Editor’s Note: the NYU Program on Corporate Compliance and Enforcement is publishing reactions to the American Bar Association’s annual White Collar Crime National Institute in Miami on March 2 and 3, 2023.
Robertson Park (photo courtesy of Davis Wright Tremaine LLP)
The ABA White Collar Conference this year offered a slightly more forthcoming group of government agency representatives from the DOJ, SEC, and the CFTC. Maybe it was the lifting of the pandemic fog, and maybe it was the March heat in Miami, but it was certainly a more assertive and transparent government narrative. The arc is clearly up across the enforcement and regulatory landscape. The enforcement panel reminded me of the movie The Graduate, where Dustin Hoffman is presented the distilled single word of advice –“Plastics.” The enforcers weren’t focused on one word of advice, but equally focused on several — “protect markets” — “Crypto”— and “ESG.” The first two are already apparent in ongoing and recent investigations and prosecutions. The latter presents a more troubling landscape for companies.
ESG is the perfect storm of highlighted enforcement interest, minimal direction or regulatory advice from the enforcers, and complex valuation issues for company leadership. The leading edge of the ESG discussion was the SEC director — so there has been no real discussion of potential criminal investigations, but I think the tripwire for public institutions is what they say to investors and stakeholders about their ESG bona fides, and how ESG is “valued” in their books and records. There is also the increasing prospect of global institutions being whipsawed by differing international expectations and requirements.
On another panel, the new Chief of the Fraud Section told the audience that imminent corporate resolutions will shed some light on DOJ’s implementation of the new corporate voluntary disclosure guidance. This will certainly be helpful, and the next day’s release of Ericsson “2” painted the graphic picture of the consequences of inadequate disclosure. The joint Ericsson resolution, with clear collaboration between the Fraud Section and the SDNY, also placed a punctuation mark on earlier comments by the Chief of SDNY’s Criminal Division, in which he forcefully embraced cooperation and collaboration with the DOJ’s Criminal Division. As a former twenty-year veteran of the Fraud Section — this is news — and it presents the impactful prospect of joining the two most active financial services enforcement authorities. Time will tell if the relationship can grow.
These same panels and a separate crypto discussion made repeated reference to the agencies’ affirmative use of data analytics and the importance and value to the agencies in hiring expert analysts, which they have done and continue to do. DOJ no longer just reviews data provided by subjects, but proactively reviews publicly available information. The Health Care Fraud initiative in the Fraud Section was borne from use of data and heat maps. The ongoing and growing DOJ/CFTC collaboration in market manipulation cases is one area where data mining is already fully in place. Both the SEC and the CFTC have sophisticated and real time access to market and trading data.
And, after all, the blockchain is effectively out there for anyone to see.
Robertson Park is a Partner at Davis Wright Tremaine LLP. He is a former federal prosecutor at the DOJ.
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