Author Archives: ab12757

The Tide Continues to Turn on the ESG Regulatory Front

by Steven A. Rosenblum, Adam O. Emmerich, David A. Katz, Andrew J. Nussbaum, Karessa L. Cain, John L. Robinson, Elina Tetelbaum and Allison Rabkin Golden

Photos of the authors

Top left to right: Steven A. Rosenblum, Adam O. Emmerich, David A. Katz and Andrew J. Nussbaum. Bottom left to right: Karessa L. Cain, John L. Robinson, Elina Tetelbaum and Allison Rabkin Golden (Photos courtesy of Wachtell, Lipton, Rosen & Katz).

Recently, there’s been a series of developments where regulators, major index funds, and proxy advisors took steps to diminish the role of environmental, social and governance (ESG) initiatives at public companies.

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Crippling the FCPA Is Bad Business for the U.S.

by Stephen M. Kohn

Photo courtesy of the author

On February 10, President Donald Trump issued an Executive Order (E.O.) to pause enforcement of the Foreign Corrupt Practices Act (FCPA). The E.O. is based upon the inaccurate premise that the United States’ enforcement of the anti-bribery law unfairly cracks down on U.S. companies and harms their competitiveness in the global marketplace. During the pause, the Justice Department will reevaluate the enforcement strategies behind the FCPA, and presumably approve a new approach to FCPA enforcement. But the intent behind the Executive Order does not bode well for future U.S. prosecutions of criminal bribe paying in foreign countries.

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Trump Administration Signals Strong Approach to Antitrust Enforcement

by Sheila R. Adams James, Ronan P. Harty, Christopher Lynch, Mary K. Marks, Suzanne Munck af Rosenschold, Howard Shelanski, Caroline Ziser Smith, and Jesse Solomon

Top left to right: Sheila R. Adams James, Ronan P. Harty, Christopher Lynch, and Mary K. Marks. Bottom left to right: Suzanne Munck af Rosenschold, Howard Shelanski, Caroline Ziser Smith, and Jesse Solomon. (Photos courtesy of Davis Polk & Wardwell LLP)

As the first month of the Trump administration comes to a close, we provide updates on key developments in Trump 2.0 antitrust enforcement, particularly focused on merger review.  Early hints suggest that the Trump administration may be more measured in moving away from the Biden administration’s aggressive approach on antitrust than many observers initially anticipated.

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Trump Administration Targets International Cartels and Transnational Criminal Organizations, Shifting Enforcement Focus for Businesses

by Joon Kim, Lisa Vicens, Rahul Mukhi, David Last, Samuel Chang, Katherine Lynch, and Jordan McMeans

Photos of the authors

Top left to right: Joon Kim, Lisa Vicens, Rahul Mukhi and David Last. Bottom left to right: Samuel Chang, Katherine Lynch, and Jordan McMeans (Photos courtesy of Cleary Gottlieb Steen & Hamilton LLP).

A recent Executive Order from President Donald Trump and subsequent memoranda from the Department of Justice (“DOJ”) signal an anticipated crackdown on international cartels, transnational criminal organizations (“TCOs”), and those who provide material support to such entities. This development exposes companies and individuals with foreign business operations and activities, particularly in Latin America, to potential increased risks in this area, while suggesting a shift in focus away from investigations and cases that do not involve such a connection. Since these cartels and TCOs are not formal entities with clear memberships, businesses operating in countries where these groups operate will likely face substantial challenges with respect to compliance and risk management. 

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New Administration Outlook: The Executive Branch, Schedule F, and Other Tools To Cabin Administrative Discretion

by Stephen Gannon, LaFonda Willis, Max Bonici, and Michael Treves

Left to right: Stephen Gannon, LaFonda Willis, Max Bonici, and Michael Treves (Photos courtesy of the authors)

The combination of judicial trends and concerted executive branch action is expected to drive significant changes in the federal bureaucracy and affect financial services regulation

We have previously analyzed the recent history of Executive Orders (“EOs”) controlling the issuance and content of regulations. As we saw on Inauguration Day 2025, and continue to see, the second Trump Administration is aggressively deploying EOs toward that end and others.

