Author Archives: Seth Massey

Directors Resign After Department of Justice Raises Antitrust Concerns

by Elizabeth Ising, Stephen Weissman, Cassandra Tillinghast and Chris Wilson

On June 21, 2021, the U.S. Department of Justice’s Antitrust Division (“DOJ”) announced that two officers of Endeavor Group Holdings Inc. have resigned their positions on the board of directors of Live Nation Entertainment Inc. in the wake of concerns expressed by DOJ that the two companies formed an illegal interlocking directorate under the antitrust laws.  The announcement is a reminder that companies must continue to be mindful of potential antitrust concerns when their current or prospective directors or officers serve in similar roles at other entities. Continue reading →

How Costly is Whistleblowing?

by Aiyesha Dey, Jonas Heese, and Gerardo Perez Cavazos

Regulators trying to curtail financial fraud, government procurement fraud, or tax fraud, among many other types of misconduct, increasingly rely on whistleblowers for tips. However, the concern is that whistleblowers face severe costs to help uncover corporate fraud. Yet, there is no large-sample evidence on the consequences for whistleblowers. We examine the costs for whistleblowers using information from lawsuits, a professional networking site, and background checks for up to 1,168 whistleblowers. In particular, we investigate the career, financial, and social consequences for whistleblowers that filed lawsuits under the False Claims Act (FCA) against firms accused of defrauding the government. Continue reading →

China Constricts Sharing of In-Country Corporate and Personal Data Through New Legislation

by Patrick F. Stokes, Oliver Welch, Nicole Lee, Ning Ning, Kelly S. Austin, Judith Alison Lee, Adam M. Smith, John D.W. Partridge, F. Joseph Warin, Joel M. Cohen, Ryan T. Bergsieker, Stephanie Brooker, John W.F. Chesley, Connell O’Neill, Richard Roeder, Michael Scanlon, Benno Schwarz, Alexander H. Southwell, and Michael Walther

The People’s Republic of China is clamping down on the extraction of litigation- and investigation-related corporate and personal data from China—and this may squeeze litigants and investigation subjects in the future.  Under a new data security law enacted late last week and an impending personal information protection law, China is set to constrict sharing broad swaths of personal and corporate data outside its borders.  Both statutes would require companies to obtain the approval of a yet-to-be-identified branch of the Chinese government before providing data to non-Chinese judicial or law enforcement entities.  As detailed below, these laws could have far-reaching implications for companies and individuals seeking to provide data to foreign courts or enforcement agencies in the context of government investigations or litigation, and appear to expand the data transfer restrictions set forth in other recent Chinese laws.[1]

Continue reading →

Biden: The Fight Against Foreign and Transnational Corruption Is a National Security Interest

by Kimberly A. Parker, Jay Holtmeier, Christopher Cestaro, John F. Walsh, Edward C. O’Callaghan, Ronald C. Machen, Lillian Howard Potter, Chavi Kenney Nana, Zachary Goldman, Mandy Fatemi, and Gemma Bateman

On June 3, 2021, President Biden issued a National Security Memorandum establishing the fight against corruption both at home and abroad as a core United States national security interest and directing the development of a 200-day interagency review designed to culminate in a report and recommendations on how the United States government and its partners can better combat corruption, enhance transparency in the global financial system and promote good governance. When combined with the anti-money laundering (AML) legislation that entered into force with the January 2021 bipartisan passage of the National Defense Authorization Act for Fiscal Year 2021 (NDAA)[1]—the most significant reforms to US AML laws since the 2001 adoption of the USA PATRIOT Act—and a review of sanctions policy conducted by the Treasury Department, the Memorandum may lead to a heightened focus on illicit financial activity and corruption and may ultimately result in additional resources being allocated to anti-corruption and AML enforcement. Continue reading →

Consequences of Wirecard Scandal: New Requirements for Corporate Governance and Audit of German Listed Companies

by Silke Beiter, Ferdinand Fromholzer, Johanna Hauser, and Finn Zeidler,

As a reaction to the spectacular collapse of Wirecard, a then-DAX-listed financial service provider, in June 2020, an Act on Strengthening the Financial Market Integrity (Finanzmarktintegritätsstärkungsgesetz – FISG) has now been adopted following several months of intense discussions. It enters into effect on 1 July 2021 with a transitional period for certain provisions. The Act establishes new requirements for the corporate governance and the audit of listed companies as well as other public-interest entities.
Continue reading →

