Category Archives: Compliance

DOJ’s Settlement Imposes Legal Process Compliance Monitor, Highlighting the Government’s Increased Focus on Data Preservation

Google will spend the next three years with an independent compliance monitor scrutinizing its process for responding to warrants and other government data requests. This and other requirements are part of a settlement agreement with Google, announced by the Department of Justice (“DOJ”) on October 25, 2022, to resolve a four-year long dispute over lost data responsive to a DOJ search warrant.

The dispute dates back to a warrant the DOJ obtained in 2016 in the U.S.… More

Companies Should Beware of Employees Texting Business Communications

Text messaging is convenient.  It is an informal and instant mode of communication now available through numerous apps, which allow an individual to use their synced phone, tablet, and computer to quickly fire off messages.  It’s no wonder that text messaging has extended beyond the realm of friends and family, taking hold in our daily business communications.

However, intra-company text messages and other off-channel business communications have drawn scrutiny from the federal government because they undermine a company’s ability to maintain effective recordkeeping.… More

DOJ Updates Policies on Corporate Ethics and Compliance

Last week, Deputy Attorney General Lisa O. Monaco delivered remarks on corporate criminal enforcement, announcing revisions to DOJ’s policies for addressing corporate ethics and compliance matters. These changes reflect an increased focus on holding individuals accountable for corporate wrongdoing, guidance on handling corporate recidivism, further transparency regarding the appropriateness and necessity of monitorships; incentives for voluntary self-disclosure of misconduct; and a recognition of compensation related incentives to garner a corporate culture of compliance.… More

In Deciding Tortious Aiding and Abetting Claims, MA Federal Court Finds Routine Provision of Banking Services May Amount to Substantial Assistance When a Strong Inference of Actual Knowledge Exists

On August 31, 2022, in a lengthy order,[1] Judge Timothy Hillman of the U.S. District Court of Massachusetts denied motions to dismiss that were filed by multiple defendant banks (the “Banks”) in an attempt to avoid liability for allegedly aiding and abetting a multibillion-dollar Ponzi scheme by TelexFree. While the Banks raised a variety of issues, the judge’s rulings regarding the “substantial assistance” element of a tortious aiding and abetting claim is particularly noteworthy.… More

NY Department of Financial Services Slaps $30 Million Fine on Robinhood’s Crypto Platform for Lax Anti-Money Laundering Controls

On August 1, 2022, the New York Department of Financial Services (“DFS” or the “Department”) secured its first enforcement win against a cryptocurrency platform, Robinhood’s crypto trading arm Robinhood Crypto, LLC.

Robinhood Crypto is a wholly-owned subsidiary of Robinhood Markets, Inc. (RHM).  RHM allows users to trade stocks on a commission-free basis through its broker-dealer subsidiary, Robinhood Financial, LLC (RHF).  Robinhood Crypto allows RHF customers to trade cryptocurrencies using customers’ U.S.… More

Sanctions/Export Controls Trends in 2021

This is the second in our First 100 Days series examining important trends in white collar law and investigations in the early days of the Biden administration. Our previous entry discussed SEC enforcement. Up next, anti-corruption trends.

The recent change in administrations has generated much discussion about what to expect in the worlds of export controls and sanctions in 2021.  In general,… More

Texas Man Using Online Name Generator Latest to Be Charged with PPP Loan Fraud

In the past two weeks, the federal government has charged several individuals in Paycheck Protection Program loan fraud schemes.  The allegations have ranged from applying for loans for non-operating businesses to using loan funds to buy cars and jewelry.  Charges announced this week showed a whole new level of creativity.  A Texas man, Samuel Yates, allegedly used an online name generator to make up the names of hundreds of employees in an effort to obtain a $5 million loan. … More

DOJ Reportedly Issues PPP-Related Subpoenas to Banks

In yet another sign that the federal government is following through on its warnings about PPP loan fraud, the Department of Justice, according to reports from Reuters, has issued grand jury subpoenas to several Wall Street banks related to an investigation into PPP loans.  The subpoenas were reportedly issued by the DOJ’s Fraud Section.  The issuance of the subpoenas does not necessarily indicate wrongdoing by the banks. … More

Purchasing a Rolls-Royce Is Not a Permissible Use of PPP Funds

Federal prosecutors continued to quickly respond to PPP loan fraud, bringing two additional cases that allege clear misuse of the funds intended for small businesses.  In one case, prosecutors in Georgia charged reality TV personality Maurice Fayne, aka “Arkansas Mo” of “Love & Hip Hop: Atlanta” fame, with bank fraud for allegedly using $1.5 million of a $2 million PPP loan to maintain his luxury lifestyle. … More

