Subject to Inquiry

Subject to Inquiry


Government Investigations and White Collar Litigation Group
Enforcement and Prosecution Policy and Trends, Sanctions, Trade Embargo, and Export Controls

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

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

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

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.

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Enforcement and Prosecution Policy and Trends

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

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

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

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.








Fraud, Deception and False Claims

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

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.

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Enforcement and Prosecution Policy and Trends

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

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.

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Financial Institution Regulation

At Long Last, FinCEN Issues Beneficial Ownership Information Reporting Rule

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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Enforcement and Prosecution Policy and Trends, Securities and Commodities

SEC Speaks 2022: Ongoing Efforts to Restore Public Trust, Aggressive Enforcement Agenda

Securities and Exchange Commission officials highlighted a commitment to restoring trust in the agency and aggressive enforcement during the recent SEC Speaks conference.

See our alert for analysis of their comments and stated enforcement priorities, which addressed crypto markets, aggressive use of remedies, creditworthy cooperation, the Wells process, aggressive litigation, disgorgement efforts, municipal securities, gatekeeper responsibilities, and protection of whistleblowers.

Anti-Bribery and Corruption

Brazilian Airline to Pay Millions in Coordinated Foreign Bribery Resolution

On September 15, 2022, GOL Linhas Aéreas Inteligentes S.A. (GOL), Brazil’s second largest domestic airline, resolved long-running parallel investigations by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).

The São Paulo-based company, whose shares are traded on the New York Stock Exchange, consented to a cease-and-desist order with the SEC finding that it violated the anti-bribery, books and records, and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA), and entered into a three-year deferred prosecution agreement (DPA) with DOJ to settle criminal charges for conspiracy to violate the anti-bribery and books and records provisions of the FCPA. The company will collectively pay $41.5 million in fines to the federal agencies and pay an additional $3.4 million in penalties and restitution to Brazilian authorities.

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Enforcement and Prosecution Policy and Trends

New DOJ Guidance on Corporate Criminal Enforcement

RELATED UPDATE: DOJ Announces “Pilot Program Regarding Compensation Incentives and Clawbacks” with Significant Ramifications for Corporations Facing Criminal Investigations (March 6, 2023)

On Sept. 15, 2022, U.S. Deputy Attorney General Lisa Monaco announced important guidance and new actions from the U.S. Department of Justice (DOJ or the Department) on corporate criminal enforcement. Her remarks, delivered at the New York University School of Law, echoed those McGuireWoods covered last fall regarding DOJ’s increased focus on individual accountability and corporate policing.

In short, the remarks reveal that the Biden administration continues to take an aggressive policy stance on the investigation and prosecution of corporate crime. However, Monaco acknowledged the reality that its current enforcement numbers do not reflect that aggressive posture.

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