Tag:Department of Justice
Time to Rethink Corporate Compliance amid DOJ’s New Guidelines
The U.S. Department of Justice (DOJ) announced significant changes to its Evaluation of Corporate Compliance Programs (ECCP) on March 2, 2023, at the American Bar Association’s National Institute on White Collar Crime. By investigating deeper into companies’ compliance programs, DOJ now provides new stricter guidelines and emphasizes its vigilance and the level of commitment expected from companies. The latest announcement illustrates DOJ’s continued emphasis on company policies regarding compliance incentives and disincentives in executive compensation and the preservation of company communications made via personal devices and instant messaging applications.
Senate Enjoys Rare Bipartisan Moment, Seeks to Punish Silicon Valley Bank Executives
n March 17, 2023, following the second-largest bank collapse in U.S. history, President Biden released a statement urging Congress to allow financial regulators to impose tougher penalties on the executives of failed banks. Encouragingly, on March 29–just twelve days later–the Senate proposed bipartisan legislation, dubbed the Failed Bank Executives Clawback Act (FBECA), which would grant the Federal Deposit Insurance Corporation (FDIC) clawback authority to confiscate all or part of the compensation received by bank executives in the five years leading up a bank’s failure.
Growing Banking Crisis: Silicon Valley Bank Failure
Founded in 1983, Silicon Valley Bank (SVB) is a midsize California-based lender that shook the foundation of the entire global financial system. Regulators closed SVB on March 10, making it the largest bank failure since the 2008 financial crisis and the second largest in U.S. history. While SVB offered various services from standard checking accounts to loans, it was primarily home to venture capitalists in the tech industry. Therefore, the majority of the corporate deposits were larger than the Federal Deposit Insurance Corporation’s (FDIC) $250,000 insurance limit, leaving over $150 billion in uninsured deposits at the end of 2022. The sudden collapse caused a frenzy leaving companies and investors vulnerable having already experienced mass layoffs in the tech industry.
U.S. Regulators are Employing New Strategies to Crack Down on Historically Challenging Insider Trading Cases
In the past, insider trading cases have been considered difficult to prove and prosecute. These cases usually require extensive evidence-gathering coupled with a high burden of proof. However, the Securities and Exchange Commission (SEC) and Justice Department are now turning to new developments in technology and regulatory efforts that have led to an increased focus on investigating and prosecuting insider trading cases. Why were these cases hard to prove in the past and what exactly are these new technologies?
Federal Response to the Collapse of Silicon Valley
The collapse of Silicon Valley Bank (SVB), the 16th-largest bank in the United States, in early March of this year is considered the biggest bank failure since the fall of Washington Mutual during the 2008 global financial crisis. After 40 years of success, the bank collapsed swiftly and unexpectedly. The collapse has ricocheted through the industry, provoking bank closures, rattling the global markets, and threatening the livelihood of startups. The Federal government has not only intervened and taken over the bank, but prosecutors and regulators from the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have initiated preliminary investigations. Inevitably the collapse will cause regulators to revise the current banking rules and pursue stricter regulation in order to prevent the demise of other banks and a financial crisis.
Shifting the Burden of Corporate Misconduct Onto Individual Wrongdoers
The Department of Justice (DOJ) recently took several steps to strengthen its fight against white-collar crime. In its attempt to promote corporate compliance, the DOJ announced last September that it would focus on two policies: (1) voluntary self-disclosure and (2) compensation incentives with the use of clawbacks. Since then, every U.S. Attorney’s Office has adopted the first policy, a voluntary self-disclosure program. For consistent application of the policy throughout the nation, all the voluntary self-disclosure programs have a common basis: where a company has voluntarily self-disclosed a violation, cooperated, and remediated the issue without other aggravating factors, the DOJ will not seek a guilty plea. Now, on March 2, 2023, U.S. Deputy Attorney General, Lisa Monaco, announced that the DOJ is ready to launch its second policy through a Compensation Incentives and Clawbacks Program (CICP). This pilot program shifts the responsibility of corporate violations from shareholders onto individual wrongdoers, but it is unclear how effective it will be at promoting compliance.
Exploring the Ramifications of the Department of Justice’s Withdrawal from Health Care Antitrust Guidelines
On February 3, 2023, the Department of Justice (DOJ) formally withdrew its support for three policies that created longstanding safe harbors from antitrust enforcement, relied upon by the healthcare industry for nearly thirty years. Assistant Attorney General, Jonathan Kanter, of the DOJ’s Antitrust Division stated that these changes were “long overdue”, and that the, “[DOJ] will continue to work to ensure that its enforcement efforts reflect modern market realities.” In striking these guidelines, the DOJ notably left no new guidelines in its place, leaving many healthcare providers and purchasers uncertain of whether they will face litigation or even criminal prosecution under the Sherman Act.
Justice Department Hitting Corporate Executive Lawbreakers Where it Hurts
The Justice Department introduced a new pilot program last week that encourages companies to center their compensation policies around rewarding good behavior and punishing those partaking in criminal activity. Deputy Attorney General, Lisa Monaco, previewed the program at an American Bar Association conference in Miami.
Combatting Fraud in Latin America
In a recent statement for the Department of Justice (DOJ), Assistant Attorney General Kenneth Polite Jr. shared that the DOJ plans on ramping up enforcement of the Foreign Corrupt Practices Act (FCPA) in Latin America this year. This statement comes after the majority of noncompliance actions under the FCPA in 2022 occurred in Latin America.
One Year into Russian Invasion of Ukraine: New Russia-Related Sanctions
Exactly one year since the invasion of Ukraine, on February 24th 2023, the White House, in coordination with other G7 leaders (Canada, France, Germany, Italy, Japan, and the United Kingdom), announced the newest round of sanctionsagainst key revenue generating sectors for Russia. In efforts to further degrade Russia’s economy and diminish its ability to wage war against Ukraine, the action newly targets over 200 individuals and entities including Russian firms, banks, manufacturers, and officials that helped Russia evade earlier sanctions throughout the war. Including members of the European Union, more than 30 countries representing more than half the world’s economy have already imposed unprecedented sanctions on the Russian economy, making it the most sanctioned nation in the world.