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M&A Antitrust Alert: FTC Imposes Significant Gun-Jumping Penalty for Unlawful Pre-Merger Coordination Among Crude Oil Producers

by Reb D. Wheeler, William H. Stallings, Scott P. Perlman, Oral D. Pottinger, Gail F. Levine, Andrew J. Stanger, Joshua W. Eastby, and Brian E. Saleeby 

Top left to right: Reb D. Wheeler, William H. Stallings, Scott P. Perlman, and Oral D. Pottinger. Bottom left to right: Gail F. Levine, Andrew J. Stanger, Joshua W. Eastby, and Brian E. Saleeby (Photos courtesy of Mayer Brown LLP)

M&A practitioners have long regarded the integration planning and execution process as one of the keys to a successful M&A transaction. However, in deals subject to pre-merger antitrust clearance, it is critical to navigate the line between deal provisions and arrangements intended to preserve the value of the target business and allow the parties to prepare for post-closing integration, versus those that could result in the buyer exerting control over the target business or accessing competitively sensitive information prior to closing in a manner that could be seen as potentially harming competition in violation of the US antitrust laws. This conduct, commonly referred to as “gun-jumping,” can result in investigations by the Federal Trade Commission (FTC) and the Justice Department’s Antitrust Division (DOJ) as well as significant civil penalties for violation of the pre-merger notification and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”).

A noteworthy complaint filed by the DOJ on January 7, 2025, at the request of the FTC, serves as a reminder of the risks to merging parties of not properly navigating these considerations during the pre-closing period. DOJ’s complaint alleges that the Defendants, merging crude oil producers XCL Resources Holdings, LLC (“XCL”), Verdun Oil Company II LLC (“Verdun”), and EP Energy LLC (“EP”), engaged in gun jumping in violation of the HSR Act by allowing Verdun and XCL to immediately assume control over certain of EP’s day-to-day business operations and by exchanging non-public, competitively sensitive information (CSI) before the HSR Act’s waiting period had elapsed. The proposed settlement provides for a $5.6 million civil penalty, which the FTC heralded as “the largest dollar penalty imposed for a gun-jumping violation in U.S. history.”[1]

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Samuels v. Lido DAO: a Potential New Frontier for Liability in the Cryptocurrency Space

by Stephen Gannon, James Goldfarb, and Alexandra Coyle

Photos of the authors

Stephen Gannon, James Goldfarb, and Alexandra Coyle (photos courtesy of Davis Wright Tremaine LLP)

In denying motions to dismiss, court potentially expands liability for venture capital firms investing in cryptocurrency enterprises

A recent order handed down by U.S. District Judge Vince Chhabria of the Northern District of California could be a new source of concern for digital asset entrepreneurs and the venture capital firms which invest in and support them. In Samuels v. Lido DAO the court denied the motion to dismiss filed by an entity called Lido DAO (“Lido”) and a group of its institutional investors regarding what was alleged to be a sale of unregistered tokens on an exchange. Lido was and is the operator of a successful “Staking as a Service” business conducted through a decentralized autonomous organization, or a “DAO.” Founded in 2020, Lido provides a service in which it gathers ETH from individual holders, which it then pools and “stakes” to provide validation for transactions on the Ethereum blockchain. It also selects validators and provides an “oracle” to ensure that (i) the validators, (ii) the owners who pooled their ETH, and (iii) Lido itself receive the correct ETH rewards for performing the validation work.[1]

In largely denying defendants’ motions to dismiss, the court’s order potentially greatly expands the liability venture capital firms based in California might face, particularly in the context of investing in cryptocurrency enterprises, and may raise more questions than it answers for parties involved in such disputes.

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SEC Continues Focus on AI and Cyber-Risk Related Enforcement Cases

by Brendan F. Quigley and Matthew R. Baker

photos of authors

Left to right: Brendan F. Quigley and Matthew R. Baker. (Photos courtesy of Baker Botts)

The SEC kicked off its fiscal year by bringing enforcement actions focused on AI and cyber disclosures. As discussed in more detail below:

  • These actions again show SEC Enforcement prioritizing “hot button” issues like AI and cyber, highlighting, for example, a company’s statements about its use of AI in what otherwise appeared to be a fairly garden-variety securities fraud case.
  • The actions largely involve well-worn principles of securities law applied in the context of emerging technologies, including (i) while there may be no obligation to speak on a particular issue (such as AI), if a company does speak, its statements must be full, complete, and not misleading and (ii) companies’ obligation to consider whether existing disclosures need to be updated in light of recent events (such as a cyberattack).
  • The cyber-disclosure actions prompted a lengthy, two-commissioner dissent, accusing the commission of playing “Monday morning quarterback” by bringing the case, highlighting the potential for the upcoming election (and the appointment of commissioners under a new administration) to impact the SEC’s enforcement posture.
  • The dissent in the cyber cases also undertook a lengthy analysis, comparing the allegations in the settled cases to allegations against another company, arising out of the same series of cyberattacks, in an action the SEC litigated in federal district court. As we discussed here and as pointed out by the dissent, the federal district court dismissed many of those allegations. While deciding to settle with the SEC (or any government agency) is always a complicated, multi-faceted decision, the dissent’s comparison of the litigated case and the settled actions shows the need for parties under investigation to seriously consider the merits of potentially litigating cases when appropriate.

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From Art to Science: Unveiling the Transformative Power of AI in Surveys and Interviews

by Madison Leonard, Michael Costa, and Jonny Frank

Left to right: Madison Leonard, Michael Costa and Jonny Frank. (Photos courtesy of StoneTurn)

Far from mere tools, employee surveys and interviews serve as key indicators of an organization’s overall health and success. They play a pivotal role in assessing corporate culture, gauging satisfaction, gathering feedback, improving retention, and measuring diversity. Surveys can quantify sentiment—often over multiple periods and population segments. Interviews supplement surveys by offering nuance, context, the opportunity to follow up and even multiple perspectives on a single topic. These qualitative responses are essential for identifying subtle concerns, uncovering issues not explicitly covered by standard questions, and understanding employee sentiment. Without these insights, assessments risk missing critical information about how employees feel about governance, compliance and other key topics.

Despite their importance, surveys and interviews come with their own set of challenges. They are resource-intensive and susceptible to human error. The process of choosing survey topics and questions is a delicate one. While quantitative survey results are clear-cut, the qualitative feedback from interviews and focus groups, often in the form of lengthy, nuanced responses, demands significant mental effort to categorize and interpret. The larger the dataset, the higher the risk of confirmation bias, where reviewers may focus on responses that align with their expectations or miss critical patterns in the data. This bias, coupled with the sheer volume of information to be processed, makes it difficult to conduct thorough and objective assessments, especially under time and budget constraints.

Artificial Intelligence (AI), specifically Large Language Models (LLMS), presents a compelling solution to these challenges. By automating both quantitative and qualitative data analysis, AI models can swiftly sift through large datasets, identifying patterns, contradictions, and sentiment across thousands of responses in a fraction of the time it would take a human reviewer. This time-saving aspect of AI is particularly beneficial in today’s fast-paced business environment, where efficiency and productivity are paramount.

In addition to speed, AI helps mitigate the risk of human error and bias. It allows professionals to review qualitative data thoroughly and impartially. Unlike the human eye, a well-trained AI model can efficiently process voluminous and complex text, uncovering insights without overlooking critical information.

But, as powerful as AI may be, human judgment and experience remain critical. Human input is necessary to refine, train and ultimately verify the accuracy of an AI model.

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The FTC Finalizes Sweeping Changes to HSR Reporting Obligations

by Ilene Knable Gotts, Christina C. Ma, Monica L. Smith and Gray W. Decker

From left to right: Ilene Knable Gotts, Christina C. Ma, Monica L. Smith and Gray W. Decker. (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

On October 10, 2024, the Federal Trade Commission (“FTC”), with the concurrence of the Antitrust Division of the Department of Justice (“DOJ”), announced the FTC’s unanimous vote to adopt a final rule implementing significant changes to the reporting obligations under the Hart-Scott-Rodino Antitrust Improvement Act (“HSR Act”).  Though not as extensive and burdensome as the original proposed changes (see our prior memo analyzing the proposed changes), these changes will increase parties’ filing burden and limit their ability to file quickly, even in non-problematic transactions.  Absent judicial intervention, the final rule will become effective 90 days after it is published in the Federal Register (i.e., approximately mid-January 2025).  The FTC also announced that, once the final rule goes into effect, it will lift the three-and-a-half-year “temporary suspension” of granting early termination of the HSR waiting period in transactions not needing further agency investigation.

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