Category Archives: U.S. Department of Justice (DOJ)

Federal Agencies Will Jointly Look for Bias and Discrimination in AI

by Bradford Hardin, K.C. Halm, Aisha Smith, and Matt Jedreski

From left to right: Bradford Hardin, K.C. Halm, Aisha Smith, and Matt Jedreski (photos courtesy of David Wright Tremaine LLP)

DOJ, FTC, CFPB, and EEOC Announce Joint Commitment to Use Existing Consumer Protection and Employment Authority to Oversee Use of Artificial Intelligence

On April 25, 2023, the Federal Trade Commission (FTC), the Civil Rights Division of the U.S. Department of Justice (DOJ), the Consumer Financial Protection Bureau (CFPB), and the U.S. Equal Employment Opportunity Commission (EEOC) released a joint statement highlighting their commitment to “vigorously use [their] collective authorities to protect individuals” with respect to artificial intelligence and automated systems (AI), which have the potential to negatively impact civil rights, fair competition, consumer protection, and equal opportunity. These regulators intend to use their existing authority to enforce consumer protection and employment laws, which apply regardless of the technology used for making decisions or delivering products and services. The joint statement outlines several key areas of focus for the agencies – ensuring that AI does not result in discriminatory outcomes, protecting consumers from unfair, deceptive, or abusive acts or practices (UDAAP), preventing anticompetitive practices that may be facilitated or exacerbated by AI, and promoting responsible and transparent development of AI systems. Rather than operate as if AI is unregulated, businesses should ensure their use of AI complies with existing laws and regulations.

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Former Prosecutors React to Superseding Indictment in Sam Bankman-Fried Case

The NYU School of Law Program on Corporate Compliance and Enforcement (PCCE) is following the collapse of FTX and the civil and criminal enforcement actions arising from FTX’s and its founder’s alleged misconduct. In this post, several white collar defense attorneys and former prosecutors offer their reactions to the superseding indictment of Sam Bankman-Fried (SBF) obtained on March 27, 2023 by the U.S. Attorney’s Office for the Southern District of New York (SDNY).

Top row from left to right: Rebecca Mermelstein, Mark Racanelli, and Elizabeth Roper
Bottom row from left to right: William Komaroff, Seetha Ramachandran, and Joseph Facciponti (photos courtesy of authors)

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Russia Sanctions After One Year: United States Imposes New Round of Restrictions

by Mark Chalmers, Billy Hicks, Kendall Howell, Paul D. Marquardt, Will Schisa, Daniel P. Stipano, and Charles Marshall Wilson

Top row from left to right: Mark Chalmers, Billy Hicks, and Kendall Howell. Bottom row from left to right: Paul D. Marquardt, Will Schisa, Daniel P. Stipano, and Charles Marshall Wilson. (Photos courtesy of Davis Polk & Wardwell LLP)

One year after Russia’s invasion of Ukraine, the United States and its allies imposed a new round of sanctions targeting Russia’s metal, mining, and banking sectors and signaled an increased focus on enforcement.

On February 24, 2023, the United States and its allies marked the one-year anniversary of Russia’s invasion of Ukraine with a new round of sanctions and export control restrictions targeting Russia’s economy and financial system. Consistent with the U.S. sanctions response from the outbreak of the conflict, the latest round of sanctions focused on Russia’s banking sector and export-oriented industries –adding several major Russian financial institutions to the SDN List and targeting Russia’s metal and mining sector. On the same day, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) released new rules significantly expanding and modifying the export control restrictions applicable to Russia and Belarus, which may require exporters to re-examine their processes for product classification.

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White Collar Defense Attorneys React to DOJ and SEC Enforcement Actions for Misuse of 10b5-1 Plans

Editor’s Note: Recently, both the DOJ and the SEC brought, for the first time ever, criminal and civil insider trading charges against a corporate executive for his alleged fraudulent misuse of a 10b5-1 trading plan, which typically allows corporate insiders to pre-schedule sales of company shares to avoid accusations of insider trading. In this post, several former federal prosecutors and white collar defense attorneys provide their reactions to this case and its implications for future insider trading cases.

Top row from left to right: Brian Jacobs, Gina Parlovecchio, Rachel Maimin, and Kathleen McGee.
Bottom row from left to right: Robert Johnston, Marc Rein, and Katherine Goldstein. (photos courtesy of authors’ respective firms)

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“Not a Flash in the Pan” – Government Enforcers Say Sanctions and Export Control Enforcement Against Corporations Is Here to Stay

Editor’s Note: the NYU Program on Corporate Compliance and Enforcement is publishing reactions to the American Bar Association’s annual White Collar Crime National Institute in Miami on March 2 and 3, 2023.

From left to right: Michael Kim Krouse, Amy Jeffress, Jayce Born, and Baruch Weiss (photos courtesy of Arnold & Porter LLP)

by Michael Kim Krouse, Amy Jeffress, Jayce Born, and Baruch Weiss

Hot on the heels of DAG Monaco’s speech this morning, this afternoon featured a timely panel on the government’s enforcement agenda for sanctions and export controls. The speakers included Matthew Axelrod, Assistant Secretary for Export Enforcement, Bureau of Industry and Security, US Department of Commerce; Matthew Olsen, Assistant Attorney General, National Security Division, US Department of Justice; Andrea Gacki, Director, Office of Foreign Assets Control, US Department of Treasury; and Steve Francis, Acting Executive Associate Director for Homeland Security Investigations, US Department of Homeland Security.

