Author Archives: Griffin Varner

Price Gouging Considerations in the Wake of COVID-19

By Bryce L. Friedman, Peter Guryan, William T. Russell Jr. and Vanessa K. Burrows

Historically, complaints regarding price gouging have arisen following hurricanes, tornadoes or other natural disasters. These disasters usually affect a limited geographic area and lead to local price increases for food, supplies or gasoline at brick-and-mortar retailers. However, the coronavirus disease 2019 (“COVID-19”) pandemic has resulted in a wave of price gouging complaints in the context of a worldwide public health emergency. COVID-19 price gouging complaints present new challenges because of the combination of the global reach of internet commerce businesses and the global effects of COVID-19. The goods that have primarily been affected thus far include hand sanitizer, sanitizing wipes and face masks, and everyday grocery items like chicken, rice and milk.

There have been a variety of responses to COVID-19 price gouging, including:

  • Federal legislation, investigation and enforcement.
  • State investigation and enforcement.
  • Industry self-regulation.

Continue reading →

Can Contact Tracing Apps Help Get Many of Us Back to Work Soon? A Framework for Evaluating the Various Options and Legal Concerns

By Luke Dembosky, Jeremy Feigelson, Avi Gesser, Jim Pastore, Anna R. Gressel, Joshua B. Pickar, Suchita Mandavilli Brundage, and Samantha B. Singh

Each passing week of lockdown brings mounting economic and social costs, increasing the urgency to find ways to get more people back to work safely. A large part of that effort involves the development of contact tracing applications (“apps”) for mobile phones. These apps promise to allow low-risk individuals to return to some normal activities in the near term while continuing to isolate those with higher risks. But they also present cybersecurity and privacy concerns, as well as other potential legal issues, which we discuss below. Continue reading →

The German Corporate Sanctions Act—Heralding a New Era for Enforcement in Germany

by Ralf van Ermingen-Marbach and Finn Zeidler

While corporate criminal liability has become the standard in many countries, as of today, companies in Germany can only be fined under regulatory offense law. German criminal law does not provide for corporate criminal liability.

Now, the coalition parties are seeking to establish a corporate sanctions law addressing corporate criminal conduct. The draft of the Corporate Sanctions Act (“Verbandssanktionengesetz” or the “Act”) introduces a hybrid system of criminal law and regulatory offense law. Companies would be prosecuted and sanctioned under the Act if (i) one of their managers committed a corporate criminal offense (e.g., fraud or bribery) or (ii) if another person committed such an offense while performing duties on behalf of the company when management could have prevented this by taking appropriate compliance measures. After a long and tough debate, the coalition parties have recently agreed on the draft law and are pushing ahead with the legislative process. According to statements from the governing coalition, the German Bundestag could therefore pass the Act even before summer recess. Continue reading →

White Collar and Regulatory Enforcement in the Era of COVID-19

by John F. Savarese, Ralph M. Levene, Wayne M. Carlin, and David B. Anders

When we issued our memorandum (PDF: 231KB) on “what to expect in 2020” concerning white collar and regulatory enforcement developments, we certainly did not expect that just two months later, 41 states would effectively be locked down due to the coronavirus pandemic, many courts would be closed, and governments would be intensely focused on adopting measures responsive to the global health crisis.  What we’re now seeing in the white collar/regulatory world is that, instead of pushing forward at their usual pace, prosecutors and regulators are adjusting to a new reality in which live testimony is impractical, courts are on pause and most everyone is working from home.  It is impossible to predict when the normal cadence of such investigations will resume, but inquiries of all kinds will undoubtedly return to their normal pace and intensity when the crisis abates. Continue reading →

General Counsel Publicly Reprimanded: PA Supreme Court Ruling Serves as Stark Reminder of Potential Ethical Issues in Government Investigations

By Brendan F. Quigley and Heather Souder Choi

On February 19, 2020, the Pennsylvania Supreme Court ordered that the former general counsel of Penn State University (“the GC”) be publicly reprimanded, finding that the GC had violated multiple ethical rules, in connection with the Pennsylvania Attorney General’s investigation of sex abuse by former Penn State assistant football coach Jerry Sandusky.[1] Reviewing a prior decision from the Disciplinary Board of the Supreme Court of Pennsylvania, the February 19 opinion noted not only the GC’s violations of multiple rules, but also the “significant personal and public effect” these lapses had in the context of a high-profile criminal investigation and the GC’s “lack of remorse.” Continue reading →

Fifteen Ways to Reduce Regulatory and Reputational Risks for Your AI-Powered Applications – Lessons from Recent Court Decisions and Regulatory Activity

by Avi Gesser, Henry Lebowitz, Jeffrey P. Cunard, Jim Pastore, Lisa Zornberg, Luke Dembosky, Anna R. Gressel, and Steve Tegrar

It is only February, but, so far, 2020 looks like it is going to be the year that courts and regulators look seriously at artificial intelligence (“AI”).

