On March 5, 2021, the Securities and Exchange Commission (“SEC”) filed a lawsuit in federal court against AT&T, Inc. (“AT&T”) for violating Regulation FD, and also charged three of AT&T’s Investor Relations executives with aiding and abetting this violation. Reg FD (which stands for “Fair Disclosure”) prohibits companies from selectively disclosing material nonpublic information to certain categories of individuals, including analysts and investors, and is intended to promote full and fair disclosure of such information in order to ensure that all investors have equal access to potential market-moving information.
- 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.
- This is another example of how compliance standards across Latin America and the United States have been converging in recent years on a set of standards, even if some differences remain.
- For example, both Colombian and U.S. guidance emphasize the importance of tailoring compliance programs to the most salient risks for the company; continually improving compliance programs; performing adequate due diligence on third parties; and ensuring a commitment by management to compliance, both in terms of company culture and resources allocated to the program.
- The new Resolution provides a further reason for multinational companies with business activities in the Americas and Colombian companies expanding in the region to establish a strong compliance program.
On February 18, 2021, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) announced a $507,375 settlement with BitPay, Inc. (BitPay), a payment processor for merchants accepting digital currency as payment for goods and services, for 2,102 apparent violations of multiple sanctions programs between 2013 and 2018. The settlement highlights that financial service providers facilitating digital currency transactions must not only establish sanctions compliance programs to screen their own customers but also must monitor third-party non-customer transaction information. Continue Reading OFAC Settles with Digital Currency Payment Processor for Sanctions Violations
On March 3, 2021, the U.S. Securities and Exchange Commission (“SEC”) Division of Examinations (the “Division”)—formerly the Office of Compliance Inspections and Examinations—released its 2021 Examination Priorities (“2021 Priorities”). The 2021 Priorities generally retain perennial risk areas as the Division’s core focus, but do include several new and emerging risk areas reflecting broader policy shifts under new SEC leadership.
The 2021 Priorities include: retail investors; information security and operational resilience; financial technology (“Fintech”), including digital assets; anti-money laundering; transition from the London Inter‑Bank Offered Rate (“LIBOR”); several areas covering registered investment advisers and investment companies; market infrastructure; and oversight of the Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board programs and policies. Although not formal priorities, the Division will also focus on climate-related risks and environmental, social and governance (“ESG”) matters in light of recent market developments and broader attention in these areas. Continue Reading Turning the Page: Highlights of the SEC’s Division of Examination’s 2021 Priorities
After what appears to be a period of relative leniency in 2018/19, enforcement actions for violations of the EU General Data Protection Regulation (“GDPR”) have since intensified. In 2020, according to publically available information, supervisory authorities across the EU and the UK Information Commissioner’s Office (“ICO”) have issued over EUR 170 million worth of fines combined, with six of the top ten individual fines imposed being issued in 2020. Continue Reading Ready to Pounce: Regulators Are Intensifying GDPR Enforcement
In a decision with potentially far-reaching implications, Alasaad v. Mayorkas, Nos. 20-1077, 20-1081, 2021 WL 521570 (1st Cir. Feb. 9, 2021), the First Circuit recently rejected First and Fourth Amendment challenges to the U.S. government agency policies governing border searches of electronic devices. These policies permit so-called “basic” manual searches of electronic devices without any articulable suspicion, requiring reasonable suspicion only when officers perform “advanced” searches that use external equipment to review, copy, or analyze a device. The First Circuit held that even these “advanced” searches require neither probable cause nor a warrant, and it split with the Ninth Circuit in holding that searches need not be limited to searches for contraband, but may also be used to search for evidence of contraband or evidence of other illegal activity. This decision implicates several takeaways for company executives entering and leaving the United States, particularly if they or their employers are under active investigation. In-house counsel in particular should consider the implications of the decision given obligations of lawyers to protect the confidentiality of attorney-client privileged information.
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. 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. Continue Reading D.C. District Court Rejects Privilege Claim for Post-Data Breach Forensic Report
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 Mukhi, published a chapter on “Representing Corporations in United States Attorney’s Office and DOJ Investigations,” which can serve as a useful guide for in-house counsel to prepare for an investigation or manage an ongoing matter. The chapter, available here, covers topics including DOJ’s organizational structure, the typical path of a corporate criminal investigation, recent policy initiatives at DOJ that reflect an effort to provide greater transparency with respect to corporate investigations, the process by which federal prosecutors make critical decisions about filing charges and resolving investigations, and the opportunities for counsel to advocate for their clients along the way.
Earlier this month, the Supreme Court vacated and remanded a high-profile insider trading case, United States v. Blaszczak, to the Second Circuit “for further consideration in light of Kelly v. United States.” Kelly is more commonly known as the “Bridgegate” decision, in which the Supreme Court restricted the application of federal fraud statutes to schemes seeking to obtain property, to the exclusion of schemes primarily targeting regulatory actions by government officials. In light of the remand, the Second Circuit will now reconsider its endorsement in Blaszczak of liability under Title 18 for a scheme targeting “political intelligence.” Continue Reading Second Circuit to Reconsider the Scope of Insider Trading Prosecutions Under Federal Fraud Statutes After Supreme Court’s Bridgegate Decision
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2021”.
Antitrust was front-page news in 2020: regulators sued Google and Facebook in some of the biggest antitrust enforcement actions in recent decades. Robust antitrust enforcement can be expected to continue under a Biden administration.