On December 6, 2021, the Biden Administration issued the “United States Strategy on Countering Corruption”. It is the U.S. government’s first-ever comprehensive anti-corruption plan, and “marks a new chapter” in the country’s efforts to curb graft. If the Administration is successful in executing it, the Strategy may spur a significant increase in anti-corruption investigations and
DOJ Announces First Set of Revisions Strengthening Corporate Criminal Enforcement Policies
On October 28, 2021, Deputy Attorney General Lisa O. Monaco announced the administration’s first significant changes to the DOJ’s policies on corporate criminal enforcement, highlighting departures from Trump-era policies. The announcement focused on three corporate enforcement policy developments:
- Individuals and Corporate Misconduct: to be eligible for cooperation credit, companies must provide the DOJ with all
DOJ Indicts Founder of Nikola for Allegedly Defrauding Retail SPAC Investors
On July 29, 2021, the U.S. Attorney’s Office for the Southern District of New York unsealed a securities and wire fraud indictment against Trevor Milton, the founder and one-time chairman of Nikola Corporation (“Nikola”), a pre-revenue electric- and hydrogen-powered vehicle company which went public through a merger with a special-purpose acquisition company (“SPAC”).[1] The Indictment alleges that Milton made deceptive, false, and misleading claims regarding Nikola’s products and technology, which were directed at retail investors through social media and television, print, and podcast interviews. The SEC also filed a parallel civil action against Milton, alleging violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, and which contends that Milton engaged in a “relentless public relations blitz” on social media and the popular press directed at “Robinhood investors” in order to inflate Nikola’s stock price.
These actions further confirm the heightened law enforcement and regulatory scrutiny of SPACs, as well as continuing interest by government authorities in protecting retail investors in so-called meme stocks.[2]
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Recent Settlement Highlights Risk of Follow-On Litigation Related to FCPA Investigations
On May 12, 2021, Telefonaktiebolaget LM Ericsson (“Ericsson”) announced that it had reached an agreement to settle a claim by a competitor, Nokia Corporation, for €80 million (approximately $97 million).[1] Although Nokia’s complaint against Ericsson was not filed publicly, and therefore the details of the claim are not known, Ericsson’s announcement stated that “[t]he settlement relates to events that were the subject of a 2019 resolution with the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) of investigations into Ericsson’s violations of the U.S. Foreign Corrupt Practices Act (FCPA).”[2] This appears to be a rare instance in which a company that allegedly paid bribes to obtain business from a government entity agreed to compensate a competitor that lost out on the business opportunity as a result of the corrupt conduct, and demonstrates a further, significant risk of follow-on litigation relating to FCPA violations.
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Colombian Corporate Regulatory Authority Expands Application of Compliance and Transparency Program Guidelines
The Colombian Corporations Commission (La Superintendencia de Sociedades) (“Superintendencia”) has issued Resolution 100-006261, which requires the overwhelming majority of companies that are supervised by the Superintendencia and engage in international transactions to adopt and implement a compliance program – called a Business Transparency and Ethics program – by April 30, 2021. The program must be designed to prevent and detect violations of anti-bribery laws, in accordance with 2016 guidance.
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D.C. District Court Rejects Privilege Claim for Post-Data Breach Forensic Report
Last month, in Guo Wengui v. Clark Hill, PLC, the United States District Court for the District of Columbia granted Plaintiff’s motion to compel production of Defendant’s third-party forensic investigation report following a cybersecurity incident.[1] The court held that the forensic report was not covered by the attorney-client privilege or the work product doctrine, providing a cautionary tale for companies conducting post-breach investigations.
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A Playbook for Corporate DOJ Investigations
Corporate investigations under the Biden Administration’s Department of Justice (“DOJ”) are expected to increase in the coming months. Navigating such investigations can be complex, distracting, and costly, and comes with the risk of prosecution and significant collateral consequences for the company. Recently, Cleary Gottlieb partners and former DOJ prosecutors, Lev Dassin, Jonathan Kolodner, and Rahul
SDNY District Court Rules Foreign Sovereigns Are Not Immune From Criminal Jurisdiction In U.S. Court
On October 1, 2020, the SDNY District Court issued an important ruling in U.S. v. Halkbank, holding that foreign state-owned entities (“SOEs”) can be subject to criminal jurisdiction in the United States.
The Court denied the defendant Turkish state-owned bank’s motion to dismiss an indictment charging it with conspiracy, bank fraud, and money laundering
DOJ Charges Former Uber Executive for Alleged Role in Attempted Cover-Up of 2016 Data Breach
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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OCC Imposes $80 Million Penalty in Connection with Bank Data Breach
In a landmark enforcement action related to a bank data breach, the Office of the Comptroller of the Currency (“OCC”) assessed an $80 million civil monetary penalty and entered into a cease and desist order with the bank subsidiaries of Capital One on August 6, 2020. The actions follow a 2019 cyber-attack against Capital One. The Federal Reserve Board also entered into a cease and desist order with the banks’ parent holding company. The OCC actions represent the first imposition of a significant penalty against a bank in connection with a data breach or an alleged failure to comply with the OCC’s guidelines relating to information security.
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