Global Investigations Review - The law and practice of international investigations

GIR 100 2019

Shearman & Sterling

25 October 2019

Shearman & Sterling has a world class investigations practice particularly in the US and China – two major jurisdictions for businesses.

The firm

Shearman & Sterling’s pedigree in the investigations space can be summed up by one fact: the firm’s white-collar practice pre-dates the Foreign Corrupt Practices Act (FCPA), which was introduced in 1977. The founder of the firm’s white-collar practice Danforth Newcomb was hired in 1976 to investigate the marketing practices of aerospace company Lockheed. Newcomb was responsible for investigating bribery allegations that spanned over 40 countries and more than 20 years.

Newcomb, who won GIR’s 2016 Lifetime Achievement Award, went on to represent a host of the world’s largest companies when they faced FCPA concerns, including communications company Nokia, auto manufacturers AB Volvo and Daimler, electronics company ABB and many others. Newcomb also served as a monitor for York International, a refrigeration products company that settled FCPA charges in 2007.

Today, Shearman’s investigations practice continues to thrive. From the firm’s base in New York, Shearman’s global head of litigation Adam Hakki works on civil and criminal investigations and proceedings before the US Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission.

Stephen Fishbein, a Who’s Who Legal: Business Crime Defence nominee, cut his teeth in investigations while serving at the US attorney’s office in Manhattan, where he specialised in bank and computer fraud. Fishbein was a monitor for oilfield services provider Baker Hughes following its 2007 FCPA settlement; more recently, he successfully defended Todd Newman in an insider trading case that resulted in a landmark decision by the US Court of Appeals for the Second Circuit.

Other names of note in New York are Paula Anderson, who has worked on corporate monitor teams for Baker Hughes and York International, and John Nathanson, a former federal prosecutor who did stints in both the Brooklyn and Manhattan US attorney’s offices. Nathanson is a Who’s Who Legal: Business Crime Defence nominee.

In Washington DC, the firm has Philip Urofsky, another anti-corruption expert and a Who’s Who Legal: Business Crime Defence and Who’s Who Legal: Investigations nominee. Urofsky served as an assistant chief at the DOJ criminal fraud section, where he investigated and prosecuted FCPA cases.

He is joined by Mark Lanpher, a former federal prosecutor and assistant chief litigation counsel in the SEC’s enforcement division. Lanpher was named a GIR 40 under 40 lawyer in 2017.

On the West Coast, clients can turn to Patrick Robbins in San Francisco for assistance in internal and government investigations and criminal defence in corruption, antitrust and securities fraud cases.

From Hong Kong, fluent Mandarin speaker Brian Burke advises companies with operations in greater China. Meanwhile, Masahisa Ikeda represents clients in anti-corruption and antitrust issues in Japan.

Recent events

The firm successfully guided German engineering group Bilfinger through a five-year deferred prosecution agreement concerning FCPA violations in Nigeria. The monitor imposed on the company as part of the settlement was unhappy with Bilfinger’s compliance efforts following the settlement, causing a period of uncertainty for the German business. In 2019, the DOJ dismissed the charges after the monitor gave the company a clean bill of health.

In 2019, Shearman & Sterling represented UniCredit, alongside two other firms, on a US$1.3 billion settlement with US authorities to resolve allegations that the bank and some of its subsidiaries violated US sanctions, including those imposed on Iran’s state-owned shipping company.

The firm is advising several companies, including luxury brands Louis Vuitton and Bulgari, on anti-corruption compliance in China. The firm’s China practice is a go-to for companies seeking advice on building or improving anti-bribery compliance programmes with a host of other major corporations turning to Shearman for similar help.

Shearman & Sterling was hired in 2016 by Wells Fargo to conduct an independent investigation into the bank’s retail banking practices, after it was revealed that employees had boosted sales figures by opening fee-charging accounts on behalf of unwitting customers. In April 2018, the bank announced it had settled investigations by the US Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency for US$1 billion.

When the scandal broke in 2016, it prompted a firestorm of criticism from the public and members of Congress, who grilled CEO John Stumpf during committee hearings and likened the bank to a “criminal enterprise”. Stumpf was later forced to retire, but the uproar only increased when it became clear that he stood to take as much as US$133 million in shares and other compensation with him. Shearman & Sterling was tapped to also advise the company on executive-compensation matters, amid calls to claw back Stumpf’s and other executives’ pay.

The firm was engaged by an ad hoc committee of Sociedad Química y Minera (SQM), a Chilean mining company, to investigate bribery allegations. The case was the subject of intense media scrutiny in Chile, where the company was accused of funnelling millions in illegal payments to dozens of politicians and intermediaries. During the internal investigations, Shearman lawyers conducted a forensic accounting analysis and email review of an eight-year period. SQM reached a US$30 million FCPA settlement with the DOJ and SEC in January 2017. 

Shearman represented financial institution Citigroup in connection with an investigation into an alleged US$400 million fraud involving the bank’s Mexican unit, Banamex. The firm settled the allegations with the DOJ for US$97.4 million in May 2017.

Network

Most of Shearman’s investigations lawyers are located in the main legal and financial centres of the world, including New York, San Francisco, London, Brussels, Milan, Hong Kong, Shanghai, Tokyo and Washington, DC.

Clients

The firm has more corporate clients than it’s possible to name here, but examples include financial services firms JPMorgan Chase and Morgan Stanley, construction and engineering companies Bechtel and Bilfinger, energy company Norsk Hydro, carmaker Volvo and information technology company Nokia.

Track record

FCPA guru Newcomb has played a part in many of the firm’s major FCPA representations over the years. He represented Norsk Hydro in an investigation of potential bribery in Libya and elsewhere that arose when the company was merging its oil and gas operations with Statoil, a Norwegian company. Statoil settled the matter with the SEC and DOJ in 2006 by paying US$21 million in criminal fines and disgorgement and agreeing to retain an independent monitor.

In 2008, Shearman shepherded Volvo Group to a US$19.6 million settlement with the DOJ and the SEC; and in 2010, it helped ABB to a secure a US$58 million settlement with the same two US authorities.

The firm helped Morgan Stanley with investigations stemming from the 2008 financial crisis. In February 2016 the bank agreed to pay a US$2.6 billion penalty to settle charges relating to its sale of residential mortgage-backed securities, one of the causes of the global economic meltdown.

Shearman & Sterling represented UK pharmaceutical manufacturer GlaxoSmithKline (GSK). A Chinese court in September 2014 found a local GSK subsidiary guilty of bribery and fined the company US$488 million. The charges spurred the US and UK to open their own probes into GSK, which remain active despite the company reaching a $20 million civil settlement with the SEC in 2016. The firm remains the counsel to GSK on all corruption investigations in China. 

The firm guided information technology company SAP to a modest FCPA settlement with the SEC in 2016 concerning conduct in Panama.

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