the amended version of the exemption violates the separation of powers doctrine in the Colorado Constitution and the Commerce Clause and Privileges and Immunities Clause in the U.S. Constitution because certain out-of-state attorneys may be subject to regulation under the UDMSA.
The Court held that the trial court erred by concluding that Morgan Drexen’s services fall within the scope of the legal services exemption in the original UDMSA, CRS § 12-14.5-202(10)(A). The original exemption encompasses non-lawyer assistants; however, Morgan Drexen’s activity here does not fall within the scope of that exemption because it performs substantive debt-management services without meaningful instruction and supervision by an attorney. The Court also held that the amended UDMSA does not violate the separation of powers doctrine in Article III of the Colorado Constitution or the Commerce and Privileges and Immunities Clauses of the U.S. Constitution. The Court reversed the trial court’s order and remanded that case for further proceedings consistent with this opinion.
On Wednesday, May 27, 2015, the Tenth Circuit Court of Appeals issued three published opinions and 14 unpublished opinions.
Willis v. Capital One Corp.


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[285 U.S. 413, 414] Messrs. D. Roger Englar and Henry J. Bigham, both of New York City, for petitioners.
[285 U.S. 413, 417] Mr. Ray M. Stanley, of Buffalo, N. Y., for respondent.
These three libels in admiralty in personam were brought in the federal court for western New York, by owners of cargo laden on the steamer Yorkton to recover for loss resulting from the sinking of that vessel in a collision with respondent's steamer Mantadoc, in Lake Superior, on the American side of the international boundary line. The respondent moved, in each case, that the District Court exercise its discretion to decline jurisdiction and dismiss the libels on the ground that all the parties were citizens of Canada, and that the controversy concerned 'matters ... properly the subjects of hearing and determination' by the Canadian courts. The motions were granted (49 F.(2d) 802, 804), and the decrees of the District Court were affirmed by the Circuit Court of Appeals for the Second Circuit (51 F.(2d) 1007). This court granted certiorari, 284 U.S. 612 , 52 S. Ct. 131, 76 L. Ed. -.
Shortly after the collision, the Wreck Commissioner of Canada held a formal investigation, as required by law, respecting the circumstances of the collision, and determined that the masters of both vessels were at fault. The respondent then instituted in the admiralty court of Canada a proceeding for the judicial determination of the liability as between the colliding vessels and their owners. [285 U.S. 413, 418] The libelants' motive for invoking the jurisdiction of a court of the United States, instead of that of the Canadian court in which that proceeding was pending, appears in affidavits filed with the exceptions to the libel. Under the Canadian law, it is stated, if both colliding vessels were at fault each vessel would be liable for not more than half of the loss; and the salvaged value of the Yorkton might not suffice to pay its share. See The Milan, Lush. Adm. 401. Under our law the innocent cargo owner can recover full damages from the noncarrying vessel. The New York, 175 U.S. 187, 209 , 210 S., 20 S. Ct. 67.
The libelants concede, as they must, that in a suit in admiralty between foreigners it is ordinarily within the discretion of the District Court to refuse to retain jurisdiction, and that the exercise of its discretion will not be disturbed unless abused. Charter Shipping Co. v. Bowring, Jones & Tidy, Ltd., 281 U.S. 515, 517 , 50 S. Ct. 400. Compare Watts, Watts & Co. v. Unione Austriaca di Navigazione, 248 U.S. 9 , 39 S. Ct. 1, 3 A. L. R. 323; Langnes v. Green, 282 U.S. 531, 544 , 51 S. Ct. 243. They claim, however, that the rule is not applicable here, since the cause of action arose within the territorial limits of the United States; and, moreover, that if the District Court had discretion, the decrees should be reversed because, on the undisputed facts, it was an abuse of discretion to decline jurisdiction. We are of opinion that neither claim is well founded.
The respondent insists that the doctrine of lex loci delicti has no application to cases of collision on the Great Lakes; that the Great Lakes and their connecting channels constitute public navigable waters, irrespective of the location of the international boundary, and possess all the characteristics of the high seas, The Eagle, 8 Wall. 15, 22; United States v. Rodgers, 150 U.S. 249, 256 , 14 S. Ct. 109; Panama R. Co. v. Napier Shipping Co., 166 U.S. 280, 285 , 17 S. Ct. 572; The New York, 175 U.S. 187 , 20 S. Ct. 67; The Robert W. Parsons, 191 U.S. 17, 27 , 24 S. Ct. 8; that in a case of collision on the high seas between two vessels of the same nationality, liability is governed by the law of the flag, The Scotland, 105 U.S. 24, 29 , 30 S.; The Eagle Point (C. C. A.) 142 F. 453, 454; that the Canadian law would apply in the cases at bar; and that hence, the asserted ground for the District Court's retaining jurisdiction fails.
Obviously, the proposition that a court having jurisdiction must exercise it, is not universally true; else the admiralty court could never decline jurisdiction on the ground that the litigation is between foreigners. Nor is it true of courts administering other systems of our law. [285 U.S. 413, 423] Courts of equity and of law also occasionally decline, in the interest of justice, to exercise jurisdiction, where the suit is between aliens or nonresidents, or where for kindred reasons the litigation can more appropriately be conducted in a foreign tribunal. 6 The decisions relied upon by libelants are inapposite for several reasons. They were not in admiralty causes; nor did they involve alien or nonresident parties. Compare Second Employers' Liability Case, 223 U.S. 1, 58 , 59 S., 32 S. Ct. 169, 38 L. R. A. (N. S.) 44, with Douglas v. New York, New Haven & Hartford R. Co., 279 U.S. 377 , 49 S. Ct. 355. The cases of Cohens v. Virginia, 6 Wheat. 264, 404, and McClellan v. Carland, 217 U.S. 268, 281 , 30 S. Ct. 501, denied the right to abdicate to state courts jurisdiction which the Constitution in positive terms intrusts to the federal judiciary.
Second. There is no basis for the contention that the District Court abused its discretion. All the parties were not only foreigners, but were citizens of Canada. Both the colliding vessels were registered under the laws of Canada, and each was owned by a Canadian corporation. The officers and the crew of each vessel-the material witnesses-were citizens and residents of that country, and so would not be available for compulsory attendance in the District Court. The cargo, in each case, was shipped under a Canadian bill of lading from one Canadian port to another. The collision occurred at a point where the inland waters narrowed to a neck, and the District Court concluded that the colliding vessels proceeded [285 U.S. 413, 424] in United States waters unintentionally. If the libelants are entitled to have applied the law of the United States in respect to the liability, the Canadian courts will, it must be assumed, give effect to it. The District Court embodied in the decrees an order that the respondent should appear and file security in any action which might be instituted by the petitioners in the admiralty courts of Canada, so that petitioners would not by dismissal of the libels lose the security gained by the foreign attachment. It is difficult to conceive of a state of facts more clearly justifying the refusal of a District Court to retain jurisdiction in a cause between foreigners.
