Welcome to Compliance Hot Spots, our weekly briefing on news and trends on compliance, enforcement and government affairs. Today we're spotlighting the wrecking ball that has been taken to agency guidance under the Trump administration—and what a top lawyer in President Obama's White House had to say about it. Also, we look at New York Attorney General Eric Schneiderman jumping into cryptocurrency regulation, and a new settlement—with a much bigger pricetag—in the works between Wells Fargo and financial regulators. Scroll down to see some new roles and who got the work in some of the big disputes making headlines.

As always, thanks for reading, and we value any feedback. Tips or other other observations? I'd love to hear what's on your plate. Contact me at [email protected] or 202-828-0315, or follow me on Twitter @cryanbarber. is underway, and those innovations will impact how parties resolve their disputes in the very near future with such monitoring

 

A Defense to Government 'Guidance'

 

These are dark times for so-called “guidance” from federal agencies.

Falling short of a full-fledged rules, guidance has long been bemoaned by business interests for giving agencies an avenue to regulate without going through a more plodding notice-and-comment process. In November, U.S. Attorney General Jeff Sessions said the Justice Department would end “regulation by guidance.” Then-Associate Attorney General Rachel Brand followed up with a new policy prohibiting the department from using civil enforcement authority to convert agency guidance documents into binding rules.

Meanwhile, Congress has taken aim at the Consumer Financial Protection Bureau's regulatory guidance for auto lenders, just as the Trump-appointed interim director of the agency solicits comments on the bureau's guidance activities.

Inside the Office of Information and Regulatory Affairs, the federal government's veritable nerve center for regulatory review, Neomi Rao likes what she's seeing. As the administrator of that office—known to many in D.C. as the most powerful office you've never heard of— she has played a key role in the Trump administration's deregulatory drive.

Speaking Tuesday at a Federalist Society event, Rao said the administration has “slowed the imposition of costly new regulations and guidance documents and shifted away from the inertia that favors a steady expansion of the regulatory state.”

“We've made tremendous progress in a short period of time,” she said.

Kirkland & Ellis partner Neil Eggleston, the White House counsel in the final three years of the Obama administration, had a message for the largely conservative crowd: “For some reason guidance seems to have taken on a pejorative tone,” Eggleston, a panelist with Rao, said.

More from Eggleston: “I will tell you—again, as someone who spends a fair amount of time representing large companies—that one thing large companies like is certainty. They'd like to know what enforcement priorities are, they like to know how agencies are going to interpret their various different mandates.”

And the kicker: “And in that sense, I think guidance is useful and helpful.”

But Eggleston offered this caveat: Guidance “should not take the place of a statute, it should not take the place of a regulation and should not impose new obligations or new duties on the regulated community.”

Who Got the Work

 

–>The SEC this week disclosed its deals with two former Dewey & LeBoeuf executives. Former Dewey executive director Stephen DiCarmine is required to pay a $35,000 civil penalty. Locke Lord's Michael King in Chicagorepresented DiCarmine. Former Dewey Chief Financial Officer Joel Sanders will be prohibited from serving as an officer or director of a public company. Akerman LLP's Brian Miller in Miami represented Sanders.

And in notable in-house moves:

Duane Holloway has joined Pittsburgh-based United States Steel Corp. as general counsel and chief compliance officer, replacing Suzanne Rich Folsom, who announced her departure last year. Former deputy general counsel Richard Fruehauf, who earlier worked at Cohen & Grigsby and Covington & Burling, was named vice president of strategic planning and corporate development. [Corporate Counsel]

Jim McCarthy, who served at the Consumer Financial Protection Bureau from its first day in July 2011 until 2015, has been named chief risk officer at the debt collection company ConsServe. McCarthy previously worked as a consultant specializing in consumer financial regulation. At ConServe, he'll spearhead the efforts to “identify, evaluate, mitigate, and monitor the company's compliance, operational and strategic risk,” the company said in a press release. [InsideArm]

 

Around the Web: A Billion-Dollar Wells Settlement?

 

We're about to get Regulators v. Wells Fargo, Round 2. Two years removed from its $183 million settlement over the sales practices scandal, the bank is in talks with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency over a new settlement, this time over auto insurance and mortgage lending abuses. The settlement could come with a much higher price tag: Up to $1 billion, according to a recent Wells Fargo regulatory filing. [Corporate Counsel]

Speaking of Wells Fargo: At a time when companies such as Dick's Sporting Goods are taking action to restrict sales of assault-style rifles, Wells Fargo appears to be off-trend. In a recent call with reporters, the bank's chief financial officer said it should be the government, not the private sector, setting rules for gun safety. “The best way to make progress on these issues is through the political and legislative process,”said Wells Fargo CFO John Shrewsberry. [Reuters]

Cryptocurrencies are the flavor of 2018 for financial regulators—so it was a matter of time before New York Attorney General Eric Schneiderman jumped into the mix. Schneiderman opened a probe Tuesday into the state's cryptocurrency exchanges, titling it the Virtual Markets Integrity Initiative and describing it as “a fact-finding inquiry into the policies and practices of platforms used by consumers to trade virtual or 'crypto' currencies like bitcoin and ether.” [Law.com]

Small banks are … well, unimpressed with Congress' proposal for a Dodd-Frank rollback. Not that the proposal is so small: If passed, the Wall Street Journal reports, it would represent the most significant scaling back of financial rules since 2010. While it helps larger regional banks, it “doesn't do much [for] small community banks,” Jay Davidson, chief executive of Colorado-based First American Bancorp, told the WSJ.

Names in the News…

 

 

JoAnn Lee, associate general counsel at Exxon Mobil, opens up about her career in the law, advocacy for diversity and, among other things in a wide-ranging interview, how the company chooses outside law firms. “A lot of companies have this convergence model where they use fewer law firms, but it's our philosophy that we hire the best lawyer for the case, for the jurisdiction, for the subject matter and if that means that we're hiring a different lawyer, a different law firm for every case, that's what happens,” Lee says. Read more at the NLJ here.

Dan Berkovitz, a Wilmer Cutler Pickering Hale and Dorr partner in Washington, is poised to return to the Commodity Futures Trading Commission, where he formerly served as general counsel from 2009 to 2013. Berkovitz, nominated this week to an open commissioner slot, is the co-chairman of the futures and derivatives practice at Wilmer. The WSJ has more on Berkovitz's nomination here.

Mignon Clyburn, a Democratic member of the Federal Communications Commission, is leaving the agency after a nearly decade-long run. Clyburn announced her plans Tuesday at a public meeting, which she said would be her last. Her resignation comes after months of tension with her Republican colleagues over moves to undo net neutrality rules finalized under the Obama administration, along with media ownership limits. [Reuters]

Veteran Washington lobbyist Andrew Wheeler will take over the No. 2 slot at the EPA, serving under Administrator Scott Pruitt. Wheeler represented energy clients as a non-equity principal at Faegre Baker Daniels Consulting, where he had been a co-leader of the firm's energy and natural resources practice. The NYT looks at his past advocacy here. Among his former clients: Ohio-based Murray Energy, one of the country's largest coal producers.

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—Ryan