The panel will look at civil outcomes and the possibility that the SFO might take no action against a corporate or its directors and officers following bribery being uncovered. We will also examine why putting in place Adequate Procedures to prevent bribery will shield directors and officers from prosecution under the new law.

The panel will also focus on the role that the SFO can play in providing comfort to corporations and their advisers when questions arise under the UK Bribery Act in the absence of the type of formal opinion procedure that exists in the United States. Our panel will discuss whether this really is a case of two nations divided by a common language.

This webcast is a “must attend” for general counsel, ethics officers and compliance counsel of any business affected by the UK Bribery Act. Don’t miss this opportunity to hear Vivian Robinson QC;  Barry Vitou, partner in Pinsent Masons LLP’s London office; Richard Kovalevsky QC, 2 Bedford Row; and Julian Glass, Managing Director, FTI Consulting answer your questions arising from the UK’s long-arm jurisdiction bribery laws.

This free, one hour webcast is scheduled for Wednesday, March 30, 2011 at 12:00 p.m. Eastern. To attend, please register below.

Our webcast program will dissect the RMBS litigation landscape, addressing the origination and securitization process, the litigation claims and defenses in these cases, the litigation scorecard thus far, and the potential exposure for the banks.  The discussion will feature a panel of experts deeply versed in this area:  Senior industry analyst Joshua Rosner, who has advised regulators and institutional investors on housing and mortgage finance issues; noted author and litigator Talcott Franklin, the author of the Mortgage and Asset Backed Securities Litigation Handbook, who has also established the RMBS Investor Clearing House; leading securities litigator Scott Musoff, partner at Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates, who represents financial institutions in multiple subprime, RMBS and CDO related cases;  and BLB&G partner and moderator Gerald Silk, who is representing numerous institutional investors in RMBS related actions.

Please join us for a discussion of the issues facing RMBS investors and their legal implications. This free webcast is scheduled for Wednesday, January 26, 2011 at 2 p.m. Eastern. To attend, please register below.

Everyone knows that with its limited resources, the Securities and Exchange Commission cannot hope to catch everyone who engages in insider trading. Still, the agency does try to be as visible and smart in this area as it can be; publicity is its favorite weapon. As Enforcement Director Robert Khuzami emphasized in a speech last year, the SEC seeks to focus its resources on cases that send an “outsized message of deterrence.”

Occasionally that message gets lost or at least muddled, but the SEC often succeeds at putting the hazards of insider trading in front of the public to see. September was a case in point: Nearly every day that month, the SEC, the Justice Department, and even Hollywood sent a new reminder of the grave risks that accompany insider trading. So while it doesn’t have the same ring as “Shark Week,” let’s look back at September 2010 as “Insider Trading Month.”

For starters, September included three high-profile criminal cases that will result in individuals going to prison for insider trading. On Sept. 14, the Justice Department announced that an eight-month trial had concluded with a federal jury convicting David Brooks, the former CEO of body armor maker DHB Industries. Prosecutors charged that Brooks made a staggering $185 million by trading on inside information. Brooks, who has yet to be sentenced, now faces up to 25 years in prison and the forfeiture of hundreds of millions of dollars.

On Sept. 17, former IBM Senior Vice President Robert Moffat was sentenced to six months in prison for his role in an insider-trading ring centered on the Galleon Group hedge fund and its billionaire founder, Raj Rajaratnam. Moffat admitted to leaking inside information to a female defendant in the Galleon Group case, with whom he was having an affair.

Finally, on Sept. 21, Bonnie Hoxie pleaded guilty (in what could be called the “Dumb and Dumber” case) to attempting to sell non-public information that she learned while working as an assistant to Walt Disney Co.’s head of corporate communications. Hoxie and her boyfriend’s master plan? They conspired to send anonymous letters to hedge funds and other investment companies offering to sell the inside information. Alas, the only buyers were undercover FBI agents. Hoxie now faces up to 25 years in prison, while her boyfriend faces 33 months in prison and possible deportation.

September also brought us two trials that demonstrated that the SEC and the Justice Department will take an insider-trading case all the way to a jury, if necessary. In the first week of September, Dr. Zachariah P. Zachariah, a prominent Fort Lauderdale cardiologist and “master Republican fundraiser,” took the stand in the SEC’s insider-trading case against him. The SEC charged that Zachariah made nearly $1 million by purchasing shares of two local public companies after learning the companies were being sold but before public announcements of the deals. His trial is expected be completed in early October.

On Sept. 28, federal prosecutors rested their case in the trial of U.S. v. Contorinis, an important case against a hedge fund executive being billed as a preview of next year’s blockbuster trial in the Galleon case. Prosecutors allege that Joseph Contorinis, a former partner of the Jefferies Paragon Fund, made more than $7 million in illegal profits and avoided millions of dollars in losses by trading on tips from the government’s chief witness. Like Galleon’s Raj Rajaratnam, Contorinis claims he traded based on public information and press reports.