[ Footnote 1 ] Compare Mason v. The Ship Blaireau, 2 Cranch. 240, 264; Ex parte Newman, 14 Wall. 152, 168, 169; Panama R. Co. v. Napier Shipping Co., 166 U.S. 280, 285 , 17 S. Ct. 572.
[ Footnote 2 ] See note 5, infra. See, also, One Hundred and Ninety-four Shawls, 1 Abb. Adm. 317, 321, Fed. Cas. No. 10,521; The Sailor's Bride, 1 Brown's Adm., 68, 70, Fed. Cas. No. 12,220; The Bee, 1 Ware 336, 339, Fed. Cas. No. 1,219; Muir v. The Brig Brisk, 4 Ben. 252, 254, Fed. Cas. No. 9,901; Thomassen v. Whitwell, 9 Ben. 113, Fed. Cas. No. 13,928; Boult v. Ship Naval Reserve (D. C.) 5 F. 209; The City of Carlisle (D. C.) 39 F. 807, 815, 5 L. R. A. 52; Goldman v. Furness, Withy & Co. (D. C.) 101 F. 467, 469; The Kaiser Wilhelm der Grosse (D. C.) 175 F. 215, 216, 217; The Iquitos (D. C.) 286 F. 383, 384; Danielsen v. Entre Rios Rys. Co. (D. C.) 22 F.(2d) 326, 327; The Canadian Commander (D. C.) 43 F.(2d) 857, 858.
[ Footnote 3 ] Jurisdiction was declined in Willendson v. The Fo rso ket, 1 Pet. Adm. 197, Fed. Cas. No. 17,682; The Infanta, 1 Abb. Adm. 263, 268, 269, Fed. Cas. No. 7,030; The Ada, 2 Ware (Dav. 407) 408, Fed. Cas. No. 38; The Becherdass Ambaidass, 1 Lowell 569, Fed. Cas. No. 1,203; The Montapedia (D. C.) 14 F. 427; The Ucayali (D. C.) 164 F. 897, 900; The Albani (D. C.) 169 F. 220, 222.
In the following cases jurisdiction was taken, but the existence of discretion recognized: Thompson v. The Ship Catharina, 1 Pet. Adm. 104, Fed. Cas. No. 13,949; Weiberg v. The Brig St. Oloff, 2 Pet. Adm. 428, Fed. Cas. No. 17,357; Davis v. Leslie, 1 Abb. Adm. 123, 131, Fed. Cas. No. 3, 639; Bucker v. Klorkgeter, 1 Abb. Adm. 402, 405, 406, Fed. Cas. No. 2,083; The Pawashick, 2 Lowell 142, 151, Fed. Cas. No. 10,851; The Brig Napoleon, Olc. 208, 215, Fed. Cas. No. 10,015; The Bark Lilian M. Vigus, 10 Ben. 385, Fed. Cas. No. 8,346; The Amalia (D. C.) 3 F. 652, 653; The Salomoni (D. C.) 29 F. 534, 537; The Topsy (D. C.) 44 F. 631, 633, 635; The Sirius (D. C.) 47 F. 825, 827; The Karoo (D. C.) 49 F. 651; The Lady Furness (D. C.) 84 F. 679, 680; The Alnwick (D. C.) 132 F. 117, 120; The August Belmont (D. C.) 153 F. 639; The Sonderborg (C. C. A.) 47 F.(2d) 723, 725.
[ Footnote 4 ] Jurisdiction was declined in The Carolina (D. C.) 14 F. 424; Camille v. Couch (D. C.) 40 F. 176; The Walter D. Wallet (D. C.) 66 F. 1011, 1013; The Lamington (D. C.) 87 F. 752, 757; The Knappingsborg (D. C.) 26 F.(2d) 935, 937. See, also, Bolden v. Jensen (D. C.) 70 F. 505, 509. Compare Bernhard v. Creene, 3 Sawy. 230, 234, Fed. Cas. No. 1,349; The Noddleburn (C. C.) 30 F. 142, 143; The Troop (D. C.) 118 F. 769, 772.
[ Footnote 5 ] The only case supporting the position of the petitioners which has been called to our attention is The Apurimac (D. C.) 7 F.(2d) 741, 742, involving an action by a foreign seaman for injuries sustained on a foreign vessel lying in American waters. The expressions of the District Court in this case, however, were disapproved by the Circuit Court of Appeals for the Fourth Circuit, which affirmed the judgment on the ground that jurisdiction, although discretionary, had been properly taken. Heredia v. Davies (C. C. A.) 12 F.(2d) 500, 501.
[ Footnote 6 ] Compare Davis v. Farmers' Co-operative Equity Co., 262 U.S. 312 , 43 S. Ct. 556; Logan v. Bank of Scotland (1906) 1 K. B. 141; Socie te du Gaz de Paris v. Armateurs Francais (1926) Sess. Cas. (H. L.) 13. See, for collections of authorities, Paxton Blair, 'The Doctrine of Forum Non conveniens in Anglo-American Law,' 29 Col. L. Rev. 1; Roger S. Foster, 'Place of Trial in Civil Actions,' 43 Harv. L. Rev. 1217, 'Place of Trial-Interstate Application of Intrastate Methods of Adjustment,' 44 Id. 41; Note, 32 A. L. R. 6.

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Micah J. Stewart (hereinafter “Defendant”) was found guilty on March 7, 2006 of the following charges: one count of criminal attempt at homicide (felony 1), and three counts of aggravated assault (felony 1). Defendant was found not guilty on two counts of criminal attempt at homicide (felony 1).
Defendant is also charged in an unrelated incident with the murder of another individual. During Voir Dire, any prospective juror with any knowledge of Defendant’s pending homicide charges was struck for cause.
Generally, a juror may not testify as to any matter or statement occurring during the course of the jury’s deliberations or to the effect of anything upon that or any other juror’s mind or emotions in reaching a decision upon the verdict or concerning the juror’s mental processes in connection therewith. Pa.R.E. 606(b). Furthermore, a juror’s affidavit or evidence of any statement by the juror about any of these subjects may not be received. Id. However, a juror may testify concerning whether prejudicial facts not of record, and beyond common knowledge and experience were improperly brought to the jury’s attention or whether any outside influence was improperly brought to bear upon any juror. 1 Id. Furthermore, the Pennsylvania Supreme Court noted that testimony is permissible regarding extraneous influences which might have prejudiced the jury during their deliberations. Pittsburgh Nat’l Bank v. Mut. Life Ins. Co., 493 Pa. 96, 101, 425 A.2d 383, 386 (1981).
