Sanctions, Trade Embargo, and Export Controls February 28, 2022

U.S. and Allies Significantly Expand Sanctions and Related Restrictions on Russia and Belarus

By Alex J. Brackett, Edwin O. Childs, Patrick Rowan, Elissa Baur, Jason H. Cowley and McGuireWoods LLP

Over the last several days, the United States and allies in North America, Europe, and Asia have announced a sweeping expansion of the sanctions levied against Russia and affiliated entities and individuals in the wake of Russia’s invasion of Ukraine. The additional sanctions target Russia’s largest financial institutions; impose further prohibitions related to new debt and equity for significant state-owned enterprises; and block transactions with Russian President Vladimir Putin, Minister of Foreign Affairs Sergei Lavrov, and additional Russian elites and their family members. The U.S. Commerce Department similarly implemented stringent export control restrictions that will severely restrict exports to Russia of critical U.S.-origin technologies, as well as certain foreign direct products (FDPs) of such technologies.

Enforcement and Prosecution Policy and Trends February 24, 2022

Pain Management or Pill Mill? Supreme Court to Weigh in on Standards for Prosecutions of Practitioners Prescribing Narcotics

By Brandon M. Santos and Paul T. Atkinson

Update: Pain Management or Pill Mill? Supreme Court Hears Arguments Regarding Standards for Prosecutions of Practitioners Prescribing Narcotics (March 11, 2022)

Introduction

Next week, the Supreme Court will hear oral argument in a pair of cases that may reshape the landscape of legitimate prescribing under the Controlled Substances Act (“CSA” or “the Act”). In companion cases Ruan v. United States and Kahn v. United States, the Court is expected to resolve a circuit split over the availability and scope of acting in “good faith” as a defense for medical practitioners charged with unlawfully distributing narcotics under the CSA.

Sanctions, Trade Embargo, and Export Controls February 23, 2022

Additional Sanctions on Russia and the Importance of Business Contingency Planning

By Alex J. Brackett, Patrick Rowan, Edwin O. Childs and Elissa Baur

Building on Monday’s Executive Order imposing sanctions on the so-called Donetsk and Luhansk People’s Republics (“DNR” and “LNR,” respectively) in Ukraine, the Biden Administration on Tuesday sanctioned two major Russian state-owned financial institutions as well as several individuals with close ties to the Kremlin and imposed additional restrictions on Russian sovereign debt. The sanctions were coordinated with similar penalties announced Tuesday by the European Union and Great Britain. In remarks on Tuesday afternoon, President Biden referred to the measures as the “first tranche of sanctions to impose costs on Russia” for its deployment of troops to the DNR and LNR, noting that the United States will impose additional restrictions if Russia continues to escalate tensions in the region. Today, the Administration moved ahead with additional measures, sanctioning the company charged with building Russia’s Nord Stream 2 natural gas pipeline, as well as the company’s corporate officers.

Sanctions, Trade Embargo, and Export Controls February 22, 2022

Biden Administration Issues Initial Ukraine Sanctions

By Alex J. Brackett, Patrick Rowan and Edwin O. Childs

In response to the deteriorating political and military situation on the Ukraine border, last night the Biden administration issued an initial set of sanctions targeting activities involving the Donetsk and Luhansk regions of Ukraine.

Pursuant to President Biden’s Executive Order, any new investment in, importation from or exportation to the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) regions of Ukraine by a U.S. person or to or from the United States is prohibited. U.S. persons also are prohibited from approving, financing, facilitating or guaranteeing transactions by a non-U.S. person that would be prohibited if performed by a U.S. person or from the United States. These restrictions are similar to those imposed on the Crimea region of Ukraine following its annexation by Russia in 2014, which resulted in Crimea becoming functionally off limits to United States’ commerce. That trade embargo now has been extended to Donetsk and Luhansk.

Enforcement and Prosecution Policy and Trends February 17, 2022

EARN IT Act Opens Online Service Providers to Liability for Online Child Sexual Abuse Hosted on Their Platforms

By V. Kathleen Dougherty

On Thursday, February 10, 2022, the Senate Judiciary Committee approved the Eliminating Abusive and Rampant Neglect of Interactive Technologies Act (EARN IT Act), first introduced in 2020 by Sens. Lindsey Graham, R-SC, and Richard Blumenthal, D-Conn. The EARN IT Act aims to tackle the online proliferation of child sexual abuse material (CSAM) by paring back online service providers’ broad immunity under Section 230 of the Communications Act of 1934. The Act would open up websites and tech platforms to civil lawsuits and state criminal charges for user-created content hosted on their websites.

