Welcome to Compliance Hot Spots, our briefing on compliance, enforcement and government affairs. Facebook's privacy settlement with the FTC is getting tons of attention—will the FTC drop a hammer? Also: Uber's set a quarterly lobbying record. Scroll down to see some new roles and who got the work in some of the big disputes making headlines.
I'm C. Ryan Barber in Washington. 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. Let's get started.

'Repeat Corporate Misconduct'

Corporate recidivism is in the air.

Two years after paying the highest fine in the Consumer Financial Protection Bureau's history, Wells Fargo & Co. bested its own (presumably unwanted) record last week when it agreed to pay $1 billion to resolve new allegationsof misconduct.

On the tech front, Facebook is facing greater scrutiny over its privacy practices after the revelation a political consultancy aligned with the Trump campaign harvested personal data on tens of millions of users of the social site. Facebook's facing an FTC investigation now focused on possible violations of a 2011 consent order.

What can be done to stop a corporate offender from becoming a repeat offender?

In a Friday blog post, Notre Dame Law professor Veronica Root didn't need to address Wells Fargo's latest settlement—announced that same day—to establish the bank as a repeat offender.

Root's piece, on New York University School of Law's Compliance and Enforcement blog suggests that federal regulators need to take a more holistic view and consider a company's overall record of compliance when determining appropriate sanctions.

Regulators, she wrote, “often treat each incident as an isolated matter that should be addressed on its own without consideration of other occasions where misconduct occurred within the organization.”

There might be a better way. Root writes:

“U.S. regulators, prosecutors, and perhaps even members of Congress, need to think critically about the types of sanctions that are likely to deter corporations like Facebook and Wells Fargo from engaging in misconduct. There has been some mention of corporate recidivism recently—like what's found in the FCPA Corporate Enforcement Policy—but the ability or willingness of governmental actors to look at organizational misconduct across diverse regulatory areas when considering appropriate sanctions is not at all clear. Indeed, recent experience and scholarship suggests that much more can be done.”

In the run-up to Tuesday's Wells Fargo shareholder meeting, John Chiang, the California state treasurer, called for the removal of the bank's chief executive Tim Sloan for a “laundry list of misdeeds.”

Facebook, meanwhile, drew criticism over its repeated privacy offenses from a former employee, Sandy Parakilas, an operations manager at the company.

Referring to Facebook CEO Mark Zuckerberg, Parakilas told the CBS program 60 Minutes: “I think the real problem is not what he feels in his heart. I think the real problem is that you've got a company that has repeatedly had privacy scandals. It has repeatedly shown that it doesn't prioritize privacy over the years.”

With the Facebook matter, it's important to note that the 2011 settlement with the FTC required the company to undergo independent, bi-annual audits of its privacy program. In its review for the two-year period ending February 2017, a review by PricewaterhouseCoopers LLP found that Facebook's “privacy controls were operating with sufficient effectiveness.”

Facebook was allowed to pick its compliance reviewer, according to a new report from the Washington Post that raised questions about conflicts of interest. Facebook told the Post: “We take our commitments to the FTC seriously, including the ongoing audits of our privacy program.”

The Electronic Privacy Information Center last week filed a new FOIA lawsuit against the FTC to try to squeeze more information from the agency about the required communication between Facebook and the FTC following the 2011 consent order.

Tech's Lobby Dollars Fly

Uber's set a new personal record for lobbying spend. The $570,000 that the company reported spending in the first quarter of 2018 surpassed previous periods, according to a report in Bloomberg.

From the report: “The San Francisco, California-based company is seeking to craft a new reputation in Washington and beyond after years of negative revelations ranging from spying on passengers to a fatal driverless-car incident to allegations of sexual harassment and discrimination.”

Uber's stable of outside lobbyists include teams from Ballard Partners, Mayer Brown, Peck Madigan Jones, Capitol Tax Partners and the Doerrer Group.

Meanwhile, the tech publication Recode reports that Facebook also set a new first quarter lobbying record—spending $3.3 million, according to a new disclosure. Apple's quarterly filing showed the company lobbied the CFPB for the first time ever, focusing on mobile payments.

More notable news on the lobby front…

—> J. Steven Hart is stepping down as chairman of Williams & Jensenamid wide scrutiny of his personal and professional ties to Scott Pruitt, the EPA administrator. “Considering the last couple of weeks, I think it is easier on my family and the firm to expedite my departure,” Hart told colleagues in an email, according to Bloomberg. Hart and his wife, a health care lobbyist, faced questions about the Capitol Hill bedroom Pruitt rented from the Harts.

Speaking of the EPA, Reuters reports that the White House budget office is investigating whether Pruitt's $43,000 soundproof phone booth violated federal contracting law. The NYT over the weekend, in case you missed it, took a deep dive into Pruitt's political and legal career in Oklahoma.