1 This exception is directed at evidence brought before the jury which was not presented during the trial, and which was not tested by the processes of the adversary system and subjected to judicial screening for a determination of admissibility. Pa. R.E. 606 Comment.
After potentially prejudicial extraneous information has been established by competent testimony, the trial judge must assess the prejudicial effect of the information. Id. In making this determination, the trial judge should focus on three factors: (1) whether the extraneous influence relates to a central issue in the case or merely involves a collateral issue; (2) whether the extraneous influence provided the jury with information they did not have before then at trial; and (3) whether the extraneous influence was emotional or inflammatory in nature. Id. Furthermore, the test for determining the prejudicial effect of an extraneous influence is an objective one. Id. A trial judge must determine how an objective, typical juror would be affected by such an influence. Id.
As noted supra, the first factor to be considered when determining the prejudicial effect of an extraneous influence is whether the extraneous influence relates to a central issue in the case or merely a collateral issue. While the Commonwealth categorically dismisses this possibility and Defendant fails to mention any of the three (3) factors, the Court finds that information regarding Defendant’s possible involvement in a gruesome murder relates to whether or not Defendant formed the necessary intent to kill in the instant case. Defendant’s intent to kill is undoubtedly a central issue and consequently the extraneous information received in this case meets the first factor’s requirements.
The next factor to be considered is whether the extraneous influence provided the jury with information they did not have before them a trial. While at first glance this factor would seem to be undeniably met, the Commonwealth skillfully argues that Defendant opened the door for the admission of the pending murder charge when Defense Counsel argued that Defendant was acting in self-defense. While the Commonwealth’s argument is appealing, it is inaccurate. Under no circumstance would Defendant’s involvement in a pending homicide investigation be admissible to prove that Defendant was not acting in self-defense in the instant case.
In Commonwealth v. Santiago, the Pennsylvania Supreme Court found that a defendant was entitled to a mistrial in a murder prosecution when a prosecution witness, during a recess, commented to two (2) jurors and an alternate juror that the defendant “has killed an innocent boy and it isn’t the first one he has killed.” 456 Pa. 265, 268, 318 A.2d 737, 739 (1974). In its reasoning, the Court noted that the theory of our justice system is that conclusions to be reached in a case would be induced only by evidence and argument in open court, and not by any outside influence, whether of private talk or public print. Id., 318 A.2d at 739; citing Patterson v. Colorado, 205 U.S. 454, 462, 27 S.Ct. 556, 558, 51 L.Ed. 879, 881 (1907). The court also reverberated that the minimal standards of constitutional due process guarantees to the criminally accused a fair trial by a panel of impartial and indifferent jurors. Id., 318 A.2d at 739, citing Commonwealth v. Stewart, 449 Pa. 50, 52, 295 A.2d 303, 304 (1972).
456 Pa. 265, 269, 318 A.2d 737, 740. The same language would be appropriate in the instant case.
Nevertheless, the Commonwealth argues that the Santago case is not controlling because Defendant opened the door and Defendant’s involvement in the homicide case was therefore admissible. However, Defendant’s involvement would only be admissible if its probative value outweighed the potential prejudice. Pa.R.E. 404(b)(3). The facts in the instant case do not support such a conclusion.
Furthermore, assuming arguendo that Defendant opened the door for the evidence to come in, this Court would have limited the extent to which such evidence would have been admitted and would have instructed the jury on how the information should be considered. There was no opportunity to do so in this case because the Court was unaware that the jurors were privy to this information.
The third and final factor to be considered is whether the extraneous influence was emotional or inflammatory in nature. There can be no doubt that Defendant’s possible involvement in the murder and burning of a young woman’s body is highly emotional and inflammatory. It is not relevant whether knowledge of Defendant’s involvement actually did inflame the jury, only that it is the type of information that could do so. The Court finds that this possibility exists and as a result, the third factor is met.
As the Commonwealth correctly noted in its brief, it is Defendant’s burden to establish a reasonable likelihood of prejudice. See Commonwealth v. Bradley, 501 Pa. 25, 32, 459 A.2d 733, 737 (1983). The Court has already found that the jury’s knowledge of Defendant’s involvement in the separate homicide case (1) relates to a central issue, namely Defendant’s intent to kill; (2) the information provided the jury was not before them at trial; and (3) the information was emotional and inflammatory in nature. Consequently, the Court finds that Defendant has met its burden and the extraneous information was prejudicial.
In light of these findings, the Court must determine how an objective, typical juror would be affected by such an influence. See Commonwealth v. Neff, 860 A.2d at 1069. The Court finds that the jury’s possession of this information would have made them more likely to convict Defendant in the instant case than had they not possessed this information.
AND NOW this 30th day of May 2006, upon consideration of the Defendant’s Motion for Extraordinary Relief, it is hereby ORDERED that the jury’s verdicts of guilty on Counts I, IV, V, and VI of the information are vacated and a new trial is granted. The jury’s verdicts of not guilty on Counts II and III of the information shall stand.

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As recognized by new guidance from the Financial Industry Regulatory Authority (FINRA), the departure of a registered representative often prompts customer questions about the departing representative and the continued servicing of a customer’s account. In light of the continued frequency of movement of registered representatives from, or among, member firms, FINRA issued guidance on April 5, 2019, regarding what information it expects member firms to communicate to customers upon the departure of a registered representative.
Pursuant to FINRA Regulatory Notice 19-10, FINRA expects member firms to: (1) promptly and clearly communicate to affected customers how their accounts will continue to be serviced; and (2) subject to privacy and other legal requirements, provide customers with timely and complete answers, if known, to questions about a departing representative.
Under this new guidance, FINRA expects member firms to implement policies and procedures that “assure that the customers serviced by that registered representative are aware of how their account will be serviced at the member firm, including how and to whom the customer may direct questions and trade instructions following the representative’s departure and, if and when assigned, the representative to whom the customer is now assigned at the member firm.” As with all customer communications, FINRA expects that the information provided by member firms about a departing registered representative to be fair, balanced and not misleading.
As with any new guidance, firms should review their existing policies and procedures in order to assess the need for potential enhancements. With respect to FINRA’s expectation that firms will have policies and procedures designed to promptly provide information to customers related to the continued servicing of their accounts, a firm’s existing communications program should be reviewed to ensure that all of the necessary information listed above is in fact promptly communicated to customers. Furthermore, firms should also review their policies and procedures (as well as their training programs) regarding how to respond to customer inquiries relating to a departed registered representative. In light of this new guidance, as well as a matter of risk management, firms should consider practices and procedures that ensure consistent and timely responses to customer inquiries concerning a departed registered representative and that take into account applicable privacy and other legal requirements.
