Main Menu
Posts in Securities Compliance.

Calculator picAre you a U.S. person or enterprise with 10% or more ownership or controlling interest in voting securities of a non-U.S. entity?  If so, you likely owe a report to the Department of Commerce by May 29, 2015.   The Department of Commerce’s Bureau of Economic Analysis (BEA) has collected data about U.S. bound foreign investors and U.S. owned foreign investments for many years.  It was recently reinstituted, however, as a mandatory requirement for reporting on such investments every five years.

The form to submit for outbound investments is called a BE-10.  The latest five year report is due by May 29, 2015, if you’re reporting fewer than 50 such foreign affiliate investments, and June 30, 2015, when you exceed 50.  If needed, you can ask for an extension, which the BEA will likely grant.  Each U.S. reporter has to file a BE-10A, and then another BE-10 B, C or D, as applicable, for its foreign affiliate.  The form you use depends on the level of investment, measured in assets, sales and net income of the foreign enterprise.  Details about the forms and instructions can be found here.

We have worked with the BEA to assist our clients with these kinds of filings for many years. The BEA staff are extremely helpful at answering many of the questions not answered in the regulations, forms or instructions.  Just make sure you’ve done your best to read and understand the forms and instructions first.  They can be reached at (202) 606-5566.  And, of course, feel free to contact us if we can be of assistance.

Does this really matter?  Yes it does!  Although the BEA doesn’t have sufficient resources to pursue delinquent reports, persistent failures to file could eventually end up triggering pretty serious criminal and civil penalties.  Criminal penalties for willful failures can be up to $10,000 and imprisonment for up to one year.  Civil penalties can include up to $25,000 in fines and injunctive relief.

Compliance pictureIn my recent interview with Daniel Sheehan of GRC Professional Magazine, I discuss the growing trend of the SEC holding compliance officers personally liable for those they supervise, and what actions they can take to protect themselves.

The SEC is increasingly targeting compliance officers who take missteps in their job, holding them liable for not doing their job properly.  There are cases where a compliance officer doesn’t focus as intently on a problem as they should, so in addition to prosecuting the person who did the misdeed, the SEC is also prosecuting the compli­ance officer and holding them liable.

Following the criticism directed at the SEC for failing to notice problems, they started to take a much harder look at compa­nies than they had in the past. They started to take another look at who in the companies were respon­sible for these breaches, and the compliance officers were in that category.  There are more investigations, more actions and higher penalties. As a consequence, the chances of a compliance officer who does not notify of a problem being caught up in a case is high.

What compliance officers must do to protect themselves:

  • When a problem, or potential problem, is identified, get out in front of it.  Investigate problems aggressively and thoroughly.  Ask questions and follow up on those questions.
  • Document every step of the investigation.  The government will look for evidence that the problem has been thoroughly investigated. For the sake of all involved, evidence is absolutely necessary.  It will need to be proven that the matter has been thoroughly and properly investigated.

If you have any questions about compliance issues, please feel free to contact me.

Search This Blog

Subscribe

RSS RSS Feed

About Us
The International Practice Group of Garvey Schubert Barer is a cross-disciplinary group of attorneys practicing in areas ranging from business transactions, immigration, maritime, government regulatory work, transportation and logistics, and estate planning. The group members include bilingual and multicultural attorneys who are well-versed in handling these subject matters in a cross-border context. The firm’s attorneys have been actively practicing in the international arena since the early 1970s. 
Read More

Recent Posts

Topics

Select Category:

Archives

Select Month:

Contributors

Back to Page