Author Archives: Katie Zavadski

FDIC Reminds Banks of Changed Restrictions on Employment Practices

by Matt Bisanz, Kelly Truesdale, Jeffrey Taft, and Andy Rosenman

Left to right: Matt Bisanz, Kelly Truesdale, Jeffrey Taft, and Andy Rosenman (Photos courtesy of Mayer Brown LLP)

The Federal Deposit Insurance Corporation (“FDIC”) recently reminded financial institutions of sweeping changes to longstanding restrictions on the ability for insured depository institutions, bank holding companies (“BHCs”) and other similar institutions to hire or retain individuals with certain criminal records.[1] In this Article, we discuss the background to the changes to Section 19 of the Federal Deposit Insurance Act (12 U.S.C. § 1829) (“Section 19”) and why they matter for these financial institutions.

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Crypto 2023: The Storm Breaks

by Stephen T. Gannon and Madison J. Breshears

Photos of the authors

From left to right: Stephen T. Gannon and Madison J. Breshears (photos courtesy of Davis Wright Tremaine LLP)

The first quarter of 2023 may go down in history as one the most intensive periods of enforcement activity and related oversight in the history of the SEC and the bank regulatory agencies.[1] While digital assets have never been free of regulatory scrutiny, this most recent escalation could have an existential impact on an industry which has been subject to repeated disruptions since mid-2022.[2] The market has made quick work of separating the wheat from the chaff, sparing not even key, widely-respected players­. Such conditions, coupled with increasingly aggressive regulatory action, could result in an increase in the number of firms who choose to seek shelter off-shore, or protection through acquisition by larger, traditional incumbent financial institutions. What follows is a brief summary of this recent regulatory activity, but there is surely more to come. This article will also reflect on the causes and consequences of this regulatory initiative, and what lessons might be learned.

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U.S. Cybersecurity and Data Privacy Outlook and Review – 2023

by Alexander H. Southwell and Snezhana Stadnik Tapia

Left to right: Alexander H. Southwell and Snezhana Stadnik Tapia. (Photos courtesy of Gibson Dunn & Crutcher LLP)

As with recent years, privacy and cybersecurity law and policy continued to evolve substantially over the course of 2022 in an effort to keep up with technological developments and shifting consumer expectations and policy priorities. Recently, in the tenth edition of Gibson Dunn’s U.S. Cybersecurity and Data Privacy Outlook and Review, we provided a review of some of the most significant developments on this topic in the U.S.

Below we summarize the past year’s developments and future prospects, including the wave of new privacy and cyber laws and regulations at the federal and state levels due in large part to increased attention on protective privacy and cyber hygiene. This past year also saw a substantial uptick in scrutiny and enforcement by federal and state regulators, as well as civil litigation, and we expect this amplified focus on privacy and cybersecurity issues to continue. Although the full impact of these developments is yet to be realized, one thing is clear: in 2023, the flurry of regulatory, enforcement, and litigation activity will likely continue and require close monitoring.

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U.S. Attorney’s Offices Issue Nationwide Corporate Voluntary Self-Disclosure Policy

by Joon H. Kim, Lev L. Dassin, Jonathan S. Kolodner, Lisa Vicens, Andrés Felipe Sáenz, and Roberta Mayerle

From left to right: Joon H. Kim, Lev L. Dassin, Jonathan S. Kolodner, Lisa Vicens, Andrés Felipe Sáenz, and Roberta Mayerle (Photos courtesy of Cleary Gottlieb Steen & Hamilton)

On February 22, 2023, the Department of Justice announced a new corporate Voluntary Self-Disclosure Policy for U.S. Attorney’s Offices nationwide (the “USAO Policy”).[1]  The USAO Policy sets forth clearer and concrete benefits for companies that voluntarily and timely self-report misconduct as had been directed by the September 15, 2022 memorandum from the Deputy Attorney General for the Department of Justice (“DOJ”) (the “Monaco Memorandum”).[2]  The USAO Policy also follows the significant revisions to the DOJ Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy recently announced on January 17, 2023 (the “Corporate Enforcement Policy”).[3] 

The USAO Policy applies to all U.S. Attorney’s Offices and is effective immediately.  As such, it standardizes what was previously a patchwork of different practices across U.S. Attorney’s Offices and fills a gap where no comprehensive voluntary self-disclosure policy previously existed. 