While FINRA’s recent guidance will likely become a new point of contention in arbitration and litigation involving departing registered representatives, a firm’s implementation of appropriate policies and procedures will help to mitigate litigation risk, as well as related regulatory inquiries and exposure.
Should you wish to discuss the requirements and/or implications of FINRA Regulatory Notice 19-10, please contact any of the authors or any of McGuireWoods’ securities enforcement and regulatory attorneys.
On March 12, 2019, the United States Attorney’s Office for the District of Massachusetts announced federal criminal charges in “Operation Varsity Blues,” the largest college admissions case ever prosecuted by the Department of Justice. Fifty people have been charged for their involvement in what prosecutors describe as a nationwide conspiracy to get the children of wealthy parents into elite colleges around the country. As alleged, wealthy parents paid tens of thousands of dollars to facilitate cheating on college entrance exams to increase their children’s test scores. Additionally, many of the parents are accused of paying hundreds of thousands of dollars in bribes to college officials to secure their children’s acceptance into colleges as athletic recruits using fabricated athletic credentials.
The defendants accused of facilitating these schemes, including the university officials, and college entrance exam proctors and examiners, have been charged with racketeering conspiracy under the federal RICO statute. The parents accused of paying the bribes have been charged with conspiracy to commit mail fraud and wire fraud. Other charges levied against various defendants include money laundering and tax fraud.
Beyond the individuals implicated in the criminal investigation, certain allegations made by prosecutors create risk for colleges and universities. For example, prosecutors have alleged that certain bribe payments were used for the benefit of college athletics programs or were wired directly into college accounts.
Within days of the operation being made public, lawsuits were filed against many of the figures involved, including the colleges. A class-action lawsuit filed in the U.S. District Court for the Northern District of California against some of the colleges referenced in the charging documents should be of particular concern to schools around the country. That lawsuit alleges that the colleges at issue fraudulently represented that their admissions processes were neutral and merit-based, when they knew or should have known that some students were admitted through corruption.
Although DOJ has stated that the schools involved in Operation Varsity Blues are not the targets of their current investigation “right now,” plaintiffs’ lawyers throughout the country as well as state Attorneys General, and other state and federal prosecutors, could seek to pursue similar theories against schools throughout the country.
As the FBI put it when it announced these charges, these allegations “strike at the core of the college admissions process at universities across the country.” Based on the potential risks, colleges should consider a proactive approach. This should begin with having an outside assessment of all aspects of admissions policies and procedures to identify any processes in need of revision, as well as implementation of robust compliance procedures. Admission preferences, particularly related to athletics, should be a focus. Identifying and eliminating weaknesses and vulnerabilities in the admissions process may be critical in protecting colleges from regulatory and private civil action. Having this done strategically by outside legal counsel and within the confidentiality protections of attorney-client privilege is imperative.
In addition to thoroughly vetting their admissions processes, colleges and universities should also examine the controls and level of due diligence that they impose over the application process and consider requiring verification by parents and students of the accuracy of the information in the application and attestation by parents and students that no payments, contributions to third parties, gifts or favors have been made to anyone in connection with the admission process.
Conducting an internal review is particularly important in light of the potential for federal enforcement action. As we have previously commented, recent changes to DOJ’s enforcement policy favor those who self-investigate, make prompt voluntary self-disclosure of violations, fully cooperate with DOJ investigations, remediate swiftly and meaningfully, and implement effective compliance programs.
In view of the unprecedented focus on the integrity of the admission process by federal prosecutors, it should be expected that future related action will follow. Regulators, accrediting agencies, other state or federal prosecutors, alumni and aggrieved private parties may be contemplating whether to address the perceived inequities. Executive management of all educational institutions should take immediate steps to assess their vulnerabilities and implement prudent policies to regulate the admissions processes. Governing boards and the public will likely demand no less.
Finally, educational institutions should assess whether their insurance policies may provide coverage for “Varsity Blues” related investigations or litigation. Many institutions are ensured under the higher education equivalent of directors & officers’ liability policies. These policies go by different names, such as a “higher education non-profit liability policy,” and typically provide coverage for loss incurred on account of a “claim” arising out of a “wrongful act.” Policy definitions of “claim” vary, but may include civil litigation and governmental investigations. Many policies define “wrongful act” broadly to include any actual or alleged act, error, omission, misstatement, misleading statement, neglect or breach of duty, by an insured. Educational institutions may also have other types of insurance policies that may also provide coverage for these types of claims. Institutions should understand what coverage is available and be prepared to give notice promptly if a claim is asserted.
The Department of Homeland Security (DHS) announced on March 1, 2019, an extension of the Temporary Protected Status (TPS) for qualifying individuals from El Salvador, Haiti, Sudan, and Nicaragua. DHS also announced a nine-month automatic extension of these TPS beneficiaries’ Employment Authorization Documents (EADs), allowing beneficiaries to work in the United States until January 2, 2020. The Department took this action to ensure its continued compliance with the preliminary injunction order of the U.S. District Court for the Northern District of California in Ramos v. Nielsen, No. 18–cv–01554 (N.D. Cal. Oct. 3, 2018).
The announcement provided welcome news to employers awaiting word on whether they could continue to employ individuals with work authorization expiring on March 4, 2019. However, the January 2, 2020, extension could change in the future depending on the outcome of the lawsuit.
For now, employers should be prepared when reviewing employment documentation of new or current employees from these four countries. Taking an adverse employment action against a TPS beneficiary under the mistaken belief that they cannot work because their EAD card is expired can subject a company to investigation by the Department of Justice’s Immigrant and Employee Rights Section and can result in significant fines. Current employees from these four countries who are TPS beneficiaries need not provide any further documentation to continue working. However, employers must take steps to update these employees’ Form I-9s to remain complaint with federal law.
Initial and date the correction in the margin of Section 1.
Initial and date the correction in the Additional Information field in Section 2.
The notice also provides specific instructions for completing Form I-9s for new hires falling under TPS protected status.
This notice received little attention upon its release, but it has a far-reaching impact on employers throughout the United States. For employers and HR professionals, understanding and complying with this Federal Register notice will help mitigate risk and avoid potentially costly mistakes.
