Tag Archives: Douglas K. Yatter

DOJ Launches New Whistleblower Incentive Program

by Kevin Chambers, Terra Reynolds, Douglas K. Yatter, and Lilia B. Vazova

From left to right: Kevin Chambers, Terra Reynolds, Douglas K. Yatter, and Lilia B. Vazova. (Photos courtesy of Latham & Watkins LLP)

DOJ’s pilot program aims to fill gaps in existing federal whistleblower programs and incentivize prompt corporate self-disclosure alongside individual whistleblower tips.

Following the March 2024 announcement of its intention to introduce a new corporate whistleblower incentive program, on August 1, 2024, the Department of Justice (DOJ) launched a three-year pilot program for rewarding whistleblowers who alert DOJ to significant corporate misconduct. DOJ’s new program, modeled after whistleblower programs run by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), may generate a significant number of tips about potential misconduct and adds an important new dimension for companies’ compliance measures and handling of investigations.

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SEC Targets NFTs as Securities for the First Time

by Ghaith Mahmood, Nima H. Mohebbi, Stephen P. Wink, Douglas K. Yatter, Adam Zuckerman, and Deric Behar

Top left to right: Ghaith Mahmood, Nima H. Mohebbi, and Stephen P. Wink.
Bottom left to right: Douglas K. Yatter, Adam Zuckerman, and Deric Behar.
(Photos courtesy of Latham & Watkins LLP)

In its first enforcement action involving NFTs, the SEC focused on issuer marketing that promises outsized returns on investment and platform building.

On August 28, 2023, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (the Order) against a Los Angeles media and entertainment company (the Company) for an unregistered securities offering relating to its sale of $29.9 million worth of non-fungible tokens (NFTs)[1]. The company agreed to a settlement that includes disgorging $5 million, paying another $1 million in fees and penalties, and ceasing and desisting from violating the Securities Act of 1933. Notably, the settlement does not include fraud charges.

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SEC v. Ripple: A Tale of Two Token Transaction Types

Editor’s Note: The NYU Law Program on Corporate Compliance and Enforcement is following the recent decision in SEC v. Ripple Labs, Inc., in which the district court decided competing summary judgment motions for both the SEC and Ripple by holding that contractual sales of XRP, Ripple’s native token, to institutional investors were securities while the XRP token itself was not. In this post, attorneys at Latham & Watkins LLP take a deep dive into the court’s holdings and their implications for the crypto industry.

by Jack Barber, Jenny Cieplak, Benjamin Naftalis, John Sikora, Stephen P. Wink, Douglas K. Yatter, Luca Marquard, Adam Zuckerman, and Deric Behar

Top left to right: Jack Barber, Jenny Cieplak, Benjamin Naftalis, John Sikora, and Stephen P. Wink.
Bottom left to right: Douglas K. Yatter, Luca Marquard, Adam Zuckerman, and Deric Behar.
(Photos courtesy of Latham & Watkins LLP)

A bifurcated decision in a highly anticipated digital assets enforcement action may not provide the clarity that market participants want or need.

On July 13, 2023, Judge Analisa Torres of the US District Court for the Southern District of New York issued an order on motions for summary judgment in the civil enforcement action brought by the Securities and Exchange Commission (SEC) on December 22, 2020, against Ripple Labs Inc. (Ripple), its former CEO (Christian Larsen), and its former COO and current CEO (Brad Garlinghouse). The SEC’s claims include the unlawful offer and sale of securities in violation of Section 5 of the Securities Act of 1933 (the Securities Act), as well as aiding and abetting the allegedly unlawful offer and sale of securities by the individual defendants (see this Latham blog post for more information).

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A Singular(ity) Challenge: Compliance and Enforcement in Financial Markets in the Age of Artificial Intelligence

by Douglas K. Yatter and Hanyu (Iris) Xie

Douglas K. Yatter and Iris Xie (Photos courtesy of Latham & Watkins LLP)

With the sudden arrival in the public consciousness of generative artificial intelligence (AI) tools like ChatGPT, it has become commonplace to observe that the rapid advancement and adoption of AI has the potential to reorder large portions of human economic, social, and artistic activity. The ability of AI technologies to analyze, learn from, and utilize vast amounts of data with less and less human intervention or control may create opportunities and challenges in equal measure. In the financial services industry and financial markets, where use of code has long been essential for data analysis and automation, AI is an evolutionary next step that may test the limits of our existing framework for compliance and enforcement.

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Insider Trading in Commodities Markets: An Evolving Enforcement Priority (Part IV of IV)

by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

This is Part IV of a four-part post. For Part I, discussing the CFTC’s historical authority to bring insider trading actions, and the CFTC’s expanded authority after the Dodd-Frank Act, click here. For Part II, discussing recent enhancements in the CFTC’s ability to detect insider trading, and four of the CFTC’s foundational insider trading cases, click here. For Part III, discussing two of the CFTC’s recent settlements involving insider trading and misuse of confidential information, click here.

In another new area of collaboration between the agencies, the CFTC’s Division of Enforcement announced in March 2019 that it would work alongside the DOJ to investigate foreign bribery and corruption relating to commodities markets, issuing an enforcement advisory on self-reporting and cooperation for violations of the CEA involving foreign bribery.[1] The agency’s first enforcement action in this area arrived in late 2020 with an order that included a focus on misappropriation of confidential information.

