Author Archives: Clarissa Santiago

Nasdaq Proposes New Listing Rules Regarding Board Diversity

by Edward D. Herlihy and David K. Lam 

On December 1, 2020, The Nasdaq Stock Market LLC (“Nasdaq”) submitted a proposal (PDF: 1.51 MB) to the SEC to adopt listing rules related to board diversity. There appears to be some confusion in the news media about the concept. The proposed rule does not impose a hard mandate or quota system, as some of its critics have suggested. Instead, the Nasdaq proposal is a disclosure-based rule that offers companies flexibility to maintain their decision-making authority over the board’s composition.
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SEC Disgorgement Authority Would Expand in National Defense Authorization Act

by Greg D. Andres, Martine M. Beamon, Angela T. Burgess, Tatiana R. Martins, Uzo Asonye, Robert A. Cohen, Neil H. MacBride, Fiona R. Moran, Paul J. Nathanson, and Patrick Sinclair

The National Defense Authorization Act approved by Congress earlier this month would extend to 10 years the time for the SEC to file disgorgement claims for scienter-based violations. It also would toll the limitations period while a party is outside of the United States. As of this writing, the bill has been vetoed by the President, and the House has voted to override the veto. The Senate is currently debating on the override. Continue reading →

Federal Banking Agencies Propose Cyber Incident Notification Requirements

by Nicole Friedlander, Jared Fishman, Ethan Chess, and Jonathan Silverstone

On December 18, the Board of Governors of the Federal Reserve System (the “Board”), Office of the Comptroller of the Currency (the “OCC”) and the Federal Deposit Insurance Corporation (the “FDIC,” and together, the “Agencies”) released a notice of proposed rulemaking (the “proposal”) regarding notification requirements for banking organizations and bank service providers related to significant cybersecurity incidents.[1] 

Under the proposal, a banking organization would be required to notify its primary banking regulator within 36 hours of a “computer-security incident” that it believes in good faith could materially disrupt, degrade, or impair (i) its ability to carry out banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base; (ii) any of its business lines, including associated operations, services, functions and support, and would result in a material loss of revenue, profit, or franchise value; or (iii) any operations, including associated services, functions and support, the failure or discontinuance of which would pose a threat to the financial stability of the United States. Additionally, bank service providers would have to notify at least two individuals at affected banking organization customers immediately of significant computer-security incidents.

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SEED Findings on the SEC Enforcement Actions Against Public Companies and Their Subsidiaries in Fiscal Year 2020

by Anat Carmy-Wiechman, Giovanni Patti, and Peter Robau

In a new report (PDF: 1.02 MB), the NYU Pollack Center for Law & Business, in collaboration with Cornerstone Research, investigated recent trends in enforcement via the Securities Enforcement Empirical Database (SEED). Below, we highlight some of the key findings.
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FATF Issues Guidance on Cryptocurrency-Related Red Flags Indicative of Money Laundering and Terrorist Financing

by Jonathan J. Rusch

Over the last several years, one of the persistent concerns of law enforcement and regulatory agencies has been the growing use of cryptocurrencies as a vector for money laundering and terrorist financing (ML/TF). For example, a 2020 report by a blockchain analysis company traced $2.8 billion in Bitcoin that moved from criminal entities to exchanges in 2019[1] – a substantial increase from about $1 billion in 2018.[2]

As one indication of the depth of those concerns, in 2019, the leaders of the Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the Securities and Exchange Commission issued a joint statement “to remind persons engaged in activities involving digital assets of their anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under the Bank Secrecy Act (BSA).”[3] To underscore the importance of compliance with those obligations, the U.S. Department of Justice has been prosecuting a stream of criminal cases against various individuals for using cryptocurrencies to launder illegal proceeds.[4]

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CFTC Division of Enforcement Releases Guidance on Evaluating Compliance Programs

by Joon H. Kim, Colin D. Lloyd, Breon S. Peace, Jennifer Kennedy Park, Rachel Lerner, Robin M. Bergen, and Nowell D. Bamberger

On September 10, 2020, the Division of Enforcement (“Division”) of the Commodity Futures Trading Commission (“CFTC”) released guidance (“CFTC Guidance”) outlining factors the Division will consider when evaluating compliance programs in connection with enforcement actions.[1] The CFTC Guidance ties into guidance released by the Division in May directing staff to consider an entity’s compliance program when recommending a penalty or other resolution as part of an enforcement action.[2]

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Deutsche Bank Settlement with OFAC Highlights Risk of Insufficient Due Diligence and Screening

by John F. Curran, Jacob Gardener, and Christopher Dioguardi

On September 9, Deutsche Bank Trust Company Americas (“Deutsche Bank”) agreed to pay the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) $583,100 to settle potential civil liability for apparent violations of the Ukraine-Related Sanctions Regulations.  The settlement, which resolved two types of apparent violations involving two different entities on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDNs”), underscores the importance for banks to effectively screen transactions and diligently investigate red flags in order to avoid processing payments involving SDNs.  It also highlights the value of taking prompt remedial action and fully cooperating with OFAC once an apparent violation is discovered.        

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ESG Disclosures: Task Force on Climate-Related Financial Disclosures

by Mark S. Bergman, Ariel J. Deckelbaum, Jeh Charles Johnson, Brad S. Karp, Loretta E. Lynch, Richard A. Rosen, Audra J. Soloway, Frances F. Mi, and David G. Curran

The disclosure recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”), which consider the physical, liability and transition risks associated with climate change, are intended to facilitate the development of voluntary and consistent climate-related financial disclosures by companies for investors, lenders, insurers and other stakeholders. Since their publication in 2017, the TCFD recommendations have emerged as a leading international framework for climate-related disclosures, although uptake on these standards has been slower in the United States than elsewhere. The number of companies that reference the TCFD recommendations in their disclosures is steadily increasing, and industry leaders continue to call on companies to adopt these recommendations.

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Justice Department Revises Merger Remedies Guidelines

by Joel Mitnick and Ngoc Pham Hulbig

On September 3, 2020, the Department of Justice (“DOJ”) issued a revised Merger Remedies Manual (PDF: 312 KB), which sets forth the Division’s framework for implementing remedies to resolve antitrust concerns in merger cases. The new manual updates DOJ’s guidelines for merger remedies for the first time in nearly a decade and reaffirms the Division’s strong preference for structural relief. The Division’s 2004 Policy Guide to Merger Remedies (PDF: 367 KB) noted that “structural remedies are preferred to conduct remedies in merger cases because they are relatively clean and certain, and generally avoid costly government entanglement in the market.” DOJ eliminated the absolute preference for structural rather than conduct remedies when it issued its 2011 Policy Guidelines to Merger Remedies (PDF: 202 KB), noting that different types of mergers present “different competitive issues and, as a result, different remedial challenges.” However, the Division withdrew the 2011 guidelines (PDF: 83.4 KB) in 2018 and reinstated the 2004 guidelines, indicating a return to its preference for structural remedies. The new 2020 guidelines firmly codify that preference with even stricter language in some cases.

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The Airbus Triple Resolution: A Landmark Case in Europe and America

by Michel A. Perez

With the triple coordinated resolution of the Airbus case announced simultaneously on January 31, 2020 in Washington, London and Paris, negotiated corporate settlements reached new heights in Europe. Airbus is the second largest aerospace company in the world after Boeing. It is a consortium of British, French, German and Spanish units with its head legal office in the Netherlands. For more than a decade, the company was suspected by regulatory authorities in Europe and the United States of using bribes to promote its sales.

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