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English Court of Appeal: Cryptoasset Network Software Developers May Owe Fiduciary Duties to Token Holders

by Sunil Gadhia, Ferdisha Snagg, and Andreas Wildner

Left to right: Sunil Gadhia, Ferdisha Snagg, and Andreas Wildner (Photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)

On 3 February 2023, the Court of Appeal of England and Wales, Civil Division (the “Court”) handed down judgment in the litigation between Tulip Trading Limited (“TTL”) and a number of core developers of software in respect of four bitcoin networks.[1]

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2022 Year-end False Claims Act Update

by Jonathan Phillips, Winston Chan, John Partridge, James Zelenay,Reid Rector, Michael Dziuban, Chelsea Knudson, Blair Watler, John Turquet Bravard, Ben Gibson, Julien Jabari, Wynne Leahy, Jose Madrid, Nick Perry, Kelsey Stimson, Adrienne Tarver, and Chumma Tum

Top row left to right: Jonathan Phillips, Winston Chan, John Partridge, James Zelenay Middle row left to right: Chelsea Knudson, Michael Dziuban, Blair Watler, Julien Jabari Bottom row left to right: Ben Gibson, Reid Rector, Nick Perry, John Turquet Bravard

A dull year is rare when it comes to the False Claims Act (FCA), but this last year was exceptional by any standard. In the last twelve months, the Supreme Court decided to take up two different issues under the FCA, while the Department of Justice (DOJ) announced, yet again, billions in recoveries and nearly a thousand new FCA cases, a new record.

DOJ’s $2.2 billion in recoveries during FY 2022 marked the fourteenth straight year where recoveries exceeded $2 billion, dating back to 2008. But even more notable than the dollar amount was the sheer volume of FCA activity. DOJ obtained its recoveries from the second-highest number of settlements in history, and there were more new FCA matters initiated in FY 2022 than in any prior year, meaning the pipeline of FCA lawsuits is very full.

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SEC Releases Final Clawback Rules

by Sean Feller, Krista Hanvey, Elizabeth Ising, Ronald Mueller, Michael Scanlon, Lori Zyskowski, Aaron Briggs, and Christina Andersen

On October 26, 2022, the Securities and Exchange Commission (“SEC” or “Commission”), in a 3-to-2 vote, adopted final rules that will require listed companies to implement policies for recovery (i.e., “clawback”) of erroneously awarded incentive compensation, implementing Section 10D of the Securities Exchange Act, which was added by Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).[1]  The SEC originally proposed clawback rules on July 14, 2015,[2] but the proposed rules remained dormant until October 14, 2021, when the SEC reopened the comment period[3] (and which was reopened for a second time on June 8, 2022).[4]  The final rules add new Exchange Act Rule 10D-1 (“Rule 10D-1”), which largely tracks the long-pending proposed rules but also incorporate terms previewed in the 2021 release reopening the comment period.

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United States Expands Sanctions Authorization of Internet-Based Activities in Wake of Protests in Iran

by Judith Alison Lee, Adam M. Smith, Stephenie Gosnell Handler, Audi Syarief, and Samantha Sewall.

On September 23, 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued General License D-2 (“GL D-2”), expanding a prior authorization to further facilitate the free flow of information over the internet to, from, and among residents of Iran. GL D-2 authorizes the exportation to Iran of certain services, software, and hardware incident to the exchange of internet-based communications. GL D-2 supersedes and replaces an existing license, General License D-1 (“GL D-1”), that had been in place without update for over eight years. According to the Treasury Department, the updated license is designed to bring the scope of the license in line with modern technology and ultimately to expand internet access for Iranians, providing them with “more options of secure, outside platforms and services.” As noted below, even though GL D-2 certainly expands upon the types of software and services allowed to be exported, one of its principal effects will likely be the enhanced comfort parties may have in providing such technology to Iran. GL D-1 was often not fully leveraged by the exporting community that was concerned about the extent of coverage. GL D-2 is an evident attempt to right this balance, making sure that exporters remain aware of limitations while also providing more certainty to those who wish to leverage the exemption. Continue reading →