LJN - Business Crimes Bulletin

Why High-Quality Data is Crucial to Fighting Financial Crime

Tom Bock, Paul Connolly, Fernanda Barroso and Maria Evstropova, staff — Thu, 1 Aug 2024 00:13:26 -0400

The fight against financial crime is becoming increasingly complex. The increasing prominence of AI also means that firms may leave themselves exposed to unexpected risks if they do not carefully consider the quality of the data that fuels the AI system.

SEC Crypto Enforcement Actions Raise More Questions Than Answers

Ladan Stewart, staff — Thu, 1 Aug 2024 00:11:05 -0400

A decision in the SEC’s enforcement case against Ripple Labs was hailed as vindication for the industry’s position that the SEC lacks the proper legal authority to regulate crypto. However, several conflicting rulings followed. So where does the crypto industry go from here? The answer is not so simple.

Is FEPA As Impactful As It Was Promised to Be?

Christopher T. Zona, staff — Thu, 1 Aug 2024 00:09:20 -0400

FEPA, which amends the federal domestic bribery statute has been touted by some as “the most sweeping and consequential foreign bribery law in nearly half a century.” But will it end up being an influential force combatting corruption or a paper tiger?

The Future of the SEC’s Climate Change Disclosure Rules If Regulatory Polices Are Reversed

John Coffee, staff — Thu, 1 Aug 2024 00:07:49 -0400

Depending on the results of the election in November, there may be major reversals in securities regulation and SEC policies. In particular, the SEC’s much discussed and much litigated climate disclosure rules may be abandoned by a Trump SEC.

SEC Whistleblower Short Sellers

David R. Chase and Scott Silver, staff — Thu, 1 Aug 2024 00:05:46 -0400

The position that short sellers should be denied the benefits of their critically important whistleblowing efforts is short-sighted and contrary to the notions of our capitalistic markets. Moreover, it will serve only to disincentive a vital constituency of the SEC Whistleblower Program, which, in turn, will degrade the effectiveness of the SEC’s enforcement program.

Strategies and Legal Challenges Following FTC’s Noncompete Rule

Adam Powell and Daniel Hughes, staff — Thu, 1 Aug 2024 00:03:49 -0400

The FTC's new rule that limits noncompete clauses/agreements is slated to go into effect on Sept. 4, 2024. This article summarizes the rule, some pending challenges to the rule, and strategies that businesses should consider implementing today to protect their interests.

DOJ’s Cyber Fraud Initiative: A Wake-up Call That Keeps Ringing

Randy S. Grossman, Kareem A. Salem and Kayla LaRosa, staff — Mon, 1 Jul 2024 00:11:05 -0400

DOJ’s Cyber Fraud Initiative has been a wake-up call for companies to prioritize cybersecurity and adhere to stringent standards. By leveraging the FCA, DOJ has used a powerful enforcement tool to target a wide range of cybersecurity failures and misrepresentations. The increasing focus on cybersecurity by enforcement agencies means that robust cybersecurity practices are becoming a standard expectation, not just a best practice.

The State of Supreme Court Jurisprudence On Public Corruption

Carrie H. Cohen and Allison M. Magnarelli, staff — Mon, 1 Jul 2024 00:09:36 -0400

In the past decade, each time the Supreme Court has taken certiorari in a public corruption case, the court has reversed trial convictions and limited the types of conduct that constitute a federal bribery offense.

Defending Against Extradition to the United States

Robert J. Anello and Richard F. Albert, staff — Mon, 1 Jul 2024 00:07:42 -0400

The arm of U.S. extradition law is long. Fortunately, practitioners have defenses at their disposal that they may raise in the requested country’s courts to help either limit the scope of prosecution once extradition occurs, or to prevent it altogether.

New DOJ Self-Disclosure Pilot Program Increases Risk for Startups

Jonathan Fahey, Jonathan P. Lienhard and Oliver Roberts, staff — Mon, 1 Jul 2024 00:05:27 -0400

The DOJ has created new incentives for employee, or anyone, to report criminal misconduct allegedly committed by companies and their agents. Given their often laxer internal reporting structures and higher employee turnover rates, startup companies should pay particularly close attention to this new development to best mitigate legal risks.

Antitrust Enforcement Agencies Target AI Companies

Sulaiman Abdur-Rahman, staff — Mon, 1 Jul 2024 00:03:35 -0400

U.S. antitrust enforcement agencies may file complaints against the biggest companies advancing artificial intelligence, legal experts said in reaction to news reports of a handshake agreement between the Department of Justice and Federal Trade Commission.

Second Circuit Holds No Special Standard for Charging Campaign Contributions As Bribes, Reinstates Charges Against Former NY Lieutenant Governor

Paul Tuchmann, staff — Sat, 1 Jun 2024 00:11:24 -0400

We now have an opportunity to see whether the volume of campaign contribution bribery cases in the Second Circuit increases, and whether the government brings any cases that appear to infringe on the First Amendment interests of campaign contributors and candidates.