—> Skadden, Arps, Slate, Meagher & Flom registered to lobby for Barclays Bank PLC on tax reform, according to a new registration. Skadden tax partner Christopher Bowers in Washington and Skadden of counsel Paul Oosterhuis, international tax specialist, are on the account.

Who Got the Work

➤➤ Wells Fargo turned to a Sullivan & Cromwell team ahead of the bank's $1 billion settlement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. Leading the team was H. Rodgin Cohen, the firm's senior chairman. Sullivan & Cromwell special counsels Shari Leventhal and Stephen Meyer were also on the team. The settlement marked the largest-ever at the CFPB, and the first enforcement action taken under the bureau's interim director, Mick Mulvaney.

➤➤ Eugene Scalia, co-chair of Gibson, Dunn & Crutcher's administrative law and regulatory practice, is representing UBS Financial Services Inc. amid age-discrimination claims brought by a former managing director named Alexander Beigelman. The case is pending in the U.S. Court of Appeals for the Seventh Circuit. A federal trial judge earlier said Beigelman could pursue his allegations. Matthew Singer of Chicago's Stowell & Friedman represents Beigelman.

➤➤ Scalia colleague Ted Olson, founder of Gibson Dunn's appellate and constitutional law practice, is leading a new fight against the CFPB in the U.S. Court of Appeals for the Fifth Circuit. Olson is pressing a challenge to the bureau's single-director structure on behalf of All American Check Cashing. Olson lost a similar argument in the U.S. Court of Appeals for the D.C. Circuit, where he represented the mortgage provider PHH Corp.

➤➤ Paul, Weiss, Rifkind, Wharton & Garrison partners Theodore Wells Jr. and Daniel Toal are leading a new appeal for Exxon, challenging the dismissal of the company's bid to stop a climate-change investigation by state attorneys general. Meanwhile, in San Francisco federal district court, Gibson Dunn's Theodore Boutrous Jr. is leading the charge for Chevron Oil in a case in San Francisco federal court.

➤➤ A team from Keker, Van Nest & Peters, representing former pro cyclist Lance Armstrong, put to bed a closely watched False Claims Act case in Washington in which the government alleged the U.S. Postal Service was duped about alleged use of drug-performing drugs among members of the USA cycling team. My colleague Ross Todd in San Francisco caught up with name partner Elliot Peters about the deal.

Promotions & Appointments

• M. Kendall Day, a longtime U.S. Justice Department lawyer focused on white-collar crime, is joiningGibson, Dunn & Crutcher on May 1. Day leaves Main Justice as acting deputy assistant attorney general in the Criminal Division. “The firm has an unparalleled white collar practice, and I am honored to be its newest member,” Day said in a statement.
• Covington & Burlingpartner Andrew Smith in Washington is on deck to lead the Federal Trade Commission's consumer protection team, Bloomberg's Big Law Business reports. Smith, formerly assistant to the FTC's consumer director from 2001 to 2015, joined Covington in 2016 from Morrison & Foerster.
• Justin Muzinich, serving now as counselor to Secretary Treasury Steve Mnuchin, is the Trump administration's pick for the second-in-command postat the agency. Muzinich's ethics agreement and financial disclosure were publicly released this week, revealing income in 2017 and 2018 of more than $15 million from stock options, capital gains and wages from his former investment firm Muzinich & Co., where he had been president.
• Janus Henderson Investors namedGeorgina Fogo, formerly BlackRock's global compliance head, as chief risk officer. The publication Pensions & Investments reportsthat Una Neary, head of the regulatory practice at Goldman Sachs Group, will replace Fogo at BlackRock.

Got a lateral move or other appointment in the compliance and regulatory space? I'm at [email protected].

Compliance Reads: Quotable & Notable

—> Larry Thompson, the compliance monitor for Volkswagen and a former top-ranking Justice Department official, says the German automaker isn't doing enough to remake its culture in the aftermath of the emissions scandal. From the NYT: “The conclusions of Mr. Thompson's confidential report, first reported by the Bild am Sonntag newspaper and confirmed by a Volkswagen spokesman, are the latest sign that a ballyhooed campaign by Volkswagen to become an exemplary corporate citizen has been floundering.” Thompson, the Volkswagen monitor since April 2017, has urged the company to adopt a more effective whistleblower program, according to the NYT.

—> “2018 is going to be a very interesting time,” Gary Gensler, the former Obama-era CFTC chairman, tells the NYT. “Over 1,000 previously issued initial coin offerings, and over 100 exchanges that offer I.C.O.s, are going to need to sort out how to come into compliance with U.S. securities law.”

—> “A growing number of companies are implementing conduct risk management software to prevent [anti-bribery and corruption] violations while demonstrating to regulators that a company is serious about monitoring its supervised persons,” Brian Fahey, chief executive of MyComplianceOffice, writes at LegaltechNews.