On August 20, 2020, the Department of Justice (“DOJ”) announced that it had charged Joseph Sullivan, the former Chief Security Officer (“CSO”) of Uber Technologies Inc. (“Uber”), with obstruction of justice and misprision of a felony for allegedly attempting to cover up Uber’s 2016 data incident during the course of an investigation by the Federal Trade Commission (“FTC”).
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CISA Alert: North Korean Cyber Threat Poses Increased Risk for Financial Institutions
On April 15, 2020, the U.S. Departments of State, the Treasury, and Homeland Security, and the Federal Bureau of Investigation issued an advisory alert providing guidance on the North Korean cyber threat and steps to mitigate that threat (the “Alert”).[1] The U.S. Government has repeatedly warned the private sector that North Korea, formally known as the Democratic People’s Republic of Korea (“DPRK”), routinely engages in malicious cyber activities and has specifically targeted financial institutions.
This Alert serves as a reminder, especially during this pandemic as businesses go remote and virtual to an unprecedented degree, that the cyber threat, including from the DPRK, remains a critical risk for all companies. Financial institutions in particular, a traditional target of North Korean cyber activity, should take steps to ensure they are protecting themselves from and responding effectively to malicious cyber intrusions.
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Law Enforcement Priorities and Practicalities During the COVID-19 Pandemic
As the COVID-19 pandemic continues to rapidly unfold, with breathtaking effects on everyday life barely imaginable just weeks ago, enforcement agencies have responded with pronouncements prioritizing investigations into COVID-19-related frauds and have proceeded with some significant non-COVID-19 law enforcement actions likely planned before the full impact of the pandemic could have been predicted. At the same time, enforcement agencies are having to respond to the same practical challenges and constraints that the rest of society and other large organizations around the world face. They, like the rest of us, are facing severe travel restrictions, learning to work remotely, and dealing with colleagues and family members who are sick from the virus. Over the coming weeks and months, enforcement agencies will be managing the COVID-19-focused enforcement priorities and moving forward with their existing matters, while they deal with the practical realities and uncertainties presented by the pandemic.
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Insider Trading Risk During the COVID-19 Outbreak
On March 20, 2020, news outlets reported that four U.S. Senators sold millions of dollars in stock following classified briefings to the Senate on the threat of a COVID-19 outbreak. Three days later, the Co-Directors of the Securities and Exchange Commission’s (“SEC”) Division of Enforcement, Stephanie Avakian and Steven Peikin, issued a statement reminding market participants of their obligations with respect to material non-public information (“MNPI”) and of the SEC’s commitment to protecting investors from fraud and ensuring market integrity.[1]
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Task Force Led By Preet Bharara and Cleary Gottlieb’s Joon H. Kim Issues Report Recommending Reforms to Insider Trading Law
Insider trading law has remained a subject of significant debate and attention, including with a recent Second Circuit decision addressing the use of 18 U.S.C. §§ 1343 (wire fraud) and 1348 (securities fraud) in insider trading cases[1] and a new insider trading bill that passed the U.S. House of Representatives in December by an overwhelming majority. Yesterday, a blue ribbon task force headed by Preet Bharara, the former U.S. Attorney for the Southern District of New York, published a report studying the history and current state of insider trading law and proposing reforms that would bring greater clarity and certainty to the law.
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Priorities, Trends and Developments in Enforcement and Compliance
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2020”.
Enforcement of anti-bribery, sanctions and money laundering laws remains a top priority for US authorities. In 2019, the US Department of Justice and civil regulators issued new or updated policies aimed at
SEC to Allow Settling Parties to Submit Simultaneous Settlement Offers and Applications for Waiver from Disqualifications
On July 3, SEC Chairman Jay Clayton issued a statement signaling a policy change in SEC settlements and the consideration of applications for waiver of collateral consequences flowing from those settlements, such as the loss of certain significant procedural advantages in (or even outright exemption from) the securities registration process.[1] In practice, this change could both streamline the process of settling enforcement actions with the SEC and provide additional certainty to settling entities, which, under the current regime, must decide whether to settle a matter before completing and knowing the outcome of negotiations over waivers.
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Proposed Bad Actor Disqualification Act of 2019 Would Severely Limit the Availability of Waivers for Institutions Entering into Settlements with the SEC and DOJ
Last month, Representative Maxine Waters, Chair of the House Financial Services Committee, introduced a discussion draft of the “Bad Actor Disqualification Act of 2019” (the “Proposed Act”). Similar to proposed legislation Rep. Waters introduced in 2015 and 2017, the effect of the Proposed Act, if passed, would be to dramatically increase the burdens on institutions
DOJ Guidance on Corporate Compliance Programs: A Checklist for Directors
As discussed in our most recent blog post, on April 30, 2019, the Criminal Division of the U.S. Department of Justice (“DOJ” or “the Department”) announced updated guidance for the Criminal Division’s Evaluation of Corporate Compliance Programs (“the Guidance”). The Guidance is relevant to the exercise of prosecutorial discretion in conducting an investigation of a corporation, determining whether to bring charges, negotiating plea or other agreements, applying sentencing guidelines and appointing monitors.[1] The Guidance focuses on familiar factors: the adoption of a well-designed compliance program that addresses the greatest compliance risks to the company, the effective implementation of the company’s compliance policies and procedures, and the adequacy of the compliance program at the time of any misconduct and the response to that misconduct. The Guidance makes clear that there is no one-size-fits-all compliance program and that primary responsibility for the compliance program will lie with senior and middle management and those in control functions.
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DOJ Updates Guidance for Evaluating Corporate Compliance Programs
On April 30, 2019, the Criminal Division of the U.S. Department of Justice announced updated guidance for the Criminal Division’s Evaluation of Corporate Compliance Programs (“the Guidance”) in charging and resolving criminal cases. This memorandum highlights key updates and discusses the themes present across versions of the Guidance. Overall, this newest version places greater emphasis