Throughout the week over at Securities Docket, I highlight the most interesting columns and blog posts from around the web on the subjects of SEC enforcement and securities litigation. Here is a digest of my picks for the week ending October 1:

So Morrison Precludes Even Domestic ADR Purchasers' Securities Suits?

The D&O Diary | Kevin LaCroix | Oct 1, 2010

In the Société Générale subprime-related securities class action lawsuit. Judge Berman held, applying the U.S. Supreme Court’s decision in Morrison, that not even domestic purchases of SocGen’s ADRs can assert claims under the Exchange Act. As a result, Judge Berman wound up dismissing the entire case, and not just the claims of investors who purchased their SocGen shares on foreign exchanges. As discussed below, if the Exchange Act does not even apply to domestic transactions in ADRs, the question that immediately arises as to who is left that might be able to assert Exchange Act claims against non-U.S. companies. The answer in many cases may be – well, nobody.

Using Drug War Methods to Look for Insider Trading

DealBook | Peter Henning | Sep 30, 2010

Without the wiretaps, it was unlikely the government would have been able to find executives like Mr. Kumar, Mr. Goel and Mr. Moffat revealing confidential corporate information, or even would have suspected that they might be a source for traders. Making a case against Mr. Rajaratnam might not be possible without his own words. The Galleon case is critical to the government’s effort to police a corner of the market that has long avoided serious scrutiny for insider trading because it is so hard to track down evidence. If prosecutors cannot establish the need for wiretaps in this type of case, then it may well be impossible to prosecute those who trade on tidbits gleaned from companies.

Is DOJ moving beyond the FCPA? The anti-corruption net widens to embrace commercial bribery

DLA Piper | John Hillebrecht and Kiera Gans | Sep 29, 2010

The United States does not have a federal commercial bribery statute, outlawing bribery in private business settings. It does have the Travel Act. In relevant part, the Travel Act criminalizes the use of “the mail or any facility in interstate or foreign commerce” – a telephone call, wire transfer, or actual travel – with the intent to “facilitate the promotion, management, establishment or carrying on of an unlawful activity.” The statute defines unlawful activity as, among other things, “bribery … in violation of the laws of the state in which committed or of the United States.”4 Because prosecutors can use the Travel Act to essentially federalize the commercial bribery statutes of any state – and almost all states have such a statute – the Travel Act is substantially broader than the FCPA and can be used to prosecute bribery of foreign private individuals.

U.S. Courts Should be Reserved for U.S. Cases

U.S. Chamber Institute for Legal Reform | Sep 29, 2010

Permitting foreign securities lawsuits in U.S. courts would discourage foreign investment and further damage the U.S.’s already poor global reputation for excessive litigation. It might also lead to other countries allowing lawsuits in their courts regarding activity by U.S. companies in the U.S. Congress and the public should ignore the self-serving outrage of the plaintiffs’ bar. The Supreme Court ruling was consistent with U.S. legal principles and common sense. Lawsuits regarding foreign activity should be heard in foreign, not U.S., courts.

Frederick Bourke: The Accidental Felon?

The FCPA Blog | Richard L. Cassin | Sep 29, 2010

Frederick Bourke, the government says, didn't stumble into Viktor Kozeny's conspiracy to violate the FCPA by accident, as Bourke contends. He either knew the deal was tainted by bribery and ignored the facts, or deliberately avoided learning the truth. Either way, the government says, Bourke had "knowledge" under the FCPA to support his July 2009 conspiracy conviction.

FCPA Investigations – Now Call First?

FCPA Compliance and Ethics Blog | James McGrath | Sep 28, 2010

The DOJ’s shift to a “call first” policy is seismic and defeats both of the foregoing tenets. If a company involves the government in the investigation process from the outset, its hand is tipped and, there can be no assertion of attorney-client privilege and the work-product doctrine protection in subsequent reviews or in litigation. In addition and once DOJ is involved, its knowledge of Company X’s alleged problem becomes part of the public domain and subject to disclosure to the investing public on a schedule of the government’s own making.

Aiding and Abetting Battle Rages: Implications For Securities Class Actions Far Reaching

RiskMetrics Securities Litigation Blog | Luke Green | Sep 28, 2010

While the outcome of the Janus Capital case is still unknown, if the Court does in fact uphold the Fourth Circuit's opinion the implications could be varied. Some commentators have predicted a deluge of securities class action suits against the spectrum of actors who may be affiliated with a fraudulent prospectus. Still, others have argued that the Fourth Circuit's opinion addresses only actors who took a direct role in the fraud by both drafting and disseminating allegedly fraudulent materials. The truth on this matter is anyone's guess. At least one thing is true, however. The question of whether there will be a significant expansion of liability under the securities fraud laws, and, therefore, a substantial expansion of the securities class action universe could be decided in December 2010.

Ten Questions Every Director Should Ask About FCPA Compliance

Jones Day | Henry Klehm III and Joshua S. Roseman | Sep 27, 2010

To be sure, although not in the context of the FCPA, the SEC has recently sued an independent director for failing to adequately discharge oversight responsibilities.[6] And directors of companies with FCPA problems frequently find themselves named as defendants in shareholder derivative actions.[7] Finally, if the worst happens, the FCPA prohibits companies from indemnifying directors for fines assessed for violations of the FCPA,[8] and insurance will not usually be available to cover such fines. In short, there is no doubt that directors are well-advised to closely oversee FCPA compliance. To that end, what follows below are 10 key questions that every director should ask about FCPA compliance.

House Passes Impotent Debarment Bill

FCPA Professor | Mike Koehler | Sep 27, 2010

On September 15th, the House, by a unanimous 409-0 vote, passed H.R. 5366 (“Overseas Contractor Reform Act”) (see here). The Act generally provides that a corporation “found to be in violation of the [FCPA’s anti-bribery provisions] shall be proposed for debarment from any contract or grant awarded by the Federal Government within 30 days after a final judgment of such a violation.” The Act’s key trigger term for debarment – “found to be in violation” of the FCPA’s anti-bribery provisions – is a trigger that is not reached in nearly every FCPA enforcement action because of the façade of FCPA enforcement. Thus, the Act represents impotent legislation.