A new $2 million SBA safe harbor for PPP loans appears to create a wide umbrella that substantially reduces the risk that adverse consequences will rain down and soak companies with loans in this category. Perkins Coie attorneys examine the May 13 guidance and say companies will continue to benefit from conducting a PPP “necessity”

Companies seeking PPP loans must concurrently navigate the potential minefield of public scrutiny and government enforcement, requiring a heightened level of planning and procedures.

An adequate compliance program is a must to avoid ramped-up enforcement efforts and to minimize legal and reputational risks.

Click here to read the full article published by Bloomberg Law.

On April 14, 2020, the U.S. Department of Justice made a long-awaited move towards enhanced transparency into the corporate compliance monitorship selection process in launching a new webpage that lists the names of all independent compliance monitors for the Fraud Section’s thirteen active monitorships.  Seven of the active monitorships are associated with the FCPA Unit,

When administrators of colleges and universities first learn of misconduct, abuse, or neglect allegations within their communities—especially those involving wrongdoing committed by beloved mentors or authority figures within the institution—it is critical that the institution react swiftly and thoughtfully by conducting appropriately-scaled, rigorous, and credible investigations.  Such investigations are primarily focused on establishing what factually

Authored by T. Markus Funk, Hon. Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois.

As the COVID-19 pandemic ravages communities across the globe, we are witnessing an unprecedented spike in demand for immediate supplies to quarantined citizens, medical workers, and governmental agencies struggling to flatten the curve.

Sadly, we

The CFTC filed a record number of enforcement actions in 2019 against market participants, the majority of which involved commodities fraud, market manipulation, and spoofing.  As a result of these actions, the CFTC reports that it obtained over $1.3 billion in monetary sanctions and disgorgement in 2019—a 39% increase over the prior fiscal year.  And at this year’s ABA Derivatives & Futures Law Committee Winter Meeting, regulators from the CFTC and ICE warned market participants to expect these enforcement trends in spoofing and market manipulation to continue into 2020.

CFTC Seeks Parallel Enforcement with Market Regulators, but Coordinated Resolutions Scarce

 The CFTC’s Chief Counsel of the Division of Enforcement, Gretchen Lowe, commented that protecting market integrity continues to be a top priority at the CFTC.  She noted that Enforcement is particularly focused on spoofing and market manipulation, as well as matters involving regulatory infractions, such as registrants’ reporting obligations, failure to supervise, business conduct standards, and adequacy of remediation efforts.

Lowe also signaled that Enforcement will continue to pursue “parallel cooperative enforcement efforts” with both domestic and foreign market regulators—including SROs and criminal enforcement authorities in the spoofing context.  ICE Futures U.S. Enforcement Counsel, Frances Mendieta reinforced that the lines of communication are “very open” between ICE and the CFTC, and that the regulators may share information with each other over the course of an investigation.

However, despite such extensive interplay between the regulators, coordinated or “global” resolutions appear to be the exception, rather than the rule.  Both Lowe and Mendieta suggested that the sequential nature of the regulators’ respective investigations can make it difficult to coordinate settlements.  Consequently, while regulators seem keen to build on each other’s investigations, the resolutions often occur months, or sometimes years apart, which can leave market participants in protracted cycle of enforcement involving the exact same conduct.
Continue Reading CFTC, Market Regulators Forecast Aggressive Enforcement Trends, High Bar for Cooperation

The U.S. Commodity Futures Trading Commission’s (CFTC) Director of the Division of Swap Dealer & Intermediary Oversight (DSIO), alongside fellow panelist and National Futures Association’s (NFA) General Counsel, fielded wide-ranging questions from co-panelists and audience members alike in a discussion focused on Intermediaries & Advisors at the ABA’s Derivatives & Futures Law Committee Winter Meeting in Naples, Florida (January 23-25, 2020).  Chief among the topics addressed were views regarding DSIO and NFA’s evolving approach to swap dealer oversight, particularly on the heels of DSIO’s recently issued guidance on the Chief Compliance Officer Annual Report for futures commission merchants, swap dealers, and major swap participants.
Continue Reading DSIO and NFA Share Views on Evolving Swap Dealer Oversight

The DOJ is increasingly using a “data focused approach” to identify economic crime and corporate misconduct, according to a DOJ official.  In remarks to the 6th Annual Government Enforcement Institute, Deputy Assistant Attorney General Matthew S. Miner recently shared that using data analytics to identify fraud improves efficiency, expedites case development, and makes program enforcement “more targeted.”

