On July 11, 2018 the U.S. Department of Justice (“DOJ”), Bureau of Consumer Financial Protection (“CFPB”), the Securities and Exchange Commission (“SEC”) and the Federal Trade Commission (“FTC”) announced the establishment of a new Task Force on Market Integrity and Consumer Fraud (the “Task Force”).[1]  Deputy Attorney General Rod Rosenstein made the announcement on behalf of the Task Force, joined by Acting Director Mick Mulvaney of the CFPB, Chairman Jay Clayton of the SEC and Chairman Joe Simons of the FTC.

The purpose of the Task Force, as outlined by Rosenstein at the press conference, is to “focus on combating fraud against consumers—particularly the elderly, service members, and veterans—and corporate fraud that victimizes the general public and the government.”[2]  It is meant to facilitate inter-agency cooperation in deterring and prosecuting these types of consumer fraud crimes.

This Task Force expressly replaces the Financial Fraud Enforcement Task Force initiated by former President Barack Obama,[3] which focused on “the investigation and prosecution of cases of bank, mortgage, loan, and lending fraud; securities and commodities fraud; retirement plan fraud; mail and wire fraud; tax crimes; money laundering; False Claims Act violations; unfair competition; discrimination; and other financial crimes and violations”[4]—essentially the prosecution of complex frauds arising out of the 2008 financial crises.  Jesse Panuccio, the Acting Associate Attorney General, who answered questions following the press conference, indicated that the Task Force can be seen as an expansion of the Financial Fraud Enforcement Task Force which addressed a particular moment in time.[5]  Panuccio explained that this Task Force is designed to be a broader effort that expands to additional areas of consumer fraud and market integrity, such as elder fraud and cybercrime.

The establishment of such a revised Task Force presages a focus on consumer-related protections in enforcement actions.  However, this is not entirely a new initiative.  In January 2017, the SEC announced that its priorities included a focus on protecting retail investors, including elderly individuals planning for retirement, as well as cybercrime.[6]  Since the SEC already coordinates with the U.S. Attorneys’ Offices (“USAO”) and DOJ on fraud cases, some of the coordination envisioned by the Task Force has likely de facto existed for some time.

Nonetheless, the new Task Force is significant for two reasons.  First, the Task Force involves a broad array of federal agencies and senior DOJ officials.  The Task Force will be led by the Deputy Attorney General, who serves as Chair, and the Associate Attorney General, who serves as Vice Chair.  Its members will include (i) the Assistant Attorney General (Criminal Division); (ii) the Assistant Attorney General (Civil Division); (iii) the Assistant Attorney General (Tax Division); (iv) the Assistant Attorney General (Antitrust Division); (v) the Director of the Federal Bureau of Investigation; and (vi) United States Attorneys designated by the Attorney General.  Further, the Task Force is directed to invite participation from a multitude of federal agencies.[7]  Broadening the focus to other federal agencies demonstrates the particularly high level of focus being placed on protecting retail investors.  Second, the introduction of the Task Force may reflect a coordinated effort to move away from the complex frauds of the financial crisis—more than a decade past—as the majority of such cases have concluded.  Thus, while it is not surprising that the Administration would focus on retail crimes and individual victims, the establishment of the Task Force is a signal that this administration plans to place particular emphasis on the protection of consumers, and there likely will be an uptick in the prosecution of such consumer-related crimes.  It remains to be seen, however, whether this change in focus will also lead to a reduction in the emphasis on prosecuting corporations and corporate crime.

[1] DOJ Press Release, Department of Justice, Bureau of Consumer Financial Protection, U.S. Securities and Exchange Commission, Federal Trade Commission Announce Task Force on Market Integrity and Consumer Fraud (July 11, 2018) (“Task Force Press Release”), available at https://www.justice.gov/opa/pr/department-justice-bureau-consumer-financial-protection-us-securities-and-exchange-commission.

[2] Deputy Attorney General Rod J. Rosenstein Delivers Remarks Announcing the Establishment of the Task Force on Market Integrity and Consumer Fraud, DOJ (July 11, 2018), https://www.justice.gov/opa/speech/deputy-attorney-general-rod-j-rosenstein-delivers-remarks-announcing-establishment-task.

[3] Executive Order Regarding the Establishment of the Task Force on Market Integrity and Consumer Fraud (July 11, 2018), available at https://www.whitehouse.gov/presidential-actions/executive-order-regarding-establishment-task-force-market-integrity-consumer-fraud.

[4] Exec. Order No. 13519, available at https://obamawhitehouse.archives.gov/the-press-office/executive-order-financial-fraud-enforcement-task-force.

[5] DOJ, DAG Rosenstein Announces New Task Force on Market Integrity and Consumer Fraud (July 11, 2018), available at https://www.youtube.com/watch?v=-tyoA38HscI.

[6] SEC Press Release, SEC Announces 2017 Examination Priorities (Jan 12, 2017), available at https://www.sec.gov/news/pressrelease/2017-7.html.

[7] The agencies include: the Departments of Treasury, Defense, Health and Human Services, Housing and Urban Development, Energy, Education, Veterans Affairs, and Homeland Security, as well as the Small Business Administration, the Board of Governors of the Federal Reserve System, the Social Security Administration, the United States Agency for International Development, the CFPB, the FTC, the SEC, the General Services Administration, the National Credit Union Administration, the Commodity Futures Trading Commission, the Board of Directors of the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Postal Inspection Service.  See Task Force Press Release.