Fraud, Deception and False Claims February 9, 2022

Analysis of DOJ’s 2021 FCA Statistics and the Trends Therein

By Michael J. Podberesky, David Pivnick, Edwin O. Childs and McGuireWoods LLP

Last week, the U.S. Department of Justice (DOJ or Department) announced that it recovered over $5.6 billion under the False Claims Act (FCA) in Fiscal Year 2021.[1] That is a massive headline haul that is second only to the roughly $6 billion recovered under the FCA in FY 2014, when there were $3.1 billion in settlements with large banks and other financial institutions alleged to have made false statements to federally insured mortgage and loan programs. The FY 2021 recoveries are similarly inflated by a single $3 billion settlement. As indicated in our review of the 2020 FCA statistics, a $3 billion settlement with a pharmaceutical company that manufactures opioids (and several key individuals), was finalized three weeks after the end of FY 2020, on October 21, 2020. The net effect of this mega-settlement executed in early-FY 2021 was a slightly-deflated FY 2020 total recovery and a corresponding bump for FY 2021 recoveries.[2] Take out that settlement, which accounted for more than half of the FY 2021 recoveries, and the 2021 numbers look fairly pedestrian—slightly higher than FY 2020 recoveries but about 20% lower than the average recoveries from the last five years. Though the large wave of enforcement activity that many predicted would result from the change in administration and the massive spending associated with pandemic-relief efforts has yet to materialize, that may still occur once a new head of DOJ’s Civil Division is nominated and confirmed, and pandemic relief fund-related investigations mature.

Enforcement and Prosecution Policy and Trends, Securities and Commodities January 31, 2022

SEC Focus on Private Fund Advisers Continues With the Publication of EXAMS Risk Alert

By Cheryl Haas and Aline McCullough

On January 27, 2022, the Division of Examinations (“EXAMS”) of the U.S. Securities and Exchange Commission (“SEC”) published a Risk Alert with its Observations from Examinations of Private Fund Advisers. This Risk Alert is one of a series of signals of the SEC’s focus on private fund advisers under Chairman Gensler, including Form PF amendments proposed the day before the Risk Alert was published.

Anti-Money Laundering January 27, 2022

FinCEN’s Proposed Foreign Affiliate SAR Sharing Program — Key Considerations

By Jeffrey M. Hanna

On January 25, 2022, the Financial Crimes Enforcement Network (“FinCEN”) solicited commentary regarding its proposed rule that would create a time-limited pilot program to expand the ability of financial institutions to share Suspicious Activity Reports (“SARs”) and SAR-related information. (See 31 U.S.C. § 5318(g)(8)). The proposed program would permit a financial institution with a SAR reporting obligation to share, subject to certain specified limitations, SARs and related information with the institution’s foreign branches, subsidiaries, and affiliates. The proposed rule would expand on previous guidance FinCEN issued in 2006 and 2010 regarding SAR sharing within organizations.

Sanctions, Trade Embargo, and Export Controls January 18, 2022

What Significant Russian Sanctions Could Look Like, and How to Prepare

By Alex J. Brackett, Patrick Rowan and Edwin O. Childs

As the crisis on the Ukrainian border persists, companies with exposure to Russian markets and counterparties are being forced to reckon with the possibility that a Russian invasion of Ukraine could result in imposition of the most serious economic and trade sanctions ever imposed on Russia. Such sanctions are being openly discussed and debated politically, and are the clearly preferred first response to any aggressive military moves Russia might make to cross the Ukrainian border in locations where Russian military assets have been staged over the last several weeks. While obviously preferable to a global military conflict, efforts to sanction Russia to a level sufficient to reverse an incursion into Ukraine will have significant ripple effects throughout numerous industries and with numerous significant multinational organizations.

Financial Institution Regulation, Securities and Commodities January 10, 2022

2021 Brought SEC Focus on Crypto Exchanges and Lending Platforms

By Molly White and E. Andrew Southerling

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.

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