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Business Crimes Bulletin
The Criminal Division’s Enforcement Policy: What’s New for Companies Deciding Whether to Voluntarily Disclose?
Jacqueline C. Wolff
Since the DOJ announced a new policy under which companies that voluntarily disclosed violations of the Foreign Corrupt Practices Act has attempted to encourage companies to voluntarily disclose all manner of criminal misconduct beyond violations of just the FCPA, while general counsels worldwide have been wrestling with the question of whether and when it is in the company’s best interest to so disclose.
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Business Crimes Bulletin
SEC to Continue to Punish Wrongdoers and Deter Misconduct
Jonathan H. Hecht and Emily S. Unger
The Division of Enforcement will likely continue to use “every tool in its toolkit” and expect that public companies and other market participants will think rigorously about their business and appropriately tailor compliance practices and internal controls and policies to match.
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Business Crimes Bulletin
Circuit Split Reflects Disagreement About the Relationship Between Scheme Liability and SEC Rule 10b-5(b)
Stefan Atkinson and Yi Yuan
Historically, federal courts generally agreed that scheme liability under SEC Rule 10b-5(a) and (c) requires something more than a misstatement or omission — with misstatements and omissions typically being litigated under Rule 10b-5(b) instead. However, the SCOTUS in Lorenzo v. SEC held that an individual who disseminates a misstatement, without other fraudulent conduct, is potentially liable under the scheme liability provisions of Rule 10b-5. Subsequently, a circuit split has emerged over the scope of Lorenzo’s holding.
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Business Crimes Bulletin
ESG ‘Greenwashing’ Litigation On the Rise
Shoshana Schiller, Alice Douglas and Brenda Gotanda
Increased attention paid to companies’ public promotion of their environmental and sustainability programs is likely to continue in 2023, with further developments in regulation and litigation pertaining to “greenwashing” — a marketing practice which involves unsubstantiated or exaggerated claims about the environmentally friendly or socially-responsible attributes of an organization’s products or services.
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Business Crimes Bulletin
Second Circuit Narrows Reach of Wire Fraud and Insider Trading Prohibitions
Harry Sandick, Anna Blum and Abigail Marion
The Second Circuit's long-anticipated decision in United States v. Blaszczak limits the government’s ability to bring fraud or insider trading prosecutions where the information used to achieve an advantage is regulatory information held by the government. It also brings the Second Circuit in greater alignment with the Supreme Court’s wire fraud jurisprudence.
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Business Crimes Bulletin
Regulators Reaching Deep In Their Toolbox to Prosecute Users of Encrypted Messages
Andrey Spektor and Laura S. Perlov
If you use Whatsapp or similar platforms for work-related communications, then you’ve probably heard that regulators are putting an end to that practice. Ephemeral and encrypted messaging, they have noted, evades monitoring and prevents retention. A seldom used doctrine allows prosecutors to charge executives with misdemeanor offenses just for being in the position of power when others commit the misconduct. Rather than take a wait-and-see approach, companies and their leaders would do well to prepare for prosecutors to reach deep into their toolbox.
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Business Crimes Bulletin
Circuit Split Over Joint and Several Liability for Forfeiture In White-Collar Crimes
Evan T. Barr
Ever since the Honeycutt ruling by the U.S. Supreme Court in 2017 that co-conspirators convicted of federal narcotics violations could not be held jointly and severally liable, courts have grappled with whether it also applied outside the narcotics context, to forfeiture judgments imposed in white-collar cases.
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Business Crimes Bulletin
SEC Tightens Rules on Scheduling Trades In Advance
Maria Dinzeo
General counsel may find themselves pulled into difficult conversations with top executives as the Securities and Exchange Commission tightens its rules on company insiders looking to dump their stock.
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Business Crimes Bulletin
Trouble Prosecuting Trump Allies Signifies DOJ’s Difficulties In Prosecuting Non-Traditional Foreign Influence Cases
Robert J. Anello and Richard F. Albert
Despite the broad language of the Espionage Act, the DOJ has faced significant hurdles in pursuing prosecutions outside the traditional espionage context, and particularly where the alleged foreign agent’s activity involves ostensibly legitimate international business dealings.
