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THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS

Government Investigations and White Collar Litigation Group
Financial Institution Regulation, Securities and Commodities

2021 Brought SEC Focus on Crypto Exchanges and Lending Platforms

This past year, the U.S. Securities and Exchange Commission followed through on its commitment to aggressively enforce securities laws in digital assets markets. As a result, it sharpened its focus on cryptocurrency exchanges and lending products.

Read on for an overview and analysis of SEC activity in cryptocurrency and what to expect in 2022.


About McGuireWoods’ Securities Enforcement and Litigation Team

Our Securities Enforcement and Litigation Team is part of our elite Government Investigations and White Collar Litigation Department includes members of our nationally-recognized Financial Services Litigation Department and former senior SEC and FINRA enforcement attorneys and litigators, as well as high-level federal prosecutors. Our Team also leverages the deep experience of the Firm’s Securities and Capital Markets and Public Finance Departments to counsel clients on the full spectrum of regulatory, compliance, and business issues arising from a government examination, investigation, and litigation. Together, we routinely conduct internal investigations and audits, and advise clients on strengthening corporate compliance and supervisory programs to stay current with the regulators on examination and enforcement priorities and to prevent recurrence of potential securities laws violations. By working collaboratively, we ensure our clients receive well-tailored advice and a comprehensive defense team to handle the many complex issues presented in government inquiries.

Fraud, Deception and False Claims

Elizabeth Holmes of Theranos Found Guilty of Making False Representations to Investors

Elizabeth Holmes, founder of Theranos, was convicted of three counts of wire fraud and one count of conspiracy to commit wire fraud. The verdict follows a high-profile, fifteen-week trial in federal court in San Francisco.  Holmes was alleged to have defrauded investors, medical professionals, patients, and the public by exaggerating and making false statements about the accuracy of Theranos’s blood-testing technology. The government’s prosecution demonstrates the Department of Justice’s commitment to prosecuting white collar crime, particularly in the tech and healthcare industries.

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Fraud, Deception and False Claims

Another Circuit Weighs in on the Standard for Evaluating Government Motions to Dismiss False Claims Act Actions

In a recent opinion, the U.S. Court of Appeals for the Third Circuit weighed in on what standard to apply in reviewing government motions to dismiss False Claims Act actions. Read a new “FCA Insider” blog post for analysis of this decision and its implications for future cases after this summer’s three-way circuit split on the issue.


About McGuireWoods’ Government Investigations & White Collar Litigation Department
McGuireWoods’ Government Investigations & White Collar Litigation Department is a nationally recognized team of more than 80 attorneys representing Fortune 100 and other companies and individuals in the full range of civil and criminal investigations and enforcement matters, including litigation and action under the False Claims Act. Our False Claims Act team includes former federal prosecutors, and experienced civil and white collar criminal litigators with experience in this unique area of law. We also tap attorneys from the firm’s other practice groups and our subsidiary McGuireWoods Consulting LLC. Strategically centered in Washington, D.C., our Government Investigations & White Collar Litigation Department has been honored as a Law360 Practice Group of the Year and earned the trust of international companies and individuals through our representation in some of the most notable enforcement matters over the past decade. For more information on our False Claims Act practice, download our brochure: False Claims Act Investigations, Litigation and Enforcement.

Government Contracts

CMMC 2.0: Department of Defense Revamps Cybersecurity Maturity Model Certification Program

On November 4, 2021, the Department of Defense (DoD) announced significant changes to the strategic direction of the Cybersecurity Maturity Model Certification (CMMC) program.  Specifically, DoD stated that the goal of these changes is to simplify the CMMC standard and prioritize the protection of certain types of controlled defense information.  After a nine-month internal review by the Pentagon, DoD introduced CMMC 2.0, which clarifies contracting requirements, places greater emphasis on contractors that hold sensitive information, and suggests that the agency seeks to reinforce cooperation between DoD and industry in addressing evolving cyber threats.  The CMMC program changes condense the number of security tiers, allow contractors who do not hold Controlled Unclassified Information (CUI) to perform annual self-assessments, and permit remediation plans (known generally as Plans of Action and Milestones (or POA&Ms)) and waivers in limited circumstances.  However, a number of mandatory controls may not be subject to a POA&M prior to award, notwithstanding that other controls may be remediated within a clearly identified timeline.

