Good evening from Washington—and welcome to Compliance Hot Spots, our roundup and analysis of regulatory and enforcement trends. Tips, feedback and observations are always appreciated. I'm C. Ryan Barber in Washington. Reach me at [email protected] and 202-828-0315, or follow me on Twitter @cryanbarber. Thanks for reading!

'Like a Celebration of What Could Have Been'

The U.S. Securities and Exchange Commission on Friday trumpeted a more than $4.5 million whistleblower award as a new milestone, marking the first time it had credited a tipster for information a company disclosed following an internal investigation.

Announcing the bounty, the SEC said the whistleblower had filed an anonymous tip with the company, prompting it to open an internal investigation and later share the findings with the government. Within four months of that anonymous report, the whistleblower also filed a tip with the SEC.

“In this case, the whistleblower was credited with the results of the company's internal investigation, which were reported to the SEC by the company and led to the commission's resulting enforcement action and the related action,” said Jane Norberg, chief of the SEC's whistleblower office. “The whistleblower gets credit for the company's internal investigation because the allegations were reported to the commission within 120 days of the report to the company.”

The SEC did not identify the whistleblower or company. But the whistleblower's lawyers—Andy Rickman of Rickman Law Group LLP and Christopher Connors of Connors Law Group LLC—identified the tipster as a former orthopedic surgeon in Brazil who had raised concerns about a kickback scheme involving a subsidiary of Zimmer Biomet Holdings, an Indiana-based medical device manufacturer. In 2017, the company agreed to pay more than $30 million in penalties and disgorgement to resolve foreign bribery allegations.

The tipster benefited from a provision of the SEC's whistleblower program that was designed to incentivize internal reporting.

For whistleblower lawyers, the award was overshadowed by a U.S. Supreme Court decision last year that curtailed the SEC's broad view of whistleblower protections. The court, in Digital Realty v. Somers, ruled that whistleblowers need to contact the SEC to qualify for Dodd-Frank's protections against retaliation. The SEC had argued for years that those anti-retaliation protections extended even to whistleblowers who only reported misconduct internally.

Phillips & Cohen partner Sean McKessy, the first chief of the SEC's whistleblower office, said Friday's award “would have all been super significant pre-Digital Realty.”

“It's almost like a celebration of what could have been. This could have been a really big thing. But it's kind of like a 'womp-womp' now, because the defense bar decided to litigate and change the way internal reporting is treated,” he said.

Rickman, a lawyer for the recipient of Friday's award, said “it would almost be borderline malpractice to have a current employee not to go to the SEC first” in light of the Digital Realty decision.

The SEC itself noted the Digital Realty decision in the announcement of Friday's award. Inviting whistleblower reports, the commission said it” protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower's identity as required by the Dodd-Frank Act.”

Who Got the Work 

>> Roger Sherman, of counsel at Jenner & Block and a former FCC wireless bureau chief, has registered to lobby for Utah-based Sorenson Communications Inc. on “issues related to communications regulation and policy, including matters impacting deaf and hard of hearing consumers.” Sherman was the FCC wireless bureau chief from 2013 to 2016 and, earlier, chief counsel to the U.S. House Energy & Commerce Committee from 2009 to 2013.

>> Jeremy Margolis, co-chairman of Loeb & Loeb's white-collar criminal defense and investigations team, is representing Stephen Calk, the CEO of Federal Savings Bank of Chicago and an economic adviser to Donald Trump during his 2016 presidential campaign. Calk was charged in New York federal court last week with institutional bribery for allegedly extending $16 million in loans to former Trump campaign chairman Paul Manafort. Assistant U.S. Attorneys Paul Monteleoni, Douglas Zolkind and Benet Kearney are in charge of the prosecution. Read DOJ's announcement here.

>> Miller & Chevalier has registered to lobby for Assured Guaranty Ltd. on the “Tax Cuts and Jobs Act of 2017 relating to international tax issues.” The advocacy team includes Marc Gerson, former tax counsel to the House Ways and Means Committee.

>> Jame Bacon of the Alexandria, Virginia, firm Allred, Bacon, Halfhill & Young is representing two individuals suing the Office of Foreign Assets Control in Washington's federal trial court. The plaintiffs were identified on a list in 2018 “blocking property of weapons of mass destruction proliferators and their supporters.” According to the complaint: They seek access to the administrative record underlying the designations to permit a meaningful exercise of their constitutional and statutory due process rights of review, reconsideration, and delisting.”