Algorithms and Antitrust

Ediberto Roman, staff — Sat, 1 Jun 2024 00:09:27 -0400

The economic benefits realized from generative AI are nothing short of astounding. That is why it is so concerning that the DOJ, the FTC, and a small choir of members of Congress seem intent on regulating algorithms away from the economy on antitrust grounds.

How Will Criminal Law Enforcement Be Able to Police the Improper Use of AI?

Leo Tsao, Robert Luskin and Corinne Lammers, staff — Sat, 1 Jun 2024 00:07:37 -0400

Given the DOJ’s limited tools to prosecute AI crimes where no one intended for the AI to violate the law, effective compliance likely will be the best defense for companies to avoid criminal charges for AI-based crimes.

What Effective Cooperation With the SEC Looks Like, According to SEC Enforcement Director

Maria Dinzeo, staff — Sat, 1 Jun 2024 00:05:43 -0400

Companies should be going above and beyond what’s legally required to earn leniency from the SEC, its top enforcement official said at a gathering of white collar defense attorneys and in-house counsel

Worldwide Regulations Increasing Compliance Challenges

Chris O'Malley, staff — Sat, 1 Jun 2024 00:03:40 -0400

Regulators worldwide — not just in the United States — are putting in place new programs and policies that will make steering clear of enforcement bunkers even more difficult. And one of the most worrisome, according to corporate attorneys, is a new DOJ pilot program that will provide stronger incentives for whistleblowers to rat out their co-workers and employers for misconduct.

OFAC, Commerce, and DOJ Emphasize Pursuit Of Enforcement Actions Against Non-U.S. Persons and Entities

Harry Sandick and Sarah Hardtke, staff — Wed, 1 May 2024 00:13:34 -0400

The guidance mirrors the recent, broader impulse among U.S. prosecutors and regulatory agencies to extend application of U.S. law to foreign persons and entities, even when those persons and entities have only threadbare connections to the U.S.

Privilege in Public Relations: Can Clients Protect Communications Between Their Lawyers and PR Firms?

Jonathan B. New, Patrick T. Campbell and Rachel H. Ofori, staff — Wed, 1 May 2024 00:11:46 -0400

Because PR firms may be considered third parties for privilege purposes, it is crucial that communications between a company’s counsel and its PR firm are handled with care to avoid waiving the attorney-client privilege.

Navigating the SEC’s New Cybersecurity Disclosure Rules

Olivia J. Greer, Catherine Kim and Jeeyoon Chung, staff — Wed, 1 May 2024 00:09:34 -0400

With the first cybersecurity rule for public companies, and the landscape of ongoing scrutiny and enforcement, SEC registrants should not lose time in reviewing their cybersecurity postures and policies to ensure compliance and, even ahead of formal adoption of certain still-pending rules, align with best practices.

Understanding the Difference Between Advocacy and Obstruction When Facing Government Investigations

Christopher D. Carusone, staff — Wed, 1 May 2024 00:07:59 -0400

Corporate counsel must understand the difference between advocacy and obstruction when facing government investigations.

FTC Finalizes Ban On Noncompete Agreements

Maydeen Merino, staff — Wed, 1 May 2024 00:05:37 -0400

The rule will generally ban employers from entering, maintaining or attempting to enter a noncompete agreement with an employee, or conveying — absent a good-faith basis — that a worker is subject to a noncompete clause.

SCOTUS Curbs ‘Pure Omissions’ Lawsuits

Jimmy Hoover, staff — Wed, 1 May 2024 00:03:18 -0400

In a unanimous victory to the securities industry, the U.S. Supreme Court curbed investor lawsuits based on a company’s mere failure to disclose known trends likely to affect their revenues.

Common Pitfalls In Personal Device Collection

Marjorie Peerce and Marguerite O’Brien, staff — Mon, 1 Apr 2024 00:13:07 -0400

Both the DOJ and the SEC have made it clear that they will look at company BYOD policies when assessing how to resolve matters under their purview. To avoid pitfalls — and sanctions — counsel must take proactive steps to ensure proper preservation and collection of personal mobile data and verify that clients comply.

FCPA Compliance Guidance for Global Businesses

Cole Callihan, staff — Mon, 1 Apr 2024 00:11:14 -0400

The Biden administration and its Justice Department have established countering corruption as a core U.S. national security interest. Companies with any international operations should ensure they have a robust written policy and compliance program focused on anti-bribery and corruption.