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Global Anti-Bribery Year-in-Review: 2022 Developments and Predictions for 2023

by Jay Holtmeier, Kimberly A. Parker, Erin G.H. Sloane, Christopher Cestaro, Meghan E. Kaler, and Caroline R. Geist-Benitez

From left to right: Jay Holtmeier, Kimberly A. Parker, Erin G.H. Sloane, Christopher Cestaro, Meghan E. Kaler, and Caroline R. Geist-Benitez. (Photos courtesy of Wilmer, Cutler, Pickering, Hale & Dorr LLP)

While Foreign Corrupt Practices Act (FCPA) enforcement activity has not come close to returning to the heights seen a few years ago, 2022 reflected significant increases from the prior year in both the number of cases against corporate defendants (eight vs. four) and the combined total of monetary penalties levied ($1.56 billion[1] vs. $459 million). Consistent with this upward trend of enforcement activity, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) continue to signal that anti-corruption enforcement is a priority and to provide further detail and clarification regarding their approach to corporate enforcement. Below are the key takeaways regarding FCPA enforcement in 2022 and trends to keep in mind as we look ahead to 2023.

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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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Regulatory Priorities at the ABA White Collar Conference: Market Protection, Crypto, and ESG

by Robertson Park

Robertson Park (photo courtesy of Davis Wright Tremaine LLP)

The ABA White Collar Conference this year offered a slightly more forthcoming group of government agency representatives from the DOJ, SEC, and the CFTC. Maybe it was the lifting of the pandemic fog, and maybe it was the March heat in Miami, but it was certainly a more assertive and transparent government narrative. The arc is clearly up across the enforcement and regulatory landscape. The enforcement panel reminded me of the movie The Graduate, where Dustin Hoffman is presented the distilled single word of advice –“Plastics.” The enforcers weren’t focused on one word of advice, but equally focused on several — “protect markets” — “Crypto”— and “ESG.” The first two are already apparent in ongoing and recent investigations and prosecutions. The latter presents a more troubling landscape for companies.

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White-Collar and Regulatory Enforcement: What Mattered in 2022 and What to Expect in 2023

by John F. Savarese, David B. Anders, Ralph M. Levene, Sarah K. Eddy, Wayne M. Carlin, and Kevin S. Schwartz

(Photos courtesy of Wachtell, Lipton, Rosen & Katz) From left to right: John F. Savarese, David B. Anders, Ralph M. Levene, Sarah K. Eddy, Wayne M. Carlin, Kevin S. Schwartz.

Introduction

Each year we try in this wrap-up memo to flag the main enforcement developments that companies should be alert to in the coming year and also to identify steps companies should be taking to prepare themselves in the event of a significant white-collar or regulatory enforcement inquiry. Because policy preferences (and politics) often shape these developments, the early days of any new administration in D.C. are frequently harder to read, and teasing apart mere rhetoric from concrete changes in enforcement priorities can be challenging. But now, two years into the Biden administration, we can see some clear themes emerging: Penalties are up—way up; investigations appear to be moving a bit faster; cryptoassets and cybersecurity have become heightened risk areas; government expectations for what constitutes full cooperation have been amped up; and many new disclosure demands across a wide range of corporate activities are coming on line. At the same time, however, several time-tested verities remain firmly in place, including the need to maintain strong internal accounting controls, provide comprehensive (and frequent) training, instill a genuinely ethics-oriented tone at the top, stay vigilant in detecting internal misconduct, and react swiftly in the event problems do arise by self-remediating and self-reporting when appropriate. A company that positions itself in this way optimizes its chances not only of securing the best possible resolution in the event of criminal or civil charges but also of forcefully resisting enforcement action where warranted.

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Beyond Howey: How the SEC’s Reach Over Digital Assets Extends Further Than Just Initial Coin Offerings

by Ijeoma Okoli

Ijeoma Okoli

On January 12, 2023, the U.S. Securities and Exchange Commission (the “SEC”) unveiled charges against two large, well-known participants in the crypto sector, Gemini Trust Company, LLC (“Gemini”) and Genesis Global Capital, LLC (“Genesis”) and accused them of engaging in a multi-billion dollar unregistered offer and sale of securities to retail investors in the form of Gemini Earn, a crypto lending program, between February 2021 and November 2022.[1] The SEC’s action came three months after both firms paused customer withdrawals, effectively trapping funds of retail and institutional investors alike with no indication as to whether customers will ever be able to recoup their funds. A few days after the SEC unveiled charges against Gemini and Genesis, Genesis filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code,[2] effectively ending a once lucrative form of capital raising in the crypto sector as other major competitors had already either run into bankruptcy trouble themselves in 2022 and/or had been previously subject to SEC enforcement actions.

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