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Business Crimes Bulletin
Cryptocurrency: Rich In Investment Opportunity; Ripe for Fraud Schemes
Melissa Davis and Mark Parisi
The recent implosion of FTX Trading leaves investors and their advisers wondering whether any crypto investment is safe. There have been dozens of cryptocurrency-related fraud schemes in recent years including Ponzi schemes and investment schemes using crypto and the blockchain to facilitate the fraud scheme.
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Business Crimes Bulletin
What the SEC May Be Signaling Through Its Approach to NFTs and F-NFTs
Mark Cianci, Charles Humphreville, Kelley Chandler and Ty Owen
Recent actions by the U.S. Securities and Exchange Commission (SEC), together with certain statements by SEC commissioners, may indicate a shift in approach toward a rebuttable presumption that digital assets are securities, without deference to formal legal tests.
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Business Crimes Bulletin
Impact of ‘Hoskins’ Cases on the FCPA and White-Collar Law
Elkan Abramowitz and Jonathan Sack
This article examines the impact of Hoskins on three issues of importance to white-collar practitioners: the scope of the FCPA; the interpretation of white-collar criminal statutes; and the authority of the district court to consider at the outset of a prosecution threshold questions of the reach of the law to foreign individuals.
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Business Crimes Bulletin
Using Anti-Bribery and Corruption Regimes for ESG Concerns
Stephanie Yonekura, Ann Kim and Derek Centola
Compliance leaders recognize that Environmental, Social and Governance (ESG) is a growing concern for U.S. companies, but face challenges in determining how to embed compliance structures into their programs. One solution is to look to already existing anti-bribery and corruption (AB&C) compliance measures.
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Business Crimes Bulletin
Insider Trading Evolving Beyond Just Securities As DOJ Targets NFTS and Crypto
Robert J. Anello and Richard F. Albert
In two recent notable cases involving NFTs and cryptocurrency markets, the DOJ has brought insider trading charges under the wire fraud statute without claiming that any securities were involved. These cases demonstrate the substantial flexibility federal prosecutors have — or at least believe they have — in charging insider trading and underscore the oft-recognized need for a federal statute expressly addressing insider trading.
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Business Crimes Bulletin
Regulators Renew Focus on Individual Liability for Gatekeepers
Robert Stern and Sarah Coyne
A rising tide of regulation is headed for corporate compliance officers and in-house lawyers. Corporate accountability is a key priority for the DOJ and SEC, and both agencies have renewed their focus on individual liability for gatekeepers, including lawyers, accountants, underwriters and auditors.
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Business Crimes Bulletin
Recent Decisions Fill Gap In §951 Notification Requirement for Agents of Foreign Governments
David Aaron
The Northern District of Illinois recently issued an opinion which criminalizes acting in the United States as an agent of a foreign government without notifying the attorney general.
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Business Crimes Bulletin
Carrots and Sticks: DAG Lisa Monaco Puts Her Stamp on DOJ’S Corporate Criminal Enforcement Policies
Harry Sandick and Hilarie Meyers
Going back many decades, each Deputy Attorney General (DAG) has promulgated revisions to the DOJ’s corporate criminal enforcement policies, leaving behind eponymous policy memos that were carefully studied by defense attorneys. Like her predecessors, Deputy Attorney General Lisa Monaco has been quick to announce a series of revisions to DOJ’s corporate criminal enforcement policies and practices.
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Business Crimes Bulletin
The Great Pandemic Heist: PPP Loan Fraud
Edward T. Kang
In the COVID-19 era, there has been a heist of great value, but it has not gone undetected. Prosecutors have called the heist the largest fraud in U.S. history, with the thieves stealing hundreds of billions of dollars in taxpayer money through fraudulently obtained Paycheck Protection Program (PPP) loans.
