Anti-Bribery and Corruption, Sanctions, Trade Embargo, and Export Controls February 21, 2023

Cross-Border Enforcement and Trends — 2022 Year in Review

By Benjamin A. O'Neil, V. Kathleen Dougherty, Andrew Thornton-Dibb, Elissa Baur, Abigail Urquhart, Elizabeth F. Tyler, Kaiwon Tresvant, Clare E. Reardon, Catherine Rosenberg, Katherine Cienkus, Jessie Dawe and Alex Scandroli

Key developments in U.S. cross-border enforcement were driven by the year’s most newsworthy developments, from Russia’s invasion of Ukraine and the battery of sanctions that swiftly followed, to the collapse of the cryptocurrency market.

For details, download this inaugural review, which focuses on anti-money laundering, as this issue continued its rise up the enforcement and regulatory agenda. The review features enforcement highlights from 2022 and significant trends that will continue to drive enforcement in this space in 2023.

Download Review

Fraud, Deception and False Claims February 17, 2023

Supreme Court to Determine Whether False Claims Act Liability Is Precluded Where Defendants Proffer an Objectively Reasonable Interpretation of an Ambiguous Legal Requirement

By Michael J. Podberesky, Michael Francisco, Kate Hardey, Brett Barnett and Timothy J. Whittle

On January 13, 2023, the Supreme Court granted a writ of certiorari to petitioners in two False Claims Act cases to determine whether the False Claims Act’s knowledge requirement reaches defendants who can offer an “objectively reasonable” interpretation of an ambiguous legal or contractual requirement material to government payment. The Court’s decision will likely be one of the most significant FCA decisions in decades, and it will have important implications for government contractors and healthcare providers whose businesses require compliance with complex and sometimes opaque regulatory regimes.

Compliance, Securities and Commodities February 2, 2023

SEC Issues Risk Alert on Reg BI Deficiencies Identified During Exams

By Brian Baltz, John Ayanian, Cheryl Haas and Emily P. Gordy

On Jan. 30, the U.S. Securities and Exchange Commission’s Division of Examinations released a Risk Alert identifying perceived weaknesses in broker-dealers’ compliance with the disclosure, care, conflicts of interest and compliance obligations of Regulation Best Interest.

Read on for highlights from the alert and how they reflect the SEC’s evolving expectations during examinations

Enforcement and Prosecution Policy and Trends, Sanctions, Trade Embargo, and Export Controls January 30, 2023

FinCEN Alert Highlights Potential U.S. Real Estate Investments by Sanctioned Russian Elites

By Peter C. Morrison, Jeffrey J. Chapman, Thomas R. Lansen, Alex J. Brackett and Patrick Rowan

The Financial Crimes Enforcement Network recently issued an alert cautioning all financial institutions about potential investments in the U.S. commercial real estate sector, by or on behalf of Russian elites and their proxies. FinCEN’s communication complements U.S. efforts, in response to Russia’s war against Ukraine, to isolate sanctioned Russian persons from the international financial system. In addition to highlighting specific vulnerabilities to sanctions evasion in this sector, the alert provides guidance to help financial institutions identify red flags for such activities.

Read on for details about the alert and recommended next steps for financial institutions.

Enforcement and Prosecution Policy and Trends January 20, 2023

New Incentives Added to the Criminal Division’s Corporate Enforcement Policy

By Benjamin A. O'Neil, Brandon M. Santos, Casey Erin Lucier and Andrew Thornton-Dibb

UPDATE: U.S. Attorneys’ Offices Adopt Policy Incentivizing Self-Disclosure of Corporate Misconduct (Feb. 27, 2023)

On January 17, 2023, Assistant Attorney General (AAG) Kenneth A. Polite, Jr. delivered remarks to an audience at the Georgetown University Law Center, announcing changes to the Criminal Division’s Corporate Enforcement Policy (CEP). These changes to the CEP follow the September 15, 2022 direction from U.S. Deputy Attorney General Lisa Monaco, which we previously covered, for each Department of Justice (DOJ) Department to publish policies around voluntary self-disclosure, and to clarify the benefits of self-reporting. Although the Criminal Division already has such a policy, AAG Polite noted that the DAG’s direction was an opportunity to take stock of the existing policy and strengthen it.

Enforcement and Prosecution Policy and Trends January 5, 2023

Federal Trade Commission Proposes Rule to Bar Almost All Non-Compete Agreements in Contracts With Workers

By Amy Manning, Holden Brooks, Wrede Smith, Joshua Wade, John G. McDonald, Elena Marcuss, John E. Thomas, Jr., John Bishop, Brandi G. Howard and Casey Erin Lucier

On Jan. 5, the Federal Trade Commission proposed a sweeping rule that would bar almost all non-compete clauses in contracts with workers and in other agreements. A notice-and-comment period provides an opportunity for stakeholders to comment on the proposed rule. If adopted, the rule, which would not take effect for several months, would upend longstanding legal precedent that reasonable non-compete provisions are enforceable.

See our alert for more information about the Federal Trade Commission’s proposed rulemaking and its effect on non-compete agreements.