Perhaps the biggest trial-related event occurred on Sept. 14, when a federal judge issued a crucial ruling that clears the way for another trial that will undoubtedly receive massive attention: the SEC’s fraud and insider-trading case against former Countrywide CEO Angelo Mozilo. U.S. District Judge John Walter refused to grant Mozilo’s motion to dismiss the case, finding that that the SEC had raised issues of fact requiring resolution by a jury. The Mozilo trial is set to begin on Oct. 19 in Los Angeles.

Consider some of the many other high-profile insider-trading cases that made headlines in September:

• SEC v. Goldfield: On Sept. 1, the SEC filed a settled enforcement action against Stephen Goldfield, a former hedge fund manager who allegedly made $14 million trading on confidential information about the 2007 takeover of MedImmune Inc.
• SEC v. Slaine: On Sept. 16, the SEC announced a settlement of its insider-trading case against David Slaine, a former hedge fund portfolio manager at DSJ International Resources. Slaine agreed to disgorge $836,385, after previously pleading guilty to charges of securities fraud and conspiracy to commit securities fraud.
• SEC v. Cuban: One of the SEC’s most high-profile insider-trading cases in years, the Mark Cuban case was dismissed by a district court in July 2009 and appeared to be dead. On Sept. 21, however, the case was unexpectedly resurrected by an appeals court in New Orleans. The court held that the SEC’s allegations provided “more than a plausible basis” to find that in connection with receiving certain confidential information about a public company, Cuban had agreed not to sell his shares in that company.
• SEC v. Hansen: On Sept. 27, in yet another insider-trading case with a salacious angle to it, the SEC alleged that Richard Hansen, the former chairman of a regional investment bank, traded based on non-public information that he learned from a woman who he met on AshleyMadison.com, a Website for people seeking extramarital affairs.
• SEC v. Rajaratnam: On Sept. 29, the Second Circuit Court of Appeals ruled on some hotly disputed wiretap conversations in the Galleon case. The Second Circuit held that while U.S. Judge Jed Rakoff had exceeded his jurisdiction “by ordering the disclosure [to the SEC] of thousands of conversations involving hundreds of parties, prior to any ruling on the legality of the wiretaps and without limiting the disclosure to relevant conversations,” the SEC has “a presumptive right” to receive the wiretaps in discovery to place it “on a level playing field … the very purpose for which civil discovery exists.”
• SEC v. Steffes: On Sept. 30, the last day of Insider Trading Month, the SEC filed an interesting case against Gary Griffiths, the chief mechanical officer of Florida East Coast Railway; and Cliff Steffes, a trainman who also worked in the rail yard. After allegedly learning confidential information about an upcoming acquisition of the company that owned FECR, the two men allegedly then tipped Steffes’ father (who was also Griffiths’ brother-in-law ) Rex Steffes; his brothers Bret Steffes and Rex R. Steffes; and his uncle, Robert J. Steffes. Together, the SEC alleges, this family affair generated more than $1 million in illicit profits after the acquisition was announced publicly.

Even Hollywood helped deliver the message during Insider Trading Month, as September was filled with trailers, teasers, and finally the late September release of “Wall Street: Money Never Sleeps.” The original Wall Street movie, of course, is arguably the most famous movie ever made about insider trading (“Blue Horseshoe loves Anacott Steel!”); the sequel opens with the villain from that movie—Gordon Gekko—finally emerging from prison after serving an eight-year prison sentence for insider trading. Hopefully the extraordinary stream of other individuals joining Gekko in September as cautionary tales in the insider-trading area also captured the public’s attention and delivered a message of deterrence.

Originally published in Compliance Week. Reprinted with permission. © 2010 Haymarket Media, Inc. All Rights Reserved. Compliance Week can be found at http://www.complianceweek.com. Call (888) 519-9200 for more information.

Tracy L. Coenen

What is at the heart of almost every securities case, whether the case is pursued by the government or a private party? It is a trail of money. The difficulty in prosecuting or defending a securities case is the fact that there is voluminous financial data that must be culled, analyzed, and presented in a way that proves the case.

For the last three decades, securities and financial fraud cases have been evaluated by forensic accountants using manual processes. The financial investigators compared accounting data with source documents, ultimately trying to prove the source and use of funds.

This is complicated, especially in large cases (which are the ones the government most often cares about), because there can be a multitude of involved people, entities, bank accounts, and brokerage accounts.  The process of understanding and organizing the flow of funds is complex, and it can take months or even years before plaintiffs or defendants know exactly what happened to the money.

Cutting-Edge Forensic Accounting

The world of forensic accounting is moving in a new direction, however. Fraud investigators are slowly beginning to use technology to analyze large volumes of financial data much faster, more efficiently, and more accurately than they have been able to do using traditional investigative techniques. The shift has been moving at a snail’s pace, however, but this provides significant opportunities for parties to litigation who are willing to embrace change and harness the power of cutting-edge technology.

