Welcome to Compliance Hot Spots, our roundup and analysis of regulatory and enforcement trends. Tips, feedback and general thoughts on your practices always appreciated. I'm your host, C. Ryan Barber. Reach me at [email protected] and 202-828-0315, or follow me on Twitter @cryanbarber.

DOJ's New (Acting) No. 3 Talks Compliance

Claire Murray, the newly named principal deputy associate attorney general—serving as the effective No. 3 at Main Justice—introduced herself this week to attendees at the Compliance Week conference in Washington. “Our philosophy is that an agency can never be led by too many lawyers from Kirkland & Ellis,” the former Kirkland partner said in her prepared remarks.

Murray is serving below two ex-Kirkland lawyers—U.S. Attorney General William Barrand his deputy, Jeffrey Rosen, who was confirmed last week to the second-in-command slot. She joined Barr's front office from the Trump White House, where she had been an associate counsel first under the leadership of Donald McGahn, who has since returned to Jones Day.

Here are some highlights from Murrary's remarks at the Mayflower Hotel in downtown Washington:

>> “This Department of Justice appreciates the challenges you face. Our Attorney General has been a General Counsel and a Director at multiple companies—you might say that corporate compliance was his day job. Our new Deputy Attorney General spent nearly thirty years advising corporations about the complicated regulatory regimes within which they operated. And a significant portion of my practice at Kirkland involved internal investigations and white collar defense in the FCPA space.”

>> “As I meet with our litigating divisions in the coming weeks, I plan to ask what first-hand experience their corporate-enforcement attorneys have not only with prosecution, but also with in-house compliance. And I will ask them to evaluate whether their staffs would be more effective if they worked to recruit at least some prosecutors with in-house compliance experience.”

>> “Having expertise in compliance at the Department not only helps our attorneys, it also benefits the parties who are negotiating a resolution with us. After all, when you're presenting your corporate compliance policies, you want the government's lawyers to be well versed in what's effective, what's practical, and what's not. Having expertise in compliance on both sides of the table advances the Department's mission of pursuing justice.”

KPMG's 2019 CCO Survey: Takeaways

KPMG this year surveyed 220 chief ethics and compliance officers across industries, including consumer, financial services, health care and insurance.

“Ethics and compliance roles, responsibilities and expectations have evolved and progressive organizations will continue to look for opportunities to integrate ethics and compliance throughout their organizations and use automation to facilitate and ethical and compliant organizational culture,” the KPMG report said.

Several takeaways from the survey, which was released Tuesday:

>> Five activities that respondents planned to enhance in 2019: investigations; monitoring and testing; data analytics; regulatory change management; and reporting/ data visualization dashboard. The survey identified the “main drivers” as the following: “need for real-time detection and responsiveness”; “volume of investigations and consistency in triaging, management, resolution and learning”; “innovative technology and automation”; and protection of brand and reputation.

>> Ethics was the top response when survey respondents were asked to identify five regulatory and compliance obligations they intend to refine this year. The other areas were: privacy, product safety, time and expense compliance; and 3rd party vendor management.

>> The top focus area for integration was identified as training, followed by investigations and monitoring and testing. Several of the “key actions” the respondents identified included expanding ethics and compliance training, driving automation and integrating governance and reporting across areas such as legal and human resources.

Who Got the Work

>> Arnold & Porter partner Craig Holman, who leads the firm's government contracts and national security practices, is representing the Elon Musk company Space Exploration Technologies Corp. in a contract suit in the U.S. Court of Federal Claims. “SpaceX's lawyers told the U.S. Court of Federal Claims that the proceedings surrounding the company's bid protest should be conducted confidentially, under the terms of a protective order, in order to safeguard the competitive process,” according to a report at Geek Wire.

>> The plaintiffs firm Levi & Korsinsky, lead counsel in a class action against Tesla in the Northern District of California, last week sued the SEC in D.C. federal district court to squeeze records from the agency about Musk's twitter activity and about the company's internal controls and procedures. Here's a link to the complaint. “Although the SEC has produced some of the requested documents, the SEC continues to withhold documents relating to the SEC's investigation into Musk's fraudulent tweets, and the SEC complaint and settlement, despite this proceeding being over,” the suit alleged. My colleague Alaina Lancaster has more here.

>> Joann Needleman of the firm Clark Hill PLC in Philadelphia is representing the New York-based debt collection law firm Forster & Garbus in a suit in Brooklyn federal court that was brought by the Consumer Financial Protection Bureau. “Using high-volume litigation tactics, Forster & Garbus collects substantial sums of money from consumers who may not actually owe debts or may not owe debts in the amounts claimed in the collection suits,” according to the complaint. The CFPB enforcement team includes Barry Reiferson. My colleague Jason Grant has more here.