DOJ Brings First Payroll Protection Program-Related Criminal Case

On Tuesday, May 5, the Department of Justice (DOJ) filed charges in the federal District Court of Rhode Island against David A. Staveley and David Butziger for conspiracy to make a false statement and conspiracy to commit bank fraud in connection with loan applications made under the federal government’s Payroll Protection Program (PPP).  The Complaint alleges that Staveley of Andover, Massachusetts, and Butziger of Warwick, Rhode Island,… More

COVID-19 Fraud Prosecutions Off and Running

The Department of Justice (DOJ) announced a criminal complaint last Friday in the most significant COVID-19 fraud prosecution to date.  A complaint is a charging document usually submitted to a court to obtain an arrest warrant.  It is not an indictment, and, unless an early resolution is reached, in order to pursue the case further DOJ will have to present the case to a grand jury to vote on charges (whenever grand juries are once again in session).… More

White House’s Proposed Consolidation of PCAOB into SEC Could Reduce Audit Oversight

In its proposed budget for 2021, the White House called for the Public Company Accounting Oversight Board’s (“PCAOB”) “functions and responsibilities” to be consolidated into the SEC.  According to the administration, having the SEC absorb the PCAOB’s functions will clarify existing ambiguity and duplication among the two regulators, and promote “constraint” over the fees the PCAOB charges to public companies and broker-dealers to fund the PCAOB.  … More

White Collar Year in Preview: False Claims Act Trends in 2020

Editors’ Note: This is the fourth in our start-of-year series examining important trends in white collar law and investigations in the coming year. Our previous entry discussed  anti-corruption trends in 2020. Up next: a look at State Attorney General trendsLook for additional posts throughout the month of January.

More than halfway into the Donald Trump administration,… More

White Collar Year in Preview: Healthcare Fraud Trends in 2020

Editors’ Note: This is the second in our start-of-year series examining important trends in white collar law and investigations in the coming year. Our previous entry discussed SEC enforcement in 2020. Up next: a look at trends in anti-corruption and under the Foreign Corrupt Practices Act. Look for additional posts throughout the month of January.

2019 saw ongoing action in the healthcare space.… More

SEC Division of Enforcement Issues 2019 Annual Report

On November 6, 2019, the SEC Division of Enforcement published its annual report for fiscal year 2019. The report provides valuable insight, not only as to the Division’s performance over the past year, but also about its current priorities and where it will be focused in the near-term future. Overall, Enforcement’s program since 2017, when SEC Chairman Jay Clayton assumed leadership of the agency, has been shaped by five “core principles”: (1) focus on the retail investor;… More

Supreme Court to Decide Constitutionality of the CFPB

The Supreme Court has granted certiorari to hear a challenge to the constitutionality of the Consumer Financial Protection Bureau (CFPB).  While the CFPB won in the Ninth Circuit, the agency has since changed its mind and now agrees that its structure, which makes the single director of an independent agency removable only for cause, is unconstitutional, and also asked the Court to grant certiorari. … More

Supreme Court Set to Re-Evaluate Pleading Standards for Claims Alleging Breach of Fiduciary Duty of Prudence Under ERISA

On November 6, 2019, the Supreme Court will hear oral argument for Retirement Plans Committee of IBM v. Jander to expand on its “more harm than good” pleading standard articulated in Fifth Third Bancorp v. Dudenhoeffer.  Both Dudenhoeffer and Jander deal with employee stock ownership plans (ESOPs), retirement plans which primarily invest in the stock of the company that employs the plan participants. … More

U.S. Senate Considering Update to Federal Anti-Money Laundering System

A bipartisan group of Senators, with the support of the American Bankers Association, recently introduced bill S.2563, known as the ILLICIT Cash Act.  The acronym “ILLICIT” stands for “Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings.”  As that name suggests, the bill’s primary purposes are to close loopholes involving shell companies, improve information collection, and encourage communication between financial institutions and law enforcement. … More

IRS Criminal Investigation Update: The “New” Voluntary Disclosure Practice

In September 2018, the Internal Revenue Service (IRS) closed its Offshore Voluntary Disclosure Program (OVDP), which had, in various forms and at various times since 2009, provided a mechanism for taxpayers with undisclosed foreign accounts to come clean and avoid criminal liability.  While this was a noteworthy development and made the news given how hard the IRS had pushed in the recent past for compliance in this area,… More