Regulators Want AI Companies to Respect Antitrust and Consumer Protection Laws

Karen Hoffman-Lent and Kenneth Schwartz, staff — Mon, 1 Apr 2024 00:09:20 -0400

The new era of AI technology has ushered in competition concerns alongside consumer-protection fears. Accordingly, regulators and lawmakers are taking note of the AI craze and are keen on ensuring that companies involved in AI are respecting both antitrust and consumer protection laws.

Will the Corporate Transparency Act Smother the Cannabis Industry?

Steve Schain, staff — Mon, 1 Apr 2024 00:07:11 -0400

The CTA requires business entities to file information on their “beneficial owners” with FinCEN, which, in turn, may disclose it to domestic and foreign law enforcement agencies, prosecutors, judges and financial institutions.

California DOJ’s Mission: Reinvigorate Criminal Prosecutions Program

Maria Dinzeo, staff — Mon, 1 Apr 2024 00:05:13 -0400

California hasn’t brought a case for criminal antitrust violations in more than 20 years. But that’s about to change, according to California Assistant Attorney General Paula Blizzard.

FTC Chair Concerned About Dominant Tech Firms

Maydeen Merino, staff — Mon, 1 Apr 2024 00:03:40 -0400

The concentration of dominant technology firms could harm U.S. national interests and global leadership, Federal Trade Commission Chair Lina Khan said in March at a Carnegie Endowment for International Peace event.

Decoding DOJ’s New ‘Justice AI’ Initiative

James D. Gatta, Allan J. Medina and Ian Q. Rogers, staff — Fri, 1 Mar 2024 00:13:46 -0500

The DOJ is likely to face many practical challenges and novel issues as it begins coding its own algorithm for AI-related enforcement. This article briefly examines three areas of AI-related enforcement where such practical challenges and novel issues may arise.

The FTC and DOJ’s New Guidelines Promise Sharper Scrutiny of Mergers

Karen Hoffman Lent and Kenneth Schwartz, staff — Fri, 1 Mar 2024 00:11:44 -0500

From loosened structural presumptions to unconventional theories of harm such as “ecosystem competition” to consideration of a merger’s effects on outside markets, we review some of the most noteworthy changes in the new Guidelines.

Supreme Court Set to Decide On Competing Interpretations of Federal Corruption Statute

Elkan Abramowitz and Jonathan Sack, staff — Fri, 1 Mar 2024 00:09:47 -0500

In this article, we describe the competing interpretations of Section 666 and comment on the implications of a Supreme Court decision in United States v. Snyder, where it will decide whether the law criminalizes “gratuities,” and not simply “bribes,” given to state and local officials.

The Role of the SEC In Cryptocurrency Regulation and Enforcement

Jay Dubow, Joanna Cline and Milica Krnjaja, staff — Fri, 1 Mar 2024 00:07:56 -0500

The SEC's cryptocurrency-related actions reached a new high in 2023, jumping more than 50% when compared to 2022. We expect the SEC’s enforcement efforts in this area to continue at a high pace in 2024, even though whether or not cryptocurrency should be classified as a security or something else remains uncertain.

Global Antitrust Competition Enforcers Are Back, According to Report

Gail J. Cohen, staff — Fri, 1 Mar 2024 00:05:53 -0500

Labor markets, artificial intelligence and consumer-related issues are going to be under the microscope from antitrust investigators around the globe in 2024, according to a report from Morgan, Lewis & Bockius.

SEC Keeping Eye On Non-GAAP Financial Disclosures

Kirsten Ulzheimer, staff — Fri, 1 Mar 2024 00:03:56 -0500

The SEC’s Division of Corporation Finance continues to provide comments to issuers about non-GAAP financial measures, and the SEC’s Division of Enforcement continues to investigate the accuracy of such non-GAAP metrics and, when necessary, will enforce charges against a company for providing misleading non-GAAP financial measures.

Artificial Intelligence: The New Weapon of Insider Threats

Peter Collins, staff — Thu, 1 Feb 2024 00:11:23 -0500

It is imperative that every organization acknowledges and takes seriously the potential harm that can be caused by insiders who misuse AI as a weapon for personal gain or to settle scores.

Contours of Bribery Analyzed By Second Circuit In Bank Corruption Case

Elkan Abramowitz and Jonathan Sack, staff — Thu, 1 Feb 2024 00:09:47 -0500

This article analyzes the Second Circuit’s decision, which rejected the defense’s arguments for narrowing the definition of “corruptly” and a “thing of value” in the context of Section 215(a)(2).

SEC Revises Beneficial Ownership Reporting Rules

Sarah Heaton Concannon and Alexander Schwartz, staff — Thu, 1 Feb 2024 00:07:22 -0500

This article identifies certain information asymmetries in the SEC’s beneficial ownership reporting rules, discusses the extent to which those information asymmetries are addressed (or not) under the SEC’s recent rule amendments, and considers whether additional rule amendments or SEC guidance continue to be necessary.