When the Trump Administration designated Venezuelan state-owned oil producer Petreoleos de Venezuela (“PdVSA”) on January 28, 2019, pursuant to preexisting sanctions relating to the political situation created by the Maduro regime, it sent a significant but not unanticipated ripple through the global petroleum markets. The impact of the sanctions for commodities traders and petroleum refiners—particularly in the U.S. Gulf Coast, where PdVSA’s steady supply of heavy crude has long been a sizable staple feedstock—was fairly immediate, and appears to have had the intended effect of isolating PdVSA, impairing its production capabilities and reducing its cash revenues. According to industry reports, many of the larger commodity traders around the world have largely if not entirely backed away from trading in PdVSA crude, and PdVSA has been cut off from its primary sources of naphtha and other diluents it needs to move its heavy crude through pipelines. Whether the sanctions will have the intended political effect of forcing regime change in Venezuela remains to be seen.
Although at a high level the PdVSA sanctions are not functionally different from other OFAC sanctions designations, their political contours, the immediacy of the underlying humanitarian crisis in Venezuela, and the proximity and entanglement of PdVSA in U.S. markets—including the fact that one of PdVSA’s most valuable assets is the U.S.-based Citgo—makes them appear like a different creature. So, what can the Venezuela sanctions, as imposed against PdVSA, tell us about the future of U.S. sanctions?
All sanctions regimes, export controls, import controls and other forms of trade restriction are reflections of foreign policy. In the case of sanctions, their form and function tends to be highly particularized to the political situation at issue. The Venezuela sanctions appear unique in part because of the specific circumstances in which they are imposed: Maduro’s government is in crisis, Venezuela is a significant crude producer and exporter for the international oil market, and PdVSA is a critical element of the Venezuelan economy and of great symbolic importance to the Venezuelan people. Combine that with Venezuela’s physical proximity to the United States and the fact that the imposition of sanctions against PdVSA is cutting that company off from its biggest export market and cutting U.S. refiners off from one of their largest sources of feedstock, and you have a uniquely impactful sanctions action that is unlikely to be repeated.
Sanctions can be a blunt instrument, but they can also be a precise tool, as they appear to be here. The Venezuela sanctions continue a trend of applying incremental pressure to targeted sectors of an economy or particular operators in that sector, without going so far as to impose a comprehensive embargo against an entire country. Unlike the Russia/Ukraine sectoral sanctions, the Venezuela sanctions, through the PdVSA designation, went from incremental to exponential in the pressure being applied. But like the sectoral sanctions, the Venezuela sanctions are more complex in design and application. It is reasonable to expect that future sanctions programs will probably look more like the Venezuela sanctions and Russia/Ukraine sectoral sanctions than the Cuba embargo.
As of this writing, the Maduro regime remains in place and it is unclear whether the regime change being sought by the Trump Administration will occur—at least in a reasonably orderly fashion. Regardless of that outcome, the PdVSA designation has certainly impacted the political conversation, and moved Venezuela’s political and humanitarian crisis more to the forefront in terms of U.S. and international awareness and attention. As a result, it is possible that the current and future administrations will feel emboldened to consider the use of sanctions more liberally, particularly if Maduro does step aside without internal armed conflict or outside military intervention. On that point, we can’t ignore that the Trump administration has not shied away from applying sanctions and appears ready and willing to do so to further its foreign policy agenda.
For now, we remain relatively early in the life cycle of the PdVSA designation, with the first wind-down deadlines set to pass and the global commodities markets remaining in a wait-and-see posture. More time needs to pass before we will have a clear understanding of the likely political and economic trajectory of the situation in Venezuela, and that clarity may remain elusive. For now, we have to view the posture of the Venezuela sanctions as dynamic and subject to significant change with limited notice.
Following recent changes to Department of Justice policy regarding individual accountability in government investigations of corporate wrongdoing, DOJ has recently further demonstrated its willingness to consider a flexible approach in applying the False Claims Act.
In a January 28, 2019 speech by Deputy Associate Attorney General Stephen Cox to the 2019 Advanced Forum on False Claims and Qui Tam Enforcement, DOJ reaffirmed its commitment to applying the so-called Granston Memo, which sets forth the factors under which DOJ may dismiss qui tam actions under the False Claims Act. False Claims Act enforcement remains a key DOJ enforcement priority, but DOJ is now expressly allowing government investigators to exercise discretion in identifying qui tam actions that should be dismissed.
The Granston Memo stated that these factors were neither exhaustive nor mutually exclusive, noting that “there may be other reasons for concluding that the government’s interests are best served by the dismissal of a qui tam action.” It further suggested that, although the DOJ may exercise its authority in connection with a decision not to intervene in a qui tam matter, it may also move to dismiss the matter at a later stage of litigation.
During his January 28 speech, Cox reiterated that DOJ views the Granston Memo as part of its “gatekeeping role,” advising that “when qui tam cases are non-meritorious, abusive, or contrary to the interests of justice, they impose unnecessary costs on the Department, on the judiciary, and on the defendants.” These “bad cases” result in bad case law and consume scarce DOJ time and resources. In this regard, Cox advised that DOJ views its ability to dismiss cases as “an important tool to protect the integrity of the False Claims Act and the interests of the United States.” Although he advised that DOJ has used this authority only sparingly, Cox specifically stated that DOJ has instructed its lawyers to consider dismissing qui tam cases when they are not in the DOJ’s best interests, as it has done on roughly two dozen matters since 2017.
Indeed, two recent matters demonstrate the DOJ’s willingness to use the Granston Memo factors to dismiss matters where a relator’s case is weak and dismissal is otherwise in the government’s interest.
First, in an amicus brief filed in opposition to a petition for certiorari in Gilead Sciences, Inc. v. United States ex rel. Campie, et al., the DOJ stated that it would dismiss the relators’ qui tam on remand pursuant to Section 3730(c)(2)(A). In the underlying case, the 9th U.S. Circuit Court of Appeals had decided that the relators had adequately pled the materiality element of the False Claims Act under the standard set forth in Health Services, Inc. v. United States ex rel. Escobar, even though the agency at issue had continued to accept and pay for products that failed to comply with certain regulatory requirements. Although the brief did not reference the Granston Memo by name, DOJ stated that its decision to dismiss the matter was based upon its own investigation of relators’ allegations, as well as the potential for “burdensome discovery and Touhy requests for [agency] documents and [agency] employee discovery (and potentially trial testimony), in order to establish ‘exactly what the government knew and when,’ which would distract from the agency’s public-health responsibilities.” Accordingly, the DOJ’s decision can reasonably be read as based on the Granston Memo’s priorities of preventing interference with agency policies and programs and preserving government resources (with the added bonus of preserving a materiality standard under the 9th Circuit decision that strongly benefits DOJ).