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Securities and Commodities

SEC Advisory Fees Focus Continues as Reflected in Division of Examinations Risk Alert and Chair Gensler Comments

Recent comments from U.S. Securities and Exchange Commission (SEC) Chair Gensler at the Institutional Limited Partners Association Summit and an SEC Division of Examinations (EXAMS) Risk Alert published on the same day highlight the ongoing focus of the SEC on advisory fees, both in the institutional and retail spaces.

In Chair Gensler’s remarks, he expressed concern that private fund investors may not have enough transparent, consistent information regarding private fund fees to “make informed investment decisions.” While he cited previous Risk Alerts issued by EXAMS regarding private fund advisers and the increased regulations imposed on these advisers under the Dodd-Frank Act of 2010, Chair Gensler suggested that it was time to “bring more sunshine and competition to the private funds space.”

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Compliance, Enforcement and Prosecution Policy and Trends, Government Contracts

Webinar: OSHA ETS Employee COVID-19 Vaccination and Testing Mandates

New Requirements, Tips and Traps for Large Employers

November 10, 2021
Complimentary Webinar
1-2 p.m. (ET) | 12-1 p.m. (CT) | 10-11 a.m. (PT)

REGISTER NOW

On Nov. 4, 2021, the Occupational Safety and Health Administration (OSHA) issued an Emergency Temporary Standard (ETS) requiring employees of large employers either to get vaccinated or to test negative on a weekly basis. The ETS also requires large employers to provide employees with paid leave to get vaccinated and recover from vaccinations, and unvaccinated employees to wear a mask at work.

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Enforcement and Prosecution Policy and Trends

Return to the Yates Memo: Deputy Attorney General Announces Tougher Approach to White Collar Enforcement

On October 28th, Deputy Attorney General Lisa Monaco announced that the U.S. Department of Justice (DOJ or Department) is renewing its focus on white collar crime and enforcement, in remarks delivered during the American Bar Association’s 36th National Institute on White Collar Crime. Deputy Attorney General Monaco made clear that the Department is significantly enhancing its efforts to deter white collar crime and promote corporate responsibility and compliance—stating that the government will “surge resources” to its prosecutors in support of these efforts.

Deputy Attorney General Monaco highlighted three new DOJ initiatives aimed at achieving these ends. First, she announced the Department will restore guidance originally adopted in 2015, which requires that companies wishing to receive cooperation credit in DOJ investigations disclose all non-privileged information related to all individuals involved in corporate misconduct. This policy—known as the “Yates Memo,” after its author, former Deputy Attorney General Sally Yates—was modified during the Trump Administration to permit companies to limit their disclosures only to individuals “substantially involved” in misconduct. Deputy Attorney General Monaco explained that, by reinstating the Yates Memo, the Department aimed to provide clarity about its expectations, and to prevent companies from exercising excessive discretion over which facts to disclose to the government, and which individuals to make available to prosecutors.

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Anti-Bribery and Corruption, Sanctions, Trade Embargo, and Export Controls, Securities and Commodities

The Perils of Global Expansion: World’s Largest Ad Agency Sanctioned $19 Million for FCPA Violations, Insufficient Controls

Global expansion without adequate controls is asking for trouble. That’s the lesson of a $19 million settlement between WPP, the world’s largest advertising agency, and the U.S. Securities and Exchange Commission (SEC) to resolve alleged violations of the Foreign Corrupt Practices Act (FCPA).

According to an SEC order memorializing the settlement, WPP’s trouble began when it launched a rapid worldwide growth strategy, acquiring locally operated ad agencies around the world, including some in what the SEC calls “high-risk markets,” like China, Brazil, India, and Peru. The order emphasized that, in purchasing the local agencies, WPP allowed the agencies’ founders to remain in control, an approach that increased the risk that the agencies would continue to operate as they did before being purchased.

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Enforcement and Prosecution Policy and Trends, Financial Institution Regulation

Department of Justice Announces National Cryptocurrency Enforcement Team

On October 6, 2021, the U.S. Department of Justice (DOJ) announced its plans for increased scrutiny of the cryptocurrency market with the creation of a National Cryptocurrency Enforcement Team (NCET) to pursue criminal investigations and actions against cryptocurrency misuse. The NCET will focus on “crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors” and will also aid in the tracing and recovery of assets lost to ransomware payments and other fraud and extortion.

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Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims

Department of Justice Announces Increased FCA Enforcement Through New Civil Cyber-Fraud Initiative

On October 6, 2021, the Department of Justice (DOJ) announced a new Civil Fraud Cyber Initiative to “combine the department’s expertise in civil fraud enforcement, government procurement and cybersecurity to combat new and emerging cyber threats to the security of sensitive information and critical systems.”

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