While Miner indicated that data analytics are being utilized across the DOJ’s white collar enforcement efforts, he pointed to the healthcare industry and financial sector as two such targets of the DOJ’s data-driven enforcement approach.  The DOJ has already successfully used Medicare claims data to identify fraud.  That success is attributed, in part, to the DOJ’s healthcare data analytics team which analyzes the Centers for Medicare and Medicaid Services’ payment database for health care fraud activity and trends.  The financial sector—specifically the commodities and securities arena—represents an expanding “area of focus” for the DOJ’s data-driven enforcement.  Miner indicated that the DOJ uses trading data to identify indicators or anomalies that are suggestive of market manipulation and other fraudulent activity.
Continue Reading DOJ Leveraging Data Analytics To Detect Fraud

One of the many challenges companies face when assessing their Foreign Corrupt Practices Act (“FCPA”) liability is determining whether a potential business partner constitutes a “foreign government official” under the FCPA.  From a definitional perspective, the FCPA is far from a model of clarity on this point.  See 15 U.S.C. § 78dd-2(h)(2)(A).

By way of example, consider the compliance sandbars companies must circumnavigate to determine whether (and when) providing something of value to “traditional authorities” (including First Nations, Métis and Inuit peoples) could impose FCPA liability.  This question often arises when U.S.-based companies are asked to make donations to American Indian tribes with whom they interact, or to do favors for individual members of a tribe.  For instance, a tribal elder may ask that a company doing business with the tribe employ a certain tribal member, or provide an internship to the chief’s son, etc.  Under such circumstances, companies might find themselves evaluating the contemplated transaction through the amorphic lens of the FCPA.

Understanding the Definitional Challenge

Going back to basics, the FCPA’s anti-bribery provisions define a “foreign official” as:

[A]ny officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization. 15 U.S.C. § 78dd-2(h)(2)(A).

Do American Indian tribes fit under this definition?  While there is little guidance on this analysis outside the United States (see this helpful article by my colleagues on that issue), there is even less in the context of  American Indian tribes, even though they possess much-discussed “sovereign status” in the United States.  This is both surprising and concerning.
Continue Reading American Indian Tribes and “Foreign Officials” Under the FCPA

Last month, attorneys from around the world descended upon Buenos Aires to tango with criminal justice and anti-corruption experts at the International Bar Association’s 22nd Annual Transnational Crime Conference.  Conference highlights included remarks from distinguished members of the Argentine government, including the Minister of Justice and Human Rights, President of the Financial Information Unit, and Supreme Court President.  These officials focused their comments on criminal justice reforms in Argentina, the role of regulators and the judiciary in establishing and inspiring confidence in the rule of law, and the hope that such efforts would improve Argentina’s reputation in the global fight against graft and corruption.

Panelists and attendees also discussed similar efforts across the globe, cross-border cooperation, and collateral issues to consider when representing clients subject to international anti-corruption inquiries or enforcement actions. Of note were discussions regarding the following:

Evolving Mechanisms for Detecting and Penalizing Corruption  

  1. Increased use of money laundering statutes and administrative remedies.

Although most anti-corruption laws around the world criminalize the payment of bribes to government officials, the receipt of bribes (passive bribery) is conspicuously absent from laws like the U.S. Foreign Corrupt Practices Act (“FCPA”).  As a result, beneficiaries of bribes have traditionally escaped FCPA liability.  However, panelists noted, recent years have seen an increase in anti-money laundering prosecutions and civil administrative actions targeting profits from corrupt dealings that otherwise fall outside the reach of traditional anti-bribery paradigms.  Using money laundering statutes, U.S. prosecutors were able to prosecute officials working for Venezuela’s state-owned energy company, Petroleos de Venezuela, S.A., who accepted bribes from several U.S. executives (themselves prosecuted under the FCPA).

Panelists noted that more than €2 billion in anti-money laundering fines were assessed globally in 2018 alone, calling banks not yet penalized for money laundering issues “the exception and not the norm.”  Another new norm is the decoupling of predicate offenses (i.e., conduct generating illegal proceeds) from allegations that such proceeds were in fact “laundered,” allowing prosecutors to bring intentional and negligent money laundering cases.  Panelists also warned that lawyers were being targeted more than ever as negligent money launderers, based on the sources of client payments.
Continue Reading Highlights from Transnational Crime Conference: Expanding Anti-Corruption Enforcement & Cross-Border Cooperation