Second, in motions filed in December 2018, DOJ moved to dismiss 10 qui tam matters filed by a business that the DOJ contends was created primarily for the purpose of filing qui tamactions. These matters included: United States ex rel. SAPF, LLC, v. Amgen, Inc. and United States ex rel. SMSPF, LLC v. EMD Serono, Inc., both in the Eastern District of Pennsylvania; United States ex rel. SMSF, LLC v. Biogen, Inc., in Massachusetts; United States ex rel. NHCA-TEV, LLC v. Teva Pharma., in the Eastern District of Pennsylvania; United States ex rel. SCEF, LLC v. Astra Zeneca PLC, in the Western District of Washington; United States ex rel. Miller v. AbbVie, Inc., in the Northern District of Texas; United States ex rel. Carle, v. Otsuka Holdings Co., in the Northern District of Illinois; United States ex rel. CIMZNHCA v. UCB, Inc., in the Southern District of Illinois; United States ex rel. Health Choice Group, LLC v. Bayer Corp., in the Eastern District of Texas; and United States ex rel. Health Choice Alliance, LLC, also in the Eastern District of Texas. The relator had dismissed an 11th related action, United States ex rel. Health Choice Advocates, LLC v. Gilead, also in the Eastern District of Texas. DOJ justified the dismissal of the matters under Section 3730(c)(2)(A) based on the government’s interests in “preserving scarce government resources and protecting important policy prerogatives of the federal government’s healthcare programs,” similarly aligning with the Granston Memo factors.
Cox’s comments and these cases serve as strong indicators that DOJ is starting to exercise the discretion granted to government investigators in the Granston Memo to dismiss unmeritorious matters. While it remains to be seen how frequently and under what circumstances DOJ will exercise this discretion, defendants should analyze the application of the Granston Memo factors in any new matter to determine whether there is a possibility of terminating litigation at a stage that would avoid costly discovery and litigation.
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On Dec. 17, 2018, President Trump signed the Small Business Runway Extension Act of 2018 into law. It amends § 3(a)(2)(C)(i)(II) of the Small Business Act “by striking ‘3 years’ and inserting ‘5 years,’” so a contractor’s size will be measured by the annual average of its previous five years’ revenue, instead of the annual average of its previous three years’ revenue.
Notably, the amendment does not alter employee-based size standards, or the definition of a small business concern using a headcount rather than average revenue.
In a recently issued SBA information notice, the Small Business Administration (SBA) indicated its position that the new five-year average is not effective until SBA issues a formal rule implementing the statute. While this legal theory may be open to challenge, it is important to note that SBA’s position would require that current contracts and solicitations continue to use the old three-year average until completion of the formal rulemaking process.
According to a House Committee on Small Business report on the bill before its Dec. 17 signing, the purpose of the amendment is to “help advanced-small contractors successfully navigate the middle market as they reach the upper limits of their small size standard.” Since many small businesses have initially lean operating years, this change may allow overgrown businesses (i.e., other than small business concerns) to potentially qualify as small businesses when their earlier revenue is considered.
SBA does not adopt this comment. SBA believes that calculating average annual receipts over three years ameliorates fluctuations in receipts due to variations in economic conditions. SBA maintains that three years should reasonably balance the problems of fluctuating receipts with the overall capabilities of firms that are about to exceed the size standard.
Notwithstanding SBA’s stated opposition to the change, the bill passed in the House on Sept. 25 and in the Senate on Dec. 6. The bill went to President Trump’s desk on Dec. 11 and went into immediate effect on Dec. 17 when he signed it.
For now, small businesses and overgrown, other than small business concerns operating in the federal contracting arena should consider recalculating their revenue over the past five years, and determine whether they meet the requirements to properly self-certify as small under any revenue-based NAICS Code they work under, and any SBA-administered program (e.g., 8(a), HUBZone and Economically-Disadvantaged Women-Owned Small Business). However, contractors should not be surprised to see contracting officers and SBA representatives continue to apply the old three-year average until a new SBA rule is implemented.
As always, if a business determines that it no longer qualifies as small for certain NAICS code(s), or now qualifies as small under applicable NAICS code(s), the business must promptly update its certifications and representations on the System for Award Management and other federal procurement databases that rely upon self-reporting of small business status.
McGuireWoods has extensive experience advising clients on small business compliance matters, and has brought size protests on behalf of clients and defended protested concerns before SBA and its appellate authority, the Office of Hearings and Appeals. Please contact the firm’s government contracts team with any questions or to discuss further.
It was never a question of if, but rather, when the Securities and Exchange Commission would launch its first charges against robo-advisors and what those charges would be. Following then-SEC Chairperson, Mary Jo White’s keynote address at the SEC-Rock Center on Corporate Governance in 2016, regulators have been carefully monitoring robo-advisors’ compliance with the Investment Advisers Act of 1940 (“Advisers Act”). In two recent Orders, the SEC found Wealthfront Advisers made false statements about its tax-loss harvesting program (“TLH”), and found Hedgeable made false performance comparisons about its investment performance. Both robo-advisors were also found to be in violation of the Advisers Act for their marketing use on social media platforms.
Wealthfront designed its TLH program to incentivize clients to sell certain assets at a loss to create tax benefits. On its website, Wealthfront provided whitepapers outlining the TLH program. However, from October 2012 through mid-May 2016, Wealthfront falsely stated in the TLH whitepaper that it monitored all client accounts to avoid any transactions that might trigger a wash sale, which prevents the tax benefit of the TLH program. (A wash sale occurs when an investor sells a security at a loss but within 30 days of the sale, buys the same or substantially identical security.) The SEC found Wealthfront did not in fact monitor all of its client accounts to prevent a wash sale prior to mid-May 2016. In fact, at least 31 percent of accounts enrolled in the TLH program experienced a wash sale. Ultimately, the failure to monitor for and prevent wash sales led to slightly lower returns: The average Wealthfront client received fewer tax losses, obtaining overall 5.6 percent in annual harvesting yield versus 5.8 percent. Despite the relatively minor impact on customers, the SEC fined the robo-advisor $250,000 for, among other things, violating Section 206(2) of the Advisers Act, which prohibits transactions or business practices that operate as a fraud or deceit upon clients or prospective clients.
A second robo-advisor, Hedgeable, was sanctioned for its misleading marketing through the use of its “Robo Index” created to compare the performance of Hedgeable, to other unaffiliated robo-advisors. Hedgeable’s misrepresentations were egregious. Featured on its website, the index incorrectly illustrated Hedgeable’s returns by failing to account for over 96 percent of Hedgeable’s clients in its calculations. Hedgeable failed to use actual performance data and various other risk factors when depicting the average returns for the comparison robo-advisors, thereby providing incorrect return projections for its competition robo-advisors.
The SEC also found Hedgeable’s online fact sheets to be misleading. The annual benchmark returns were not updated for certain years, leading clients to believe the model portfolio outperformed its benchmark greater than what actually occurred. Hedgeable also incorrectly calculated certain benchmark and portfolio returns for several ETFs in violation of Section 206(2) and Section 206(4) of the Adviser Act.
