Compliance October 3, 2024

AI Risk and Whistleblower Protection Spotlighted in DOJ’s Revised Corporate Compliance Guidance

By V. Kathleen Dougherty, Brandon M. Santos, Garen S. Marshall, Elizabeth F. Tyler and Brenna Molinare

On September 23, 2024, the U.S. Department of Justice (DOJ) updated its Evaluation of Corporate Compliance Programs (ECCP) guidance.

The ECCP provides prosecutors with questions and factors to consider when assessing a company’s compliance program. Prosecutors use the guidance to assist in making decisions about whether to charge a company and how to resolve cases. The guidance is equally instrumental for companies as they build, strengthen, and internally assess their compliance structure and controls.

Compliance September 23, 2024

“Call Us Before We Call You”: DOJ’s New Corporate Whistleblower Awards Pilot Program

By V. Kathleen Dougherty, Elizabeth F. Tyler and Elissa Baur

On September 17, 2024, Deputy Assistant Attorney General Nicole Argentieri stressed the intense focus placed by the U.S. Department of Justice (DOJ or the Department) on incentivizing companies to maintain healthy corporate compliance programs – and highlighted key aspects of the Department’s newest enforcement tool. Speaking at the NYU School of Law’s Program on Corporate Compliance and Enforcement, Argentieri emphasized the DOJ Criminal Division’s newly rolled out Corporate Whistleblower Awards Pilot Program, which offers monetary rewards for whistleblowers who provide information about certain corporate misconduct that results in a successful criminal or civil forfeiture of more than $1 million.

Compliance, Fraud, Deception and False Claims August 13, 2024

Key Takeaways From McGuireWoods’ Webinar on Enforcement Against PE Funds in Healthcare

By Brett Barnett, Mindy Sauter, Michael Elliott and Michael J. Podberesky

McGuireWoods partners Brett Barnett, Mindy Sauter, Mike Elliott, and Michael Podberesky recently conducted a solution-oriented discussion of key enforcement and compliance developments that impact private equity (PE) funds in healthcare. They also highlighted relevant cases regarding the government’s increased interest in compliance diligence in the PE space.

Read on to learn about the eight key takeaways from the July 9, 2024, discussion. To watch the full webinar, visit McGuireWoods’ website.

Enforcement and Prosecution Policy and Trends July 3, 2024

Supreme Court Holds That SEC Must Seek Civil Penalties in Federal Court

By E. Andrew Southerling, John S. Moran, Jonathan Ellis, Louis D. Greenstein and Stephen Tagert

In SEC v. Jarkesy, No. 22-859, 603 U.S. __ (2024), the Supreme Court held that the Seventh Amendment prohibits the Securities and Exchange Commission (SEC or Commission) from seeking civil penalties in certain enforcement actions when the Commission chooses to proceed in-house before its own administrative law judges (ALJs), rather than in federal court. In a 6-3 opinion written by Chief Justice Roberts, the Court held that the Seventh Amendment requires, at a minimum, that any fraud action involving civil penalties be tried in front of a jury in federal court. The Court’s decision will have immediate implications for the SEC’s enforcement program and will likely have broader implications for administrative adjudications for a host of federal agencies and federal laws.

Sanctions, Trade Embargo, and Export Controls July 1, 2024

OFAC Enforcement Action Targets Non-U.S. Business Purchasing Services From North Korean Firm

By Patrick Rowan and Alex J. Brackett

On June 26, Treasury’s Office of Foreign Assets Control (OFAC) announced the settlement of an enforcement action against an Italian animation company that violated OFAC’s sanctions on North Korea. The enforcement action highlights several key propositions regarding sanctions compliance: (1) non-U.S. businesses cannot ignore U.S. sanctions if they are transacting through the U.S. or using U.S. dollars; (2) penalties for civil violations of sanctions are imposed on a strict liability basis; and (3) the U.S. government is particularly focused on North Korean sanctions evasion.