Second Circuit Dismisses New York DFS Lawsuit Challenging Special Purpose National Bank Charters

by Mylan L. Denerstein, Akiva Shapiro, and Seth M. Rokosky

On June 3, 2021, the United States Court of Appeals for the Second Circuit issued an important decision dismissing a lawsuit by the New York State Department of Financial Services (“DFS”), which was challenging the authority of the federal Office of the Comptroller of the Currency (“OCC”) to grant special purpose national bank (“SPNB”) charters.[1]  Such non-depository charters have attracted the attention of financial technology (“fintech”) companies.  The decision reversed a holding of the United States District Court for the Southern District of New York that had placed greater power in state regulators’ hands in holding that the OCC lacked such authority because such non-depository institutions are not engaged in the “business of banking.”  The Second Circuit’s decision, which was based on threshold standing and ripeness grounds, maintains ambiguity in the federal-state balance with respect to regulation of SPNBs and threatens to narrow DFS’s regulatory and supervisory reach over cutting-edge financial products and services, which the agency has sought to expand in recent years.  Continue reading →

Bank Julius Baer Agrees to Pay More Than $79 Million for Role in FIFA Money Laundering

by Jonathan J. Rusch 

Over the past decade, the Fédération Internationale de Football Association (FIFA) has been embroiled in several overlapping scandals associated with a reported $150 million in bribery related to FIFA and regional soccer-federation officials.[1]  Investigations by U.S. and Swiss authorities to date have led to criminal charges against numerous individuals (including former FIFA and other soccer-federation, sports-marketing, and media executives) and companies,[2] as well as a deferred prosecution agreement (DPA) with an Israeli bank that required the bank to pay more than $340 million for its role in laundering tens of millions of dollars in bribe payments to corrupt soccer officials in multiple countries.[3]

The latest development in the long-running scandal occurred on May 27, when the U.S. Department of Justice announced that a leading Swiss bank, Bank Julius Baer, had agreed to enter into a deferred prosecution agreement (DPA) requiring it to pay more than $79 million in penalties and to admit that it conspired to launder more than $36 million in bribes through the United States to soccer officials with FIFA and other soccer federations.[4] Continue reading →

NYDFS Fines First Unum and Paul Revere Insurance Companies $1.8 Million for Violations Arising Out of Data Breaches

by H. Christopher Boehning, Michael E. Gertzman, Roberto J. Gonzalez, Jeannie S. Rhee, Richard C. Tarlowe, Steven C. Herzog, and Cole A. Rabinowitz 

On May 13, 2021, the New York Department of Financial Services (“NYDFS”) announced a consent order with First Unum Life Insurance Company of America (“First Unum”) and Paul Revere Life Insurance Company (“Paul Revere”) (collectively the “Companies”), which imposed a $1.8 million penalty for violations of NYDFS’s Cybersecurity Regulation (23 NYCRR 500) (“Part 500”), including false certifications of compliance under 23 NYCRR 500.17. Continue reading →

Digital Currency Developments: Acting Comptroller Orders Review of Recent Decisions and FDIC Issues Information Request

by Arthur S. Long and Samantha J. Ostrom

This week, there were important virtual currency developments at two of the principal federal banking agencies, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).  Both of these developments occurred as the markets for digital currencies showed substantial volatility.  First, in testimony before Congress on Wednesday, Acting Comptroller of the Currency Michael Hsu expressed concerns about the OCC’s recent actions for digital currency companies and stated that he had “asked staff to review these actions.”[1]  Second, the FDIC published a request for information (RFI) about digital assets and the banking system.[2]  Comments on the RFI are due by July 16, 2021. Continue reading →

Lessons from the SAP SE Settlement on the Benefits of Self-Reporting Corporate Export Control and Sanctions Violations

by Rachel K. Alpert, Shoba Pillay, and Emily A. Merrifield

On April 29, 2021, the Boston U.S. Attorney’s Office announced that SAP SE, a multinational software company headquartered in Walldorf, Germany, entered into the first non-prosecution agreement under the Department of Justice’s (DOJ) revised Voluntary Self-Disclosure Policy, announced on December 13, 2019. Continue reading →