Under Section 206(4) of the Advisers Act, it is “unlawful for any investment adviser…to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative.” The SEC has made clear that these requirements are applicable to robo-advisors. Publishing, circulating, or distributing any advertisement that directly or indirectly provides a testimonial concerning the investment adviser that “contains any untrue statement of a material fact or which is otherwise false or misleading” is a violation of Rule 206(4)-1.
In addition to its findings with respect to Wealthfront’s TLH whitepapers, the SEC also found Wealthfront, willfully violated Section 206(4) of the Advisers Act and Rules 206(4)-1 by selectively republishing (“retweeting”) certain posts by other Twitter users that constituted positive testimonials about Wealthfront’s services. In some cases, Wealthfront knew or should have known that the Twitter users providing positive reviews had an economic interest in promoting Wealthfront, and Wealthfront failed to disclose the conflict of interest in violation of Rule 206(4)-3. These charges come as no surprise, following the SEC’s sanctions in July 2018 against two investment advisers and three investment adviser representatives for similar violations of Section 206(4) for soliciting, and publishing client testimonials on its various websites including Yelp and Facebook.
Similarly, the SEC found Hedgeable was in violation of Section 206(4) and the rules thereunder, for marketing false and misleading information on its “Robo-Index” through social media as well as its website.
Further, neither robo-advisor adopted and designed written policies and procedures with a scope that included certain social media usage in its compliance review of marketing materials and communications as required by Rule 206(4)-7.
Ultimately, the SEC charged both robo-advisors with violations of the Advisers Act and required them to pay a fine. In addition, Wealthfront is required to notify its advisory clients of the Order and provide a copy of the Order to clients by January 20, 2019. While, these Orders were not unique issues to robo-advisors, they serve as a reminder that the Advisers Act and its rules apply to robo-advisors. In fact, these Orders indicate that since robo-advisors are only available on electronic platforms, they may be more susceptible to misleading online marketing and social media ploys. Robo-advisors, therefore, should examine their compliance and supervision policies to ensure truthful and accurate data is being provided to clients, as well as ensuring social media platforms are being adequately monitored.
McGuireWoods’ experienced broker-dealer/investment adviser team will continue to monitor and report on important regulatory compliance updates. For more information, contact the authors of this article or any member of the team.
 See Financial Industry Regulatory Authority (FINRA) Report on Digital Investment Advice https://www.finra.org/sites/default/files/digital-investment-advice-report.pdf (2016). For state registered advisers, see, Massachusetts Securities Division Policy Statements: State-Registered Investment Advisers’ Use of Third-Party Robo-Advisers( http://www.sec.state.ma.us/sct/sctpdf/Policy-Statement-State-Registered-Investment-Advisers-Use-of-Third-Party-Robo-Advisers.pdf) and Robo-Advisers and State Investment Adviser Registration (April 1, 2016) (http://www.sec.state.ma.us/sct/sctpdf/Policy-Statement–Robo-Advisers-and-State-Investment-Adviser-Registration.pdf).
 Hedgeable was not also required to send its Order to advisory clients, which is most likely because the firm, as noted in the Order, is winding down its business and no longer meets the requirements to be an SEC registered adviser. Furthermore, Hedgeable is paying a significantly reduced penalty, as compared to Wealthfront, and has a payment plan, both factors indicative of reduced assets.
This article was originally posted on our sister publication, Password Protected.
On December 20, 2018, the Financial Industry Regulatory Authority (FINRA) released a report on cybersecurity practices for broker-dealers. Today’s post is the second in a series of summaries sharing essential, timely insight on how these practices impact your business. Please click here for the first post on cybersecurity practice impacts.
FINRA names “phishing” attacks as one of the most common cybersecurity threats raised by firms with the self-regulator. The goal of a phishing email is to manipulate the recipient into taking action. FINRA focuses on two types of phishing attacks in the report. The first is “spear phishing,” where the sender researches and targets the recipient(s) with a customized approach designed to get confidential information from the individual(s). The second is “whaling,” wherein the hacker sends targeted emails impersonating senior executives at the firm in order to set action in motion, typically wiring funds to specifically identified accounts.
While the SEC’s 21(a) Report focuses on risk and controls for public companies, the financial services industry, even the non-public company segment of the industry, faces the same risk and similar regulator expectations and requirements of effective controls to protect customer and firm information and assets. The SEC found that emails sent to firm staff from “fake” firm executives or vendors requested funds be wired to specified accounts. Employees at nine companies fell for the spoofed emails and, together, the issuers lost nearly $100 million.
The phishing segment of FINRA’s Cybersecurity Report conveys information on two topics: (1) how they do it (what to watch for — sources and types of communications) and (2) suggested best practices to combat the threat.
On the “how they do it front,” FINRA details the different types of senders (entities and individuals), as well as the typical characteristics of phishing emails. Further, the Report, recognizing the increasing sophistication of such attacks, also details several different characteristics, as well as examples, of phishing communications. Whether the phisher is seeking customer personal identifiable information or fraudulent wire transfers, if firms develop policies and procedures and focus training on the types of senders (or hackers/phishers) to watch out for and the typical variations of such communications, this will mitigate risk that of employees falling victim to the scams.
Importantly, FINRA’s Report details a dozen best practices implemented by firms to combat the phishing threat. While we commend the review of the full list of best practices to firms, we wanted to emphasize four of the recommended effective practices.
Creating policies and procedures that address phishing practices including identifying such emails, what to do when such emails are suspected (e.g., do not click on links, notify technology and compliance, confirming wire transfers, etc.).
Establishing robust confirmation policies and procedures for executing transaction requests.
Periodic, mandatory training of employees and associated persons on phishing practices and policies and procedures for disseminating information. Training allows the firm to provide updates on new phishing tactics and remind everyone of the specifics of the anti-phishing policies and procedures as well as the risks to customers and the firm of noncompliance.
Developing remedial training and imposing consequences for those who repeatedly violate firm phishing protocols. Impressing the importance of everyone’s adherence to firm policies and procedures in this area is one way to close potential gaps that hackers can exploit. This includes following up when the firm is on notice of individuals who violate the policies.
These effective or best practices are similar to those highlighted in the SEC’s 21(a) Report. For example, the SEC ultimately concluded that, while the companies involved in the matter had implemented policies and procedures and training, “weaknesses in the policies and procedures and human vulnerabilities” needed to be factored into the development of controls specifically geared to cyber threats. The SEC emphasized the need to reassess internal controls through the lens of cyber-security threats. While it is always best if that reassessment can occur in advance of a cyber-event, at a minimum, taking steps to shore up payment authorization and verification requirements and enhance training after an event, as the issuers investigated by the SEC staff did, is imperative to protect customers and the firm.