Compliance Reading Room

>> Microsoft Deputy General Counsel Calls for US Privacy Law as GDPR Turns 1. “Now, it's Congress's turn to adopt a new framework that reflects the changing understanding of the right to privacy in the United States and around the world,” Julie Brill (above) said in a blog post. A federal U.S. bill could take lessons from GDPR she said, with “rules that give people control over their data and require greater accountability and transparency in how companies use the personal information they collect.” [Law.com]

>> Recruiting and Retaining Compliance Staff Is Key Risk for Banks, Regulator Says. “U.S. banks are having a hard time recruiting and retaining compliance professionals, particularly those who specialize in financial crimes, the Office of the Comptroller of the Currency said in a semiannual report on the risks facing lenders. Recruiting hurdles are particularly high at small lenders and regional banks, the national banking regulator said.” [WSJ]

>> U.S. Fines Billions for Wall Street Fraud. Nearly Half the Time It Doesn't Collect. “The SEC has struggled for years to get defendants to pay more of their fines, although some are almost certain to avoid payment forever. That includes people who went to prison on related criminal charges, or people behind Ponzi schemes who spent the funds they took from defrauded investors.” [WSJ]

>> Navigating the DOJ's New Guidance on the Evaluation of Corporate Compliance Programs. A team from Drinker Biddle—including Mary Hansen, co-chair of the firm's white-collar defense and corporate investigations practice, and Peter Baldwin, a former federal prosecutor—offer their insight. [NLJ]

>> Fried Frank Partner Evan Barr On Representing Executives In Corporate Crime Cases. “Where the evidence is available, the prosecutors I've dealt with have always been interested in going after individuals, pre or post Yates memo. I never saw a difference. That could be in part that I'm dealing with the prosecutors out of the Southern District of New York, who have always been aggressive. Some people tell me that the memo had more impact in offices in other parts of the country where that was not necessarily the culture. But I didn't see a difference,” Evan Barr, a white-collar partner at Fried, Frank, Harris, Shriver & Jacobson in New York says. [Corporate Crime Reporter]

 >> Fingerprints and Finances: Next Wells Fargo CEO Will Be Under Regulatory Microscope. “From submitting their fingerprints to giving up their tax records, Wells Fargo & Co's next chief executive will go through a vetting process that could rival that of top U.S. government officials.” [Reuters]

>> Better Corporate Compliance May Hinge On Prosecutors' Resolve. “The Justice Department is offering a clearer picture of how it assesses corporate compliance programs, but whether this spurs executives and boards to bolster their systems could turn on how aggressively federal prosecutors use updated guidelines.” [Bloomberg Law]

>> US Treasury Department Warns Cryptocurrency Businesses on Compliance. “A top Treasury Department official warned Monday that the department is serious about cracking down on digital currency businesses that don't comply with trade sanctions, anti-money laundering and bank secrecy laws. Sigal Mandelker, U.S. Department of the Treasury undersecretary for terrorism and financial intelligence, said 'bad actors are trying to leverage virtual currencies to make an end-run around our laws and regulations.'” [Corporate Counsel]

>> Evaluating Corporate Compliance—DOJ Guidelines for Prosecutors. “Companies would be well-served to benchmark their current compliance program against the DOJ memorandum. In particular, companies that have been or may become internationally acquisitive should take the opportunity to evaluate the extent to which their current approach to pre-acquisition diligence and post-acquisition integration are sufficiently robust to withstand DOJ scrutiny in the event misconduct were to be identified post-closing. [Wilson Sonsini]

>> New Report Shows More SEC Enforcement Actions, Record High Use of Administrative Law Judges. Law professor Stephen Choi, director of the New York University Pollack Center for Law & Business and co-author of the report, said it's the first time at least since 2010, when the center began its SEC records database, that 100% of the SEC's actions were brought before an administrative law judge. By comparison, in 2010 only 32% were administrative rather than filed in court. [Law.com]

>> Ex-UBS Compliance Officer Says Burner Phone Gift Was 'Strange.' “A former UBS Group AG compliance officer charged with insider trading said she was surprised when her daytrading co-defendant asked her to limit their contact to a burner phone that he handed her after nights out in a London night club. Fabiana Abdel-Malek, 36, is accused of leaking price-sensitive deals information from a UBS deals database to Walid Choucair, allowing him to profit from the information.” [Bloomberg]

Notable Moves & Announcements

• Trump has nominated Treasury general counsel Brent McIntosh (above) to be an Under Secretary of the Department of the Treasury for International Markets and Development. McIntosh first joined Treasury from Sullivan & Cromwell. Trump has picked Brian Callanan to succeed McIntosh as general counsel. He is currently serving as deputy general counsel at Treasury. The WSJ has more here.

• In other Treasury news: “Craig Phillips, the counselor to the Treasury secretary who was spearheading the Trump administration's move to overhaul the nation's mortgage-financing system, is leaving his position next month,” Politico reports. The New York Times, which first reported the news, has more here. Bloomberg has more here.

• Andrew McBride has joined McGuireWoods as a white-collar partner. The former Justice Department lawyer and clerk to Justice Sandra Day O'Connor arrives from Perkins Coie.

• Former U.S. Attorney Ronald Sharpe has joined Jones Day's Washington office as a white-collar and investigations partner. Sharpe served as U.S. attorney for the District of the Virgin Islands from 2009 through 2017.

 • The California-based private equity firm Bertram Capital has promoted Zoey Armstrong (left) to chief compliance officer. Armstrong, who first joined the company in 2013 from Blum Capital Partners, will oversee legal, compliance functions. “Prior to Blum Capital, Ms. Armstrong was a paralegal in the venture capital and fund formation group of Cooley LLP, and prior to that, the investment management group of Paul Hastings LLP,” Bertram said.

• Holland & Knight has hired Joshua Prever as a litigation partner in the firm's Fort Lauderdale office. Prever focuses on, among other areas, financial services disputes and securities. Prever was formerly at Morgan, Lewis & Bockius in Miami.

• Steptoe & Johnson has hired Adie Olson as a government affairs and public policy partner in Chicago. Olson joins from Quarles & Brady.

• Shearman & Sterling has hired Sara Raisner as a litigation and enforcement counsel in the firm's New York office. Raisner formerly was a director in FINRA's enforcement department.

• Dan Gallagher, a former SEC commissioner, has joined the board of the National Association of Corporate Directors.