Fraud, Deception and False Claims June 27, 2024

Federal District Court Finds Private-Insurer Relator Can Proceed with False Claims Action

By Michael J. Podberesky, Brett Barnett and Stephen Tagert

Last month, the U.S. District Court for the District of New Jersey held that a private company could proceed with its whistleblower action against a clinical laboratory that allegedly submitted false claims to the federal government for medically unnecessary urine drug tests (UDTs). The lawsuit is part of a growing trend of nontraditional whistleblower-like insurance companies, activists, investors and special purpose entities created to file False Claims Act actions, which traditionally had been brought by former or current employees of the target entities.

Read on to learn how the opinion demonstrates the U.S. Department of Justice’s continued crackdown on UDT laboratories — part of its effort to combat the opioid epidemic and the associated abuse of federal healthcare programs — and on nontraditional whistleblowers playing an increasingly important role in bringing FCA cases.

Government Contracts, Sanctions, Trade Embargo, and Export Controls June 5, 2024

Disruptive Technology Strike Force Announces Its First Declination to Prosecute Under the National Security Division’s Voluntary Self-Disclosure Program

By R. Andrew Austria, Alex J. Brackett, Patrick Rowan and Stephen Tagert

On May 22, 2024, the Department of Justice’s National Security Division (“NSD”) announced its first declination of prosecution for a company under the voluntary self-disclosure program established by the National Security Division Enforcement Policy for Business Organizations (“NSD Enforcement Policy”). An individual who worked for a United States-based biochemical company, along with his co-conspirator, each pleaded guilty to one count of wire fraud conspiracy for their roles in a scheme to fraudulently obtain deeply discounted products from the company to then export those products to China using falsified export documents. The company promptly disclosed the suspicious activity and complied with the NSD Enforcement Policy, which creates a presumption for companies to receive non-prosecution agreements when they (1) voluntarily disclose to NSD potentially criminal violations arising out of or relating to the enforcement of export control or sanctions laws; (2) fully cooperate; and (3) timely and appropriately remediate.

Anti-Money Laundering May 8, 2024

Highlights from the 2024 SIFMA Anti-Money Laundering and Financial Crimes Conference on the Corporate Transparency Act

By Jeffrey M. Hanna and Lauren Mann

On May 6, 2024, the Financial Crimes Enforcement Network (“FinCEN”) Director Andrea Gacki, Acting Chief of the Enforcement Division Steve Hsieh, Acting Associate Director of the Policy Division James Martinelli, and other key industry leaders, convened at SIFMA’s Anti-Money Laundering and Financial Crimes conference in New York to discuss, among other things, FinCEN’s priorities for the Corporate Transparency Act (“CTA”).

Enforcement and Prosecution Policy and Trends, Financial Institution Regulation April 22, 2024

CFPB: For-Profit School Misrepresented ISAs, Made False Claims About Grads’ Employment Rates

By John Feliciano-Acosta, Farnaz Farkish Thompson and Jeffrey P. Ehrlich

On April 17, 2024, the Consumer Financial Protection Bureau entered an order against a for-profit vocational school and its CEO for mischaracterizing the school’s income-share agreements (ISAs) and misrepresenting its graduates’ employment rates. The CFPB said the school drove students to finance their training programs with promises of high graduate employability. To finance students’ education, the school offered ISAs, under which students received their education in exchange for a percentage of their future earnings. The school falsely told students that its ISAs were not loans, carried no finance charges and were “risk free.” And the school advertised on its website that 71% to 86% of its students were placed in jobs within six months of graduation, when its nonpublic reporting to investors consistently showed placement rates closer to 50%, the CFPB noted. The order marks the CFPB’s second enforcement action targeting ISAs.

Read on for details about how the school’s actions violated federal laws, including the Consumer Financial Protection Act, the Truth in Lending Act and Regulation Z, and the FTC’s Holder Rule.

Enforcement and Prosecution Policy and Trends April 11, 2024

SEC Speaks 2024: In Defense of Enforcement’s Aggressive Agenda

By E. Andrew Southerling, Louis D. Greenstein, Jackie Wells, Zachary Missan, Camille Bachrach, Cassie Gallo and Rhea Shahane

On April 2 and 3, 2024, U.S. Securities and Exchange Commission Chair Gary Gensler, Division of Enforcement Director Gurbir Grewal and other senior SEC officials convened at the SEC Speaks conference held in Washington, DC to discuss the SEC’s accomplishments in fiscal year 2023 and announce its priorities for 2024.

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