Recent developments in both Europe and the United States provide some insight into where AI is likely to face tough scrutiny and ways to mitigate risks of using AI. Continue reading →

Blaszczak and the Contract-Based Misappropriation Theory of Insider Trading

by Jakob Sebrow

The Second Circuit’s recent decision in United States v. Blaszczak [1] has been read as heralding an expansion of insider trading liability by rejecting the “personal benefit” requirement for insider trading prosecutions under the wire fraud and securities fraud statutes in Title 18 of the U.S. Code (“Title 18”).  While this holding may encourage more insider trading prosecutions under Title 18, Blaszczak also contains dicta that provides support for questioning, and perhaps eliminating, one of the more controversial theories of insider trading—the contract-based misappropriation theory. Continue reading →

UK Serious Fraud Office Issues Guidance for Evaluating Compliance Programmes, Echoes DOJ Guidance

By Saqib Alam, Shawna Pasquale and Amanda Aikman

On 17 January 2020, the UK’s Serious Fraud Office (the “SFO”) released guidance (PDF: 2.29MB)  on evaluating compliance programmes (the “SFO Guidance”). This is the first time the SFO has issued guidance on how it will assess the effectiveness of an organisation’s compliance  programme. Forming part of the SFO’s internal Operational Handbook, the SFO said it published the guidance in the interests of transparency and with the disclaimer that it should not be relied on as the basis for any legal advice or decision. The SFO Guidance nonetheless serves to assist organisations not only in evaluating the strength of their compliance programmes but also sets out what organisations can expect from the SFO and what remediation measures they should take in relation to their compliance programmes, if they are being investigated by the SFO. Continue reading →

Prioritizing Corporate Culture: Lessons for Companies from the Major League Baseball Sign-Stealing Investigation

By Nathan H. Seltzer, David Berman, Christopher D’Agostino and Nell Perks

On January 13, 2020, Major League Baseball (MLB) Commissioner, Robert D. Manfred, Jr., handed down significant punishment to the Houston Astros organization (the “Ballclub” or “team”), its General Manager Jeff Luhnow and Field Manager A.J. Hinch for sign-stealing by the Ballclub during the 2017 season and playoffs. In addition to a fine and forfeiting draft picks, the General Manager and Field Manager were suspended without pay, meaning they would miss a full season of baseball. Shortly after, the team’s owner, Jim Crane, fired them both, stating that “I have higher standards [ ], and I am going above and beyond MLB’s penalty,” and that while “[n]either one of them started this, [ ] neither one of them did anything about it. … We will not have this happen again on my watch.” Continue reading →

Is The Fraud Section Going All In On Commodities Cases?

by Aitan Goelman

On May 6, 2010, in what become known as the “Flash Crash,” the Dow fell almost 10% before recovering much of that loss within an hour.  Years later, a whistleblower who had analyzed market data (but had no inside knowledge himself) filed a report with the CFTC identifying a market participant in the S&P 500 E-Mini as a major cause of the Flash Crash.[1]  The CFTC investigated and identified this actor as Nav Sarao, a trader who had been spoofing the market from the basement of his mother’s flat in suburban London.  Determining that this was likely a criminal violation of the new anti-spoofing section of the Commodity Exchange Act (“CEA”),[2] the CFTC brought in the Fraud Section of the U.S. Department of Justice’s (“DOJ’s”) Criminal Division.  The Fraud Section (and the CFTC) pursued the investigation with vigor, and in April 2015, Mr. Sarao, whom the British tabloids subsequently nicknamed the “Hound of Hounslow,” was arrested by Scotland Yard.  Sarao ultimately pleaded guilty and agreed to cooperate with U.S. authorities. Continue reading →