Compliance Corner: Stories I'm Reading

>> Judge Exposes Bitterness of Craig, Skadden Split. More details about the acrimonious split between former White House Counsel Greg Craig and his former law firm, Skadden Arps, have gone public, showing the firm's angry response to Craig's suggestions that lawyers there violated attorney-client privilege to curry favor with the government.” [Politico] Read the decision here from U.S. District Judge Beryl Howell.

>> Facebook Privacy Settlement Is Delayed By FTC Split. “Consumer groups and others watching the talks say Mr. Simons wants a bipartisan decision to strengthen the FTC's credibility by underscoring its mission as a nonpartisan regulator. A Republican-only decision could expose it to criticism by Democrats and diminish its impact for the enforcement agency, which has sometimes been criticized for being toothless on privacy in the past.” [WSJ]

>> Have In-House Compliance Experience? Department of Justice May Want to Hire You. Principal Deputy Associate Attorney General Claire McCusker Murray told an audience at the Compliance Week Annual Conference in Washington that she plans to emphasize hiring more prosecutors who have in-house compliance experience. [Corporate Counsel]

>> 'Congratulations, You Are a C Student': Hui Chen on Understanding DOJ Guidance. “The guidance can be helpful for compliance practitioners to understand how compliance programs are evaluated by the DOJ; however, Chen reminded the audience that the DOJ only evaluates organizations when involved in criminal wrongdoing. This is not an evaluation to determine whether an organization is good, but whether an organization is criminal.” [NAVEX Global]

>> Grieving Mother Sues Furniture Industry After Son Dies Beneath Tipped Ikea Dresser. The state court suit in Pennsylvania “has taken what appears to be an unprecedented step in addressing the hazard. This month, [the plaintiff] filed a lawsuit aimed not at one company, but at the furniture industry as a whole.” [Philly Inquirer]

Notable Moves and Announcements

• Former Obama-era U.S. attorney general Loretta Lynch has joined Paul, Weiss, Rifkind, Wharton & Garrison in New York as a litigation partner. Paul, Weiss chairman Brad Karp said in a statement: “There is no lawyer who has served our country with greater distinction or integrity. With her extraordinary service at the Department of Justice, both in Washington and New York, Loretta will add even more depth and experience to our market-leading white-collar and regulatory practice.” Read more here at Law.com. The New York Times has more here.

 • The SEC on Tuesday named Erin Schneider as the director of the commission's regional office in San Francisco. Schneider (at left) has served as the associate regional director in San Francisco since 2015. In her new role, she will lead more than 125 enforcements attorneys, accountants, investigators and other staff in an office that has found new prominence policing Silicon Valley. Schneider replaces Jina Choi, who joined Morrison & Foerster after leaving the SEC in November. Schneider earlier was an associate at Gibson, Dunn & Crutcher from 2001 to 2004 and she was a staff accountant at PwC from 1995 to 1998. My colleague Ross Todd has more here at The Recorder.

• Seven lawyers, including four corporate and litigation partners, have left New York's Robinson Brog Leinwand Greene Genovese & Gluck to start a regulatory compliance group at Sullivan & Worcester, my colleague Jack Newsham reports. Partners David Danovitch, Peter Ginsberg, Scott Miller and John Riley and associates Nicholas Chionchio, Michael DeDonato and Nakia Elliott joined Sullivan's New York office,

• Sarah Paul, who worked as the tax coordinator in the Southern District of New York U.S. Attorney's Office, is rejoining the private sector as an Eversheds partner. Paul spent nine years at the Southern District office, where she litigated several high-profile cases that included an ongoing case against four people tied to the Panama Papers.

• Walmart Inc. has announced David Searle will become vice president and International chief ethics and compliance officer May 28. Searle currently serves as chief compliance officer and associate general counsel for Houston-based Bristow Group Inc., a global industrial aviation services company.

• New York's financial regulatory agency has created a first-in-the-nation cybersecurity division to place special focus on protecting the state's consumers and industries from digital threats, my colleague Dan M. Clark reports. The division will be led by Justin Herring, currently chief of the cyber crimes unit of the U.S. Attorney's Office of New Jersey.