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Business Crimes Bulletin
White Collar Crime and Professional Liability Policies
Andrew N. Bourne
Professional liability insurance policies may provide coverage for criminal proceedings, including defense costs incurred defending against criminal indictments. Corporate policyholders, and individuals covered under professional liability policies, should know exactly what type of claims are insured.
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Business Crimes Bulletin
New Fraud Section Chief Talks Corporate Compliance
Andrew Goudsward
After nearly nine years in the private sector, Glenn Leon returned to the U.S. Department of Justice to take over a section that has grown both in staff and in stature as it pursues some of the government’s biggest white-collar cases.
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Business Crimes Bulletin
Pitfalls of the Attorney-Client Privilege
Jonathan S. Feld and Lisa M. Burnett
The attorney-client privilege is a critical component in the legal process but its protection is constantly being challenged in complicated corporate investigations. There are measures that attorneys should, where possible, take steps to mitigate the risk of losing the privilege.
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Business Crimes Bulletin
The Selective Prosecution Defense
Evan T. Barr
This article explores the law on selective prosecution and why, despite the long odds against success, it may still make sense from a defense perspective to assert the claim.
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Business Crimes Bulletin
FTC Looks to Focus On Data Privacy and Competition
Isha Marathe
The Federal Trade Commission, under its current chairperson Lina Khan, has released a flurry of press releases and blogs in recent months signaling at a focused commercial surveillance “crackdown.”
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Business Crimes Bulletin
Former SEC Lawyers Dominate Payouts Under Agency’s Whistleblower Program, Study Finds
Andrew Goudsward
The U.S. Securities and Exchange Commission’s widely hailed whistleblower program has paid millions in recent years to former SEC lawyers who have come to dominate the market for representing tipsters seeking payouts through the program, a new study found.
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Business Crimes Bulletin
Upcoming Webinar
Join Board of Editors member Jacqueline Wolff and David Smith of Manatt, Phelps & Phillips on Oct. 13 as they delve into the new SEC disclosure rules on climate change risks.
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Business Crimes Bulletin
The Regulators Are at the Gates: Significant New AML Legislation Nears Passage
Patrick T. Campbell, Jonathan B. New and Francesca A. Rogo
Over the past few years, Congress and law enforcement have notably increased their scrutiny of companies’ anti-money laundering compliance, and it appears that Congress is not yet finished with its drive for additional legislation and regulation.
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Business Crimes Bulletin
SCOTUS to Hear Cases on Limits of Mail and Wire Fraud Statutes
Robert J. Anello and Richard F. Albert
Federal courts long have struggled to define the limits of the mail and wire fraud statutes, laws famously characterized as the prosecutor’s true love for their vast breadth and catch-all adaptability. After sidestepping opportunities in the past, the U.S. Supreme Court is now wading into two different and controversial manifestations of that flexibility.
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Business Crimes Bulletin
Second Circuit Ruling Offers Ways to Mitigate FCPA Risk Through Corporate Structure
Andrey Spektor
Despite the FCPA’s breadth and its aggressive enforcement, it has largely escaped judicial scrutiny. Individuals and companies are reluctant to test the bounds of the law and risk federal prison or crippling penalties. But one man has refused to fall in line and has almost single-handedly shaped recent FCPA jurisprudence.
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Business Crimes Bulletin
New Securities Suits Up Slightly, Despite Stock Drops
Ross Todd
Given the recent stock market carnage, one might expect that the courts were flooded with a fresh batch of securities suits. Stock drops, after all, are one necessary ingredient of stock drop suits. But according to Cornerstone Research’s mid-year assessment of new filings, the number of new class action securities cases filed in the first half ticked up only slightly compared to the first half of 2021.
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Business Crimes Bulletin
Using Artificial Intelligence In White-Collar Matters
Robert G. Heim
AI currently is playing a growing role in helping white-collar lawyers and their clients analyze vast amounts of data to uncover insights, connections, and patterns that would be impossible to detect through manual reviews. This article provides an introduction to AI technology and discusses the key regulatory developments practitioners should be aware of as they advise their clients on AI.