Enforcement and Prosecution Policy and Trends January 4, 2023

33 State Attorneys General Urge Federal Trade Commission to Take Action on Corporate Surveillance

By Erin Ashwell and Kevin B. Frankel

A bi-partisan coalition of 33[1] state Attorneys General sent a comment letter[2] to the Federal Trade Commission (FTC) highlighting the risks to consumers from corporate surveillance and data collection. The November 17, 2022, letter was filed as part of the FTC’s Advanced Notice of Proposed Rulemaking on Commercial Surveillance and Data Security.[3] The Attorneys General raised concerns about the collection of particular types of data, including health information, location tracking, and more seemingly innocuous information like calendar appointments. The officials, who are often the top consumer protection officers for their respective states, also highlighted concerns about how the data is stored, sold, and how difficult it is for consumers to opt out of data collection.

This bi-partisan effort comes in a time of increased state-level data privacy enforcement actions. Virginia,[4] Connecticut,[5] Colorado,[6] Utah,[7] and California[8] all have state laws that protect their citizens’ data security, or have privacy laws taking effect in 2023. And attorneys general have recently brought a series of enforcement efforts that run the gamut of data and company types, including a recent multi-state settlement with Google regarding location tracking, a New York agreement with EyeMed Vision Care LLC, and a settlement between 46 attorneys general and Carnival Cruise Line regarding an “unstructured” data breach. The attorneys general’s attention to “unstructured” data is particularly noteworthy because it focuses on data that is collected and retained in a disorganized fashion, often in email.

Despite the attorneys general’s letter, many businesses will continue to obtain and keep sensitive information in the ordinary course of business. Companies should consider minimizing the data retained, and keeping only that required, while making it easier for consumers to opt out of providing information. The states’ enforcement efforts—and the pending FTC rule-making—suggest that scrutiny of data collection will increase in the future. This will be an area to watch in the new year.

For more information about McGuireWoods’ State Attorneys General Practice, please visit the page here.

[1] The coalition was led by Massachusetts, Connecticut, Illinois, New Jersey, North Carolina, and Oregon, and joined by Arizona, Colorado, Delaware, Washington D.C., Hawaii, Idaho, Indiana, Iowa, Maine, Maryland, Minnesota, Michigan, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont, Washington, and Wisconsin.

[2] https://www.mass.gov/doc/ftc-comments-letter-on-corporate-surveillance/download

[3] https://www.ftc.gov/legal-library/browse/federal-register-notices/commercial-surveillance-data-security-rulemaking

[4] https://lis.virginia.gov/cgi-bin/legp604.exe?211+sum+SB1392

[5] https://www.cga.ct.gov/2022/act/Pa/pdf/2022PA-00015-R00SB-00006-PA.PDF

[6] https://leg.colorado.gov/bills/sb21-190

[7] https://le.utah.gov/~2022/bills/static/SB0227.html

[8] https://oag.ca.gov/privacy/ccpa

Fraud, Deception and False Claims December 5, 2022

Schemes that Deprive a Person of “Potentially Valuable Economic Information” – Punishable Under the Federal Wire Fraud Statute?

By Christina Egan and Katherine Cienkus

On Monday November 28, 2022, the U.S. Supreme Court heard oral arguments on Ciminelli v. United States. The Court will decide whether the “right-to-control” theory of fraud used by the Second Circuit is a valid basis for property fraud liability under the federal wire fraud statute. Courts and prosecutors have used the right-to-control theory to punish schemes which intend to deprive a victim of valuable information regarding an economic decision. Among other things, the ruling has implications for the expanding scope of federal fraud statutes as applied to undisclosed self-dealing and conflicts of interest. In oral arguments, the Court’s candid disapproval of the right-to-control theory sent a strong signal that this avenue under federal criminal laws for prosecuting “informational deprivation” in dealings may be about to close.

Enforcement and Prosecution Policy and Trends September 30, 2022

California Signs New Bill Prohibiting CA-based Tech Companies from Disclosing Data for State Abortion Investigations

By Brandi G. Howard, Brandon M. Santos, Kevin B. Frankel, Ayana Brown and Latrice Burks

Compliance with out of state investigative requests, like warrants, just got a little trickier for California companies. Under existing law, California technology and communications companies are required to produce specified user data in response to an out of state warrant as if that warrant was issued by a California court. But now there is one caveat—companies do not have to do so when the warrant relates to an out of state abortion investigation. On September 27, 2022, California Governor Gavin Newsom signed a bill (AB-1242) that, in part, prohibits technology and communications companies headquartered or incorporated in California from providing user data to out-of-state law enforcement or government entities investigating abortions that would be lawful under California law. The new law also prohibits California companies from assisting the out-of-state entities in investigating or enforcing abortion violations. For California corporations, the law acts as a shield against warrants, court orders, subpoenas, or other legal processes from states attempting to enforce abortion laws that conflict with California law.

Financial Institution Regulation September 29, 2022

At Long Last, FinCEN Issues Beneficial Ownership Information Reporting Rule

By Edward M. Nogay, Matthew Orso and Jeffrey M. Hanna

At long last, the Financial Crimes Enforcement Network (“FinCEN”) issued a final rule establishing a beneficial ownership information reporting requirement for corporations and companies both large and small. In its announcement earlier today, FinCEN explained that the rule will require most companies and corporations registered to do business in the United States to report information about their beneficial owners to FinCEN.

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