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.
Safeguarding Technologies through the Disruptive Technology Strike Force
On February 16, 2023, the Department of Justice (DoJ) and the Department of Commerce (DoC) announced the launch of the Disruptive Technology Strike Force. Under the leadership of Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division and Matthew Axelrod, the Assistant Secretary for Export Enforcement in the Commerce Department’s Bureau of Industry and Security (BIS), the strike force will bring together various agencies throughout the government, including the FBI, Homeland Security Investigations (HSI) and 14 U.S. Attorneys’ Offices, to “target illicit actors, strengthen supply chains and protect critical technological assets from being acquired or used by nation-state adversaries”.
Crypto Platforms Under Scrutiny by Various U.S. Agencies
Since the beginning of 2023, the cryptocurrency market has faced legal action from multiple U.S. agencies in efforts to control a sector that, until recently, mostly operated beyond the bounds of conventional financial regulation. As a result of the executive order issued by the Biden Administration in March 2022, various federal agencies examined the risk and benefits of cryptocurrencies and have issued official reports. These reports have led to coordinated action against the crypto market. The administration aims to “ensure that cryptocurrencies cannot undermine financial stability, to protect investors, and to hold bad actors accountable.” In their attempts to promote regulation, the Securities and Exchange Commission (SEC), the Department of Justice (DOJ), and the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury, have acted against the crypto market on several fronts, frightening off bank allies, suing crypto firms for violating investor protection laws, and targeting exchanges connected to money laundering.
Too Big to Fail?: Ticketmaster and the Live Entertainment Debacle
After months of near-total silence, Beyonce opened Black History Month with a bang when she finally blessed the Beehive with what they had been impatiently waiting for since the release of her seventh studio album: the announcement of the Renaissance World Tour. Her loyal fans have been anticipating this news since Renaissance was released too much acclaim at the end of July 2022. However, alongside anticipation, fans are battling a strong feeling of anxiety at the prospect of not being able to secure tickets for the coveted shows. And no wonder. Ticketmaster – the vendor through which tickets for the Renaissance tour are being sold – recently, and very publicly, bungled another highly awaited ticket sale.
New Incentives from the DOJ to Urge Companies to Self-Report Crimes
In an action meant to incentive companies to self-report their wrongdoings, the Justice Department (DOJ), has announced big changes to its Corporate Enforcement Policy (CEP). The Department of Justice has long been fighting against corporate criminality in its pursuit to maintain the integrity of the financial market. On January 17, Assistant Attorney General Kenneth A. Polite, Jr., announced revisions to the Criminal Division’s Corporate Enforcement Policy. Some of the revisions include up to a 75 percent reduction in fines for companies that voluntarily report their wrongdoings and fully cooperate with investigations and up to a 50 percent reduction for companies that fully cooperate with investigations even if they do not voluntarily disclose the crime. These incentives further soften the aggressive stance that the Biden administration originally took against Corporate America in 2021.
Google Becomes the First to Agree to Compliance Monitoring by the DOJ
In an action to keep company executives in check, the Justice Department (DOJ), created a policy where executives and compliance chiefs sign and personally attest to the effectiveness of their compliance programs. The individuals would therefore be held personally liable for their roles in the company’s wrongdoing. The DOJ and Google had a pending dispute, which was due to Google’s non-compliance with assisting authorities in an investigation. The DOJ and Google reached an agreement, with a stipulation attached, resolving the dispute over Google’s loss of data responsive to a 2016 search warrant. In the stipulation, Google has said that it has spent over 90 million dollars on additional systems and resources to improve its compliance programs, including an agreement to allow an Independent Compliance Professional to serve as a third party to monitor that Google is fulfilling its compliance legal obligations. This policy, as already seen in the settlement with Google, is forcing compliance to become a top-tier concern for big companies or face serious consequences.
The Sicker, The Better: Cigna Orchestrates Fraudulent Scheme to Defraud Government
Cigna Corporation (Cigna)–a global juggernaut in the insurance arena–faces a health care fraud lawsuit brought by the government under the federal False Claims Act (the FCA). By allegedly exaggerating patients’ illnesses to boost its own risk scores, Cigna secured inflated payments from the Medicare Advantage reimbursement system.
Big Tech & Its Algorithms: Is It Time to Hold Them Accountable?
It’s no secret that companies like Google, Alpha, Meta, and Twitter use and sell our data. However, in recent years, the content that companies display to us while we use their platform, from the ads we see to the websites that we find on search engines, has become a major contentious issue. While Section 230 of the 1996 Communications Decency Act shields Big Tech and other online platforms from liability for user-generated content, the Supreme Court recently announced that it will hear Gonzalez v. Google. The outcome of this case could have a huge impact on tech policy and could fundamentally change the type of content that we see online.
DOJ’s Unveils New Tool to Fight Corporate Crime: Care About Compliance
In an effort to deter corporate crime, the Justice Department (DOJ) has implemented a new policy aimed at giving chief compliance officers more authority. Chief Compliance Officers (CCOs) may now need to certify the integrity of their compliance programs and be personally liable if their programs do not “reasonably prevent and deter compliance issues.” According to Brian Michael, a former chief compliance officer (CCO), some industry professionals fear that such a policy would place compliance officers in a position to be personally liable for decisions that they have little say over. There is also worry that implementing such a policy would place CCOs in direct conflict with senior executives. However, Kenneth Polite, assistant attorney general in charge of the DOJ’s criminal division, insists that the new policy will place CCOs in a better position to ensure the integrity of their compliance programs. Polite hopes to force corporations to invest in compliance now rather than pay later.