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Insider Trading in Commodities Markets: An Evolving Enforcement Priority (Part III of IV)

by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

This is Part III of a four-part post. For Part I, discussing the CFTC’s historical authority to bring insider trading actions, and the CFTC’s expanded authority after the Dodd-Frank Act, click here. For Part II, discussing recent enhancements in the CFTC’s ability to detect insider trading, and four of the CFTC’s foundational insider trading cases, click here.

Three additional settlements recently announced by the CFTC further reinforce the agency’s interest in identifying and deterring misappropriation of confidential information. The latest matters also herald the arrival of criminal enforcement by the DOJ in this area.

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Insider Trading in Commodities Markets: An Evolving Enforcement Priority (Part II of IV)

by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

This is Part II of a four-part post. For Part I, discussing the CFTC’s historical authority to bring insider trading actions, and the CFTC’s expanded authority after the Dodd-Frank Act, click here.

Expansion of CFTC Resources to Detect and Deter Insider Trading

In 2018, to enhance its efforts to identify and take action against insider trading, the CFTC announced the formation of an Insider Trading and Information Protection Task Force (Task Force). The CFTC described the Task Force as “a coordinated effort across the Division to identify and charge those who engage in insider trading or otherwise improperly use confidential information in connection with markets regulated by the CFTC.”[1] The Task Force has endeavored to “thoroughly investigate and, where appropriate, prosecute instances in which individuals have abused access to confidential information — for example, by misappropriating confidential information, improperly disclosing a client’s trading information, front running, or using confidential information to unlawfully prearrange trades.”[2] The Division of Enforcement has noted the ongoing importance of this effort, including in its FY2019 Annual Report, which emphasized that “[i]llegal use of confidential information can significantly undermine market integrity and harm customers in our markets.”[3]

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Insider Trading in Commodities Markets: An Evolving Enforcement Priority (Part I of IV)

by Douglas K. Yatter, Sohom Datta, and Cameron J. Sinsheimer

Among the many changes resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), one that has been slow to develop, but broad in its significance, is the assertion of authority by the Commodity Futures Trading Commission (CFTC) to police insider trading and misappropriation of confidential information in commodities markets. As the primary regulator for derivatives across a wide range of markets, spanning agriculture, energy, interest rates, and beyond, the CFTC had limited authority to address insider trading throughout most of its history. Starting in 2015, however, the agency began bringing enforcement actions against individuals and companies for trading based on misappropriation of confidential information. Since then, the CFTC has brought a series of actions that provide insight into the scope of its new authority, and it has devoted substantial resources to pursuing new cases. Recent enforcement actions in 2020 and early 2021 have continued this trend.

This four-part post reviews the evolution of the CFTC’s insider trading enforcement authority, summarizes the agency’s recent cases, and highlights key developments, including the advent of “tipper” liability, the use of data analytics to identify potential misconduct, and the emergence of parallel criminal enforcement actions. Financial institutions and market participants should be aware that the CFTC — and now also the Department of Justice (DOJ) — will continue to be on the lookout for additional cases to pursue in this emerging area of enforcement.

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Second Circuit Affirms SEC’s Bank Secrecy Act Powers

by William R. Baker III, Douglas N. Greenburg, Benjamin A. Naftalis, Nabil Sabki, John J. Sikora Jr., Eric S. Volkman, Douglas K. Yatter, Timothy H. McCarten, and Hye Eun (Michelle) Cho

The Second Circuit’s recent decision gives the SEC the green light to continue enforcing broker-dealer compliance with the Bank Secrecy Act.

Key Points:

In U.S. Securities and Exchange Commission v. Alpine Securities Corp., the Second Circuit affirmed the SEC’s authority to require broker-dealers to comply with the BSA’s reporting and recordkeeping requirements, under Section 17(a) and Rule 17a-8 of the Securities Exchange Act of 1934 (Exchange Act).
The Alpine decision validates the SEC’s focus on broker-dealer AML programs. In anticipation of such scrutiny, broker-dealers and Chief Compliance Officers should evaluate whether their compliance programs satisfy existing anti-money laundering obligations, and particularly BSA reporting obligations.

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CFTC Enters the Market for Anti-Corruption Enforcement

by Alice S. Fisher, Douglas K. Yatter, William R. Baker III, Douglas N. Greenburg, Robyn J. Greenberg, and Benjamin A. Dozier

New enforcement advisory encourages reporting of foreign corrupt practices that the agency intends to pursue under the Commodity Exchange Act.

On March 6, 2019, the Division of Enforcement (Division) of the US Commodity Futures Trading Commission (CFTC or Commission) announced that it will work alongside the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) to investigate foreign bribery and corruption relating to commodities markets.[1] CFTC Enforcement Director James McDonald announced the agency’s new interest in this area as the Division issued an enforcement advisory on self-reporting and cooperation for violations of the Commodity Exchange Act (CEA) involving foreign corrupt practices.[2]

For companies and individuals who participate in the markets for commodities and derivatives — or whose activities may impact those markets — the CFTC announcement adds a new dimension to an already crowded and complex landscape for anti-corruption enforcement. A range of industries, including energy, agriculture, metals, financial services, cryptocurrencies, and beyond, must now consider the CFTC and the CEA when assessing global compliance and enforcement risks relating to bribery and corruption. This article summarizes the new developments and outlines key considerations for industry participants and their legal and compliance teams. Continue reading →