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Business Crimes Bulletin
Waiver of Corporate Privilege By An Individual Defendant
Benjamin Rosenberg
Individual employees often act pursuant to advice from their in-house counsel. If named as a defendant in which her action is challenged, the employee may want to assert advice of corporate counsel as a defense. But the privilege belongs to the employer, not the employee, and the employer may refuse to waive the privilege. Can the court abrogate the employer’s privilege over the objection of the employer, and if so under what circumstances?
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Business Crimes Bulletin
White-Collar Enforcement Under the Biden Administration
Nate Robson
After much saber-rattling, the Biden administration’s focus on white-collar corporate compliance is finally coming into focus. Law firms and white-collar compliance experts have long warned the administration’s ramped-up focus was coming, but the pandemic largely nixed any initiatives. A spate of recent settlements coupled with the addition of a new white-collar leader at the U.S. Department of Justice is giving the public a look into what compliance will look like under Biden.
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Business Crimes Bulletin
Efforts to Provide Out-of-State Abortion Travel Benefits Face Rapidly Shifting Legal Landscape
Jessica Mach
Employment attorneys say the breadth of new state laws — and the pace at which they are going into effect — means in-house counsel at companies trying to create workarounds for employees in states with restrictive abortion laws by providing benefits that would allow them to travel out-of-state to access abortion services will need to be on high alert, since keeping up on top of the laws will be key to limiting their exposure to litigation — or even criminal penalties.
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Business Crimes Bulletin
DOJ NFT Insider Trading Indictment Skirts Securities Question, But Litigates Like It Is
Isha Marathe
The question of whether an NFT is a security has come up several times, and United States of America v. Chastain in the Southern District of New York brings the dispute back to the forefront.
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Business Crimes Bulletin
Questions Surround Expanded Government Authority to Seize Russian Assets
Robert J. Anello and Richard F. Albert
The purpose behind the Biden Administration's proposals to seize assets of Russian oligarchs is to punish a specific action by a state actor — Russia’s invasion of Ukraine. The proposals, however, do not appear to be limited to this conduct alone and would outlast Russia’s invasion. In times of war, it at least arguably may be appropriate to pass laws to expand the executive’s authority to address specific hostile conduct. Such laws, however, should end with the conflict.
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Business Crimes Bulletin
The FRCP Rule 9(b) Standard In False Claims Act Cases
Michael A. Sirignano
In recent years, federal circuit courts of appeals have set forth somewhat different standards that civil FCA complaints brought by private citizens, known as relators, must meet to satisfy Rule 9(b) — especially regarding whether representative examples of allegedly fraudulent claims must be included in a complaint.
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Business Crimes Bulletin
Companies Need to Focus On Compliance to Protect Against Aggressive Post COVID-19 White-Collar Prosecution
G. Zachary Terwilliger
Consider another paradox of the post-COVID world: The pandemic that initially disrupted federal prosecution of corporations has now heightened potential exposure in a number of areas. This is especially the case for those organizations that took advantage of government aid or today struggle to navigate snarled global supply chains.
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Business Crimes Bulletin
Climate Change Risk and Disclosure: A New Focus for SEC Enforcement
Jacqueline C. Wolff
Given the massive amount of dollars being poured into ESG funds and the SEC’s renewed focus on both the funds and the companies in the funds, there is no time like the present for companies to engage in an assessment of their climate risks and how these risks and the status of the companies’ ESG goals are being relayed to investors.
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Business Crimes Bulletin
Government Looking Into Insider Trading By Tipping Block Trades
Michael Miller and Daniel Podair
How the government might frame insider trading cases based on allegations of tipping before the execution of block trades in securities.
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Business Crimes Bulletin
Individual Liability and Criminalizing Cybersecurity Response
Jonathan S. Sack and Christopher M. Hurley
To date, cybersecurity has generally been viewed as an organizational responsibility, and data breaches similarly have been treated as organizational weaknesses or failures. Against this backdrop of organizational responsibility, the Department of Justice has brought a noteworthy criminal case against an individual for his personal response to a corporate data breach.