SEC Chief Warns Against 'AI Washing'

Maydeen Merino, staff — Thu, 1 Feb 2024 00:05:39 -0500

Artificial intelligence could drive greater efficiency and lower costs in the finance sector but U.S. Securities and Exchange Commission Chair Gary Gensler warned last month about companies potentially making false claims about using the technology, a nefarious practice known as “AI washing.”

SCOTUS Seeks to Provide Clarity Over Investor Suits

Jimmy Hoover, staff — Thu, 1 Feb 2024 00:03:05 -0500

In a case that could either stem or unleash a tide of investor lawsuits, the Supreme Court searched for a narrow way to rule that might still be of some value to the securities bar.

The Benefits of Utilizing a Written Joint Defense Agreement Properly Tailored to Limit Future Conflicts

Robert J. Anello and Richard F. Albert, staff — Mon, 1 Jan 2024 00:11:32 -0500

A recent decision from the U.S. District Court for the Southern District of Florida illustrates a benefit of utilizing a written joint defense agreement properly tailored to limit future conflicts, rather than relying on the oral agreements that are common among many practitioners.

Navigating the Complexities of Internal Investigations In the Current Climate

Carrie Cohen, Brian Michael and Christine Wong, staff — Mon, 1 Jan 2024 00:07:29 -0500

Today, internal investigations have taken on added complexity given the government’s current emphasis on voluntary disclosures, the increased vigor of social justice movements, the 24/7 news cycle, and other heightened risks that often require companies to respond quickly to an unexpected event or potential crisis. To help companies navigate these complexities and best address such situations, the following strategies should be considered.

The DOJ’s Corporate Enforcement Policy: One Year Later

Jolie Apicella, staff — Mon, 1 Jan 2024 00:07:23 -0500

The DOJ’s Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ’s implementation of the new policy in practice.

Lack of Transparency In SEC Settlement Penalty Calculations May Frustrate Self-reporting

Michael J. Osnato Jr., Meaghan Kelly and Stephanie Hon, staff — Mon, 1 Jan 2024 00:05:20 -0500

SEC settlements often lack explanation as to how the civil monetary penalties were calculated per the statutory framework or why such penalties were appropriate under the circumstances. This lack of transparency tends to create market confusion and may frustrate certain behavior the SEC seeks to encourage, namely self-reporting.

Business Crimes Bulletin Is Going Digital Only. Here’s What You Need to Know.

Steve Salkin, staff — Mon, 1 Jan 2024 00:03:17 -0500

The final print edition of Business Crimes Bulletin will be our January issue.

Leveraging Data and Deal Terms to Meet the Demands of the DOJ’s New M&A Safe Harbor

Fri, 1 Dec 2023 00:11:52 -0500

This article describes the DOJ’s new M&A safe harbor policy and also provides practical insights on how companies engaged in M&A can meet the DOJ’s expectations.

AI Is Attracting Antitrust Regulatory Scrutiny

Gretchen L. Jankowski and Abigail L. Cessna, staff — Fri, 1 Dec 2023 00:09:45 -0500

While some jurisdictions are enacting or proposing AI-specific regulation, many existing regulatory frameworks apply to new technologies, including antitrust. Companies may experience different potential antitrust risks depending on the type of AI technology and their use of that technology.

Are Law Firms Ready for the Corporate Transparency Act?

Ross Aronowitz, staff — Fri, 1 Dec 2023 00:07:42 -0500

With the beginning of a new year around the corner and the introduction of new compliance obligations under the Corporate Transparency Act (CTA), many law firms are scrambling to determine how they will assist clients who may be subject to these additional regulations.

The White House’s AI Executive Order Has Teeth, But Does It Bite?

Cat Casey, staff — Fri, 1 Dec 2023 00:05:18 -0500

Packing more tricks and treats than a suburban soccer mom, this sweeping order was ambitious, to say the least, artfully seeking to thread the needle and balance fear and desire when it comes to the AI renaissance sweeping the globe. And yet, hidden within the body of the order lay something that might make this sweeping and ambitious order flop.

EU’s New Foreign Subsidies Regulation Creates Risk for Foreign Companies

Linda A. Thompson, staff — Fri, 1 Dec 2023 00:03:34 -0500

Now, large companies doing business in the EU must report any financial contribution received from a government in a non-EU country in the last three years.

Enhanced Oversight of Search Warrants and Title III Wiretaps

Harry Sandick, Bonnie Robinson and Thomas Kicak, staff — Wed, 1 Nov 2023 00:07:38 -0400

Search warrants and wiretaps were once used primarily to investigate organized crime, drug dealing and terrorism. In recent years, however, prosecutors have employed these tools increasingly in the context of white-collar crime to the point where it is now commonplace.