There is no substitute for the judgment, skepticism, and investigative intuition of a seasoned forensic accountant. But when a tried and true method of investigating financial crimes and allegations of fraud is combined with the latest technology, extraordinary results are possible.

Doing Things the Old Way

In any forensic accounting engagement, examining source documents is critical to finding out what really happened with the money. For example, bank documents like statements and canceled checks will tell us exactly where the money went. Accounting records can be manipulated, but unless someone is very clever and has serious connections within a bank, the bank documents ultimately tell the truth.

In securities and fraud cases, multiple years often need to be examined. This means hundreds of thousands of transactions need to be sorted, matched, and evaluated. It can take hundreds or thousands of hours to do this using traditional techniques, which involve a manual process of examining the evidence.

Forensic accountants will often “scope” the transactions, meaning they will select a dollar figure and only examine the transactions larger than that amount. Scoping is done to reduce the volume of work, and is done under the assumption that smaller transactions are immaterial to the investigation. Time and efforts are usually focused on the larger transactions.

Unfortunately, the process of scoping leaves valuable evidence unexamined. Who is to say that a $100 transaction may not hold the key to an investigation? Ignoring smaller transactions is unwise, particularly when dealing with a sophisticated fraudster who knows that smaller transactions are less likely to be examined by investigators.

In addition, this manual process leaves the investigation open to human error. Investigators could miss an important transaction or make a mistake when entering data into a database or spreadsheet used to log transactions of interest.

Investigative Innovations

Although not widely used in the private sector, investigative software provides an opportunity to do a comprehensive analysis of all financial documentation while eliminating data entry errors and risks inherent in a manual examination process.  I’m not talking about merely scanning documents and hoping a computer imports the numbers correctly.  Next generation investigative software recognizes data in many different formats, puts the data into a database, and rapidly reconciles all the numbers to guarantee accuracy.

Once the accounting system data, bank statements, checks, deposit tickets, brokerage account statements, credit card statements, and other financial data are properly imported into the system, the magic can begin.  The forensic accountant can quickly map the flow of funds, search for transaction patterns, create charts and graphs that show entities and transactions of interest, create customized reports, and much more.

The financial data is instantly more valuable and usable for the fraud investigator, who can dig deeper into the transactions and the flow of money. The data can be fully analyzed in a matter of days or weeks, rather than months or years, and the forensic accountant can examine 100% of the transactions.

If the future of forensic accounting is here, why aren’t my colleagues using this technology on a wide scale? In a nutshell, it is because of the high cost of implementation and the difficulty of integrating it into a traditional accounting firm. Traditional methods of performing and billing for fraud investigation services don’t mix well with the latest technology, and forensic accountants are usually slow to adapt their investigative methods.

Putting the System to Work

The combination of a first-rate forensic accountant and cutting-edge technology can be used in many types of cases involving high volumes of financial data, such as money laundering, financial statement fraud, securities fraud, health care fraud, investment fraud, and Ponzi schemes. Government agencies have been using this type of technology for several years, validating the investigative methods and results.

If you haven’t figured it out already, one of the greatest advantages to working with a forensic accountant who possesses superior investigative skills and the latest technology is the ability to keep up with law enforcement. In a financial fraud or securities case, there is a good chance that government investigators will be using new age technology to build their case against your client.

The best defense is a good offense, and instead of waiting months or years to see what the government comes up with, you could conduct a parallel investigation  in a matter of weeks or months with the best available resources. You will know exactly what the government may find, and you’ll know it light years sooner.

Don’t be satisfied with the old way of doing fraud examinations.  In civil or criminal cases involving high volumes of financial transactions, it makes sense to work with a financial investigator who can find answers faster, more accurately, and with greater efficiency. The investigation can be more thorough, yet can be completed in a fraction of the time a traditional investigation would take.

Tracy L. Coenen, CPA, CFF is a forensic accountant and fraud investigator with Sequence Inc. in Milwaukee and Chicago. She has conducted hundreds of high-stakes investigations involving financial statement fraud, securities fraud, investment fraud, bankruptcy and receivership, and criminal defense. Tracy is the author of Expert Fraud Investigation: A Step-by-Step Guide and Essentials of Corporate Fraud, and has been qualified as an expert witness in both state and federal courts. She can be reached at tracy@sequenceinc.com or 312.498.3661.

This webcast will address the likely impacts of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the regulatory landscape, corporate governance practices, financial reporting and accounting, among other topics.

Our panel includes Salvatore Graziano, a partner at Bernstein Litowitz Berger & Grossmann LLP, and Peter J. Henning, Professor of Law at Wayne State University Law School and columnist for The New York Times‘ Dealbook (“White Collar Watch”), where he follows issues involving securities law and white-collar crime. Please join us as we discuss the Act’s significant impact on public companies and investor protections, and what that means for institutional portfolios.

This free webcast is scheduled for Wednesday, September 15, 2010 at 2 p.m. Eastern. To attend, please register below.

Rumor has it that there are many Securities Docket and Compliance Week readers in attendance. If you are in Fort Lauderdale for the conference. please say hi!