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Business Crimes Bulletin
Repairing the Foreign Agents Registration Act
Harry Sandick and George Carotenuto
In recent years, mostly due to the well-publicized prosecution of Trump campaign manager Paul Manafort, FARA has become more of a focus for federal prosecutors. As a result, white-collar attorneys have been consulted more often about whether particular conduct requires registration under the Act.
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Business Crimes Bulletin
SCOTUS Hears Arguments In Doctors’ Good Faith Defense to Prescribing Controlled Substances
By Robert J. Anello and Richard F. Albert
When is a doctor a doctor and when is a doctor a drug dealer? In early March, the U.S. Supreme Court heard oral argument in two consolidated cases — Ruan v. United States and Kahn v. United States — to address where that line is drawn.
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Business Crimes Bulletin
Strategies for Advising Foreign Clients As DOJ Pursues Extraterritorial Criminal Cases
Emil Bove
This article addresses some issues to consider, including foreign arrest procedures, contesting extradition, and engaging with prosecutors before a defendant arrives in the United States.
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Business Crimes Bulletin
Crypto Executive Order ‘Both a Landmark and a Question Mark’
Andrew Goudsward
The Biden administration released its long awaited executive order on cryptocurrency, directing a range of federal agencies to study and assess a litany of issues related to digital assets, including cybersecurity, money laundering and climate impact.
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Business Crimes Bulletin
The FTC Gets Into the College Athlete NIL Game
Nicole Demas, L. Andrew Tseng and Sean P. McConnell
As national champions are crowned in men’s and women’s basketball, hundreds of thousands of college athletes are entering the influencer marketplace for the first time and now find themselves attractive candidates in the fast growing influencer marketing arena. With influencer marketing potentially providing a 5x return on investment, many brands are eager to get into the industry, but it doesn’t come without risks as the FTC Commissioner is taking a closer look at the use of influencers for marketing.
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Business Crimes Bulletin
First Dark Web Insider Trading Case Shows Government Active In Policing Tech
Ian McGinley
In a first of its kind prosecution, the Southern District of New York brought an insider trading case against defendant for selling inside information on the Dark Web. The SEC also brought a civil regulatory action against the defendant for the same conduct. In a rare move, however, SDNY and SEC charged this same conduct under different insider trading statutes. This difference underscores the legal complexities involved when the origin of inside information in the digital world is unknown.
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Business Crimes Bulletin
Second Circuit ‘Connolly’ Ruling Shows Limits of Mail and Wire Fraud Statutes
Elkan Abramowitz and Jonathan Sack
The Connolly decision draws attention to the limits of the mail/wire fraud statutes — laws that are quite expansive but can also be stretched too far when applied to conduct in financial markets, especially markets tied to opaque rules and practices.
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Business Crimes Bulletin
Inside Cryptocurrency Pump-and-Dump Schemes
Jonathan Bick
Cryptocurrency pump-and-dump schemes (CPDs) are becoming increasingly prevalent. As in the case of traditional “pump and dump” schemes, CPDs lead to short-term trading perturbations — exaggerated increases and/or decreases in prices, volume, or volatility.
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Business Crimes Bulletin
The DOJ Goes Phishing: The Rise of False Claims Act Cybersecurity Litigation
Annie Railton, James Gatta, Jud Welle and Emily Notini
While the DOJ Civil Cyber-Fraud Initiative is still in its early stages and cybersecurity regulations are evolving, whistleblower plaintiffs have already begun leveraging the FCA to pursue alleged noncompliance with government cybersecurity requirements.
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Business Crimes Bulletin
Examining the SEC’s Rulemaking Process
Jonathan S. Sack and Penina Moisa
SEC Chair Gary Gensler's agenda raises important questions of both substance and process, including the technical, but very important, matter of SEC rulemaking: What is required for the Commission to create new rules, or change well-established rules? The answers to these questions, in turn, may determine what can realistically be accomplished given timing and political constraints.
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