Finally, FINRA, recognizing that successful attacks may start with the customers, recommends that firms also educate their customers and direct them to resources that help them protect themselves.
FINRA’s Report provides comprehensive information for firms to combat cyber-related frauds. While the scammers continue to alter their tactics and increase the sophistication of the scams, implementing internal controls and effective policies and procedures that stay ahead of the scams and implementing effective training provide important risk mitigation strategies.
In the politically explosive atmosphere of Washington, the talk of the town is focused on congressional investigations: who will be called before Congress, and when. Newspaper headlines blare the latest controversy — from use of personal emails for government business, to numerous investigations alleging corruption of current and former government employees, including several cabinet secretaries, and the continuing developments from Special Counsel Robert Mueller’s Russia investigation. But as the nation prepares for power in the House to change hands on Jan. 3, another question looms large: what does all this mean for the business community?
Though the priorities of incoming House committee chairs may be relegated to smaller print below the fold, according to their own public commentary and reporting, the new House is poised to commence oversight hearings and congressional inquiries aimed at key segments of the business community. This article highlights the prerogatives of some of the most important committees and industry areas likely to see significant activity from the new House of Representatives.
In the House Judiciary Committee, multiple press outlets report that incoming chair Rep. Jerry Nadler (D-N.Y.) will focus on a variety of healthcare issues, such as consolidation in three major areas — healthcare insurers, the hospital market, and pharmacy benefit managers — as well as investigating the Trump Administration’s decision not to defend the Affordable Care Act against a lawsuit from 20 Republican-led states. According to David Cicilline (D-R.I.), poised to chair the antitrust subcommittee, “We will get to work immediately to promote competition and address monopoly power in health-care markets.” Additionally, spurred by the most recent and widely publicized shootings at the Tree of Life Synagogue in Pittsburgh and the Marjory Stoneman Douglas High School in Parkland, Florida, Nadler will likely take up gun control as it relates to mass shootings, implicating the gun manufacturing industry and retail outlets. Finally, while Nadler said he will not move to impeach Justice Brett Kavanaugh, he indicated plans to examine other issues associated with Kavanaugh’s confirmation process.
Because the House Oversight and Government Reform Committee’s jurisdiction is broad, incoming chair Elijah Cummings (D-M.D.) is likely to investigate numerous issues spanning several industries. Media reports indicate that these investigations will include the high cost of prescription drugs; the continuing water crisis in Flint, Michigan; and Commerce Secretary Wilbur Ross’ decision to include a citizenship question on the 2020 census. On immigration, Cummings plans to investigate the Trump Administration’s policies on the separation of migrant children from their undocumented parents at the Mexican border. Press reports also confirm Cummings is expected to investigate the General Services Administration’s decision to keep the FBI headquarters in downtown Washington, D.C., as opposed to a suburban headquarters in Maryland or Virginia, thus preventing the land from being developed commercially, in potential competition with the Trump International Hotel.
News reports also indicate that incoming chair Rep. Richard Neal (D-M.A.) of the House Ways and Means Committee will lead the House’s consideration of the United States–Mexico–Canada Agreement (the revised NAFTA deal), which will affect the auto, tech, retail, agriculture, labor and environmental sectors of the economy, though reporting requirements will likely delay a vote until the beginning of the second quarter. Press reports also indicate that the House Energy and Commerce Committee plans to hold oversight hearings regarding transparency and data security at some of the nation’s biggest technology companies.
Other commentary suggests that House Education and Workforce Committee incoming chair Rep. Bobby Scott (D-V.A.) will likely examine Education Secretary Betsy DeVos’ efforts to overturn a variety of Obama-era education regulations, implicating the private and for-profit college industry, veterans hiring, and the defense industry writ large. Based on recent press and commentary from incoming House leadership, we also anticipate significant investigative activity from House Permanent Select Committee on Intelligence incoming chair Adam Schiff (D-C.A.), House Foreign Affairs Committee incoming chairman Elliot Engel (D-N.Y.), House Armed Services incoming chairman Adam Smith (D-W.A.), and House Transportation and Infrastructure Committee incoming chair Rep. Peter DeFazio (D-O.R.).
The public statements of the incoming House chairs make it clear that businesses will confront an active period for congressional investigations. In fact, such activity is likely to continue some of the pitched battles encountered during the Obama Administration, as well as open up new fronts.
For more detail regarding the stated priorities of these committees or more information about this article generally, please contact any of the authors or other members of our congressional investigations practice.
Yesterday, Deputy Attorney General Rod Rosenstein announced a series of changes to Department of Justice (DOJ) policy that clarified DOJ’s expectations for cooperation in investigations of corporate wrongdoing. The changes are sensible and should be welcomed by the business community as an improvement over the prior policy, commonly known as the Yates Memo.
As Rosenstein noted, the changes are intended to recognize how the Yates Memo has been applied on the ground, at least in many cases. Even so, the changes should provide companies with greater comfort in several respects.
Under the revised policy, corporations are now expected to identify individuals who were “substantially involved” in or responsible for the underlying misconduct. Whereas the Yates memo, at least on paper, required the cooperating company to identify for the government every individual in the organization involved in the misconduct – no matter their role in the organization or in the misconduct, before a settlement could be finalized. To be sure, that requirement was sometimes honored in the breach. But in combination, the threat of withheld cooperation credit on an all or nothing basis, plus the requirement that all potentially culpable individuals be identified before a settlement could be finalized, gave the government significant leverage to demand that target companies bend to the prosecutors’ view of the world about individual employees’ culpability. For companies, this dynamic sometimes created pressure to err on the side of over-inclusion in designating culpable individuals.
That pressure has not gone away, but it is lessened. The revised policy is an attempt, as Rosenstein recognized, to conserve resources – both for the government and the company involved – and prevent unnecessary delay in resolving corporate liability. For companies under investigation, this change may help to reduce the significant time and cost required to conduct an investigation deemed sufficient for cooperation credit. Now, if the government team disagrees with a target company about which employees are culpable and to what degree, the government attorneys have discretion to recommend partial cooperation credit as part of a settlement. More importantly, that discretion now exists as official DOJ policy, and not just an informal deviation from the rule.
All else equal, the changes modestly strengthen the hand of companies who sincerely seek to cooperate with the government to resolve investigations, but cannot reach agreement with the government over the role of particular individual employees in corporate misconduct. Companies now have a little bit more leeway to “agree to disagree” with the government about the status of lower-level employees while retaining the benefits of cooperation. Before, such a disagreement was (at least in principle) fatal to a successful settlement. Now it need not be. And that’s unquestionably a salutary development.

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