【castlevania order of ecclesia ds rom】FCPA Lawyer Predicts GCs, CCOs Have Targets on Their Backs in 2019
Philip Urofsky,castlevania order of ecclesia ds rom with Shearman & Sterling.
This could be an especially tough enforcement year under the Foreign Corrupt Practices Act for corporate gatekeepers, such as general counsel, chief compliance officers and chief financial officers, according to
Shearman & Sterling
partner Philip Urofsky.
In an interview Wednesday about his law firm’s just released
2019 FCPA Digest
, Urofsky said he expects law enforcement to focus their efforts not only on individuals in 2019, but on corporate gatekeepers in particular.
At the U.S. Securities and Exchange Commission, for example, Urofsky said, “Enforcement head counts are down. So the SEC has been quite open that they will focus their efforts on where they get the most bang for their buck—the gatekeepers, including general counsel, chief compliance officers and accountants.”
Urofsky
, formerly an assistant chief of DOJ’s fraud section overseeing FCPA probes, was editor-in-chief of this year’s FCPA Digest. It is a compendium of FCPA-related developments in 2018, including U.S. foreign bribery proceedings and criminal prosecutions, DOJ foreign bribery civil actions, SEC actions, DOJ opinion releases, 113 ongoing FCPA investigations listed by company, pre-FCPA prosecutions, and parallel litigation related to the FCPA.
One of the longest-running FCPA probes on the list, dating back to 2011, involves allegations of bribery by Walmart Inc. in Mexico. The probe of the world’s largest retailer expanded to include several other countries. Walmart reported in November 2017 that it had reached a
preliminary settlement
with the U.S. government and had accrued $283 million for it. Observers expected the final settlement announcement in early 2018, but it never came.
"I have no insight into the Walmart case,” Urofsky said, noting that much of the Mexico misconduct lies beyond the statute of limitations. “It’s been out there for an awful long time. Is it prosecutable? Can they close it?"
Walmart said Thursday, "We are continuing discussions with the government agencies as we work to reach a resolution.”
The attorney said general counsel have special responsibilities in FCPA investigations. “The executives he or she deals with are very much in the crosshairs,” Urofsky explained. “There can be a great deal of pressure to move it forward and get it off the books, so general counsel have this balancing act of advising in a manner that ensures that the company is well-served and that executives are not unfairly targeted."
One particular area of FCPA concern for general counsel is acquisitions, and making sure the company doesn’t unwittingly acquire another company’s FCPA headaches.
“There may be an acquisition group that has its heart set on an acquisition,” Urofsky noted. “You have to say, 'Wait—we know the business case, but we don’t know the compliance case yet.' That may not make you popular."
Story continues
Urofsky sees other FCPA developments in 2018 impacting what will happen in 2019. Among other things, he envisions:
• More FCPA cases. "First the government has to get back to work,” Urofsky said, noting the government shutdown, “Then we will probably see more cases in 2019 than in 2018. There are a lot stacked up in the cue. Prosecutors are not in favor of delays"
• An impact from some 2018 court decisions. "Up until now smaller cases have been dealt with through other mechanisms, such as deferring to the SEC, or declination with disgorgement. To the extent that the court cases conclude that the SEC cannot collect disgorgement while DOJ can, we may see perhaps more cases coming out of DOJ to fill the gap as they did in Polycom."
In late December Polycom Inc., a U.S. communications technology provider, reached a
settlement with the SEC
and received a
declination of prosecution from DOJ
that included $31 million in disgorgement, with a third of the money going to the SEC. Polycom was accused of using resellers and distributors in China to bribe government officials there.
• Growing concern over “weaponizing” the FCPA, after former U.S. Attorney General Jeff Sessions in November announced a DOJ
“China Initiative”
that specifically referenced bringing FCPA cases against Chinese companies.
Urofsky said, “Such cases may be justified, but it is odd to see it as part of a China initiative. And it is concerning, because if it is viewed as a tool of foreign policy, it becomes fair game for reciprocal actions by other countries. In countries where the rule of law is not firmly established, that approach really leads to opportunistic, politicized prosecution."
Read more:
DOJ Cites 'Full Cooperation' in Declining FCPA Case Against Plantronics
Walmart Says Global Ethics and Compliance Chief Jay Jorgensen Is Leaving
Compliance Hot Spots: U.S. Execs Fret About China | Sanctions Drive New Lobbying | New Suit Against FINRA | Who Got the Work & More
View comments
下一篇:Cargotec completes the ownership change of joint venture in China
相关文章:
- Silver Price Daily Forecast – Silver Attempts To Break Through The Key Resistance Level
- Disrupting the Legal Sector Through Technology
- Hut, Hut, Hike! Get Set to Take Our Weekly News Quiz
- BRIEF-Nanning Sugar's Controlling Shareholder Transfers Stake In The Company To Guangxi Rural Investment
- Ex-Tesla employee agrees to pay $400K over claims he stole trade secrets
- NVIDIA Rises 3%
- South Korea's Hyundai target 2019 global sales of 4.7 million vehicles
- Becerra and Other Democratic State AGs Appeal Ruling Killing ACA
- 5%, led by a 17% increase in average ticket and a slight decline in traffic. Growth in the quarter reflected the impact of households stocking up on essentials like paper goods and cleaning supplies as the pandemic became a nationwide concern, along with strength in discretionary categories as the quarter came to a close and stimulus dollars and tax refunds were disbursed.
As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
Read more here:
Under Armour: A Tough Start to 2020
Walmart: Continued Omni-Channel Progress
Match: An Impressive Start to 2020
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
This article first appeared on
GuruFocus
.
Warning! GuruFocus has detected 4 Warning Signs with DLTR. Click here to check it out.
DLTR 30-Year Financial Data
The intrinsic value of DLTR
Peter Lynch Chart of DLTR
View comments
- Calculating The Fair Value Of The City Pub Group plc (LON:CPC)
相关推荐:
- Are Options Traders Betting on a Big Move in Penn National (PENN) Stock?
- Is Vanguard Energy Admiral (VGELX) a Strong Mutual Fund Pick Right Now?
- Minnesota Gift Tax: All You Need to Know
- IBN & HDB's Credit Ratings Lowered
- Toy CEO says it 'sickens' him that people profit from a shortage of supplies to fight coronavirus
- PE's lack of liquidity comes into focus as public, private markets converge
- Apple cuts sales forecast as China sales weaken; iPhone pricing in focus
- The unexpected moneymaker in 2018: euro zone government bonds
- Top 5 Things to Know in the Market on Monday, June 1st
- Does Max Financial Services Limited’s (NSE:MFSL) CEO Salary Compare Well With Others?
- FINAL DEADLINE TODAY: The Schall Law Firm Announces the Filing of a Class Action Lawsuit Against HDFC Bank Limited and Encourages Investors with Losses in Excess of $100,000 to Contact the Firm
- Capstar Financial Holdings, Inc. (NASDAQ:CSTR) Passed Our Checks, And It's About To Pay A US$0.05 Dividend
- Dorian LPG: Q2 Earnings Insights
- What Kind Of Investors Own Most Of IBI Group Inc. (TSE:IBG)?
- Company News for Mar 10, 2020
- Despite Its High P/E Ratio, Is Ovzon AB (publ) (STO:OVZON) Still Undervalued?
- Insights on the Surgical Sealant/Tissue Patch Global Market to 2025 - Key Drivers and Restraints
- Have Insiders Been Buying IKONICS Corporation (NASDAQ:IKNX) Shares?
- Will AudioEye Continue to Surge Higher?
- 3 Reasons Growth Investors Will Love Charles River (CRL)