Good evening from Washington—and 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 C. Ryan Barber in Washington—reach me at [email protected] and 202-828-0315, or follow me on Twitter @cryanbarber. We're taking next week off but returning June 25—thanks, always, for reading!

Big Tech Gets Squeezed

The federal government's scrutiny of big tech is ramping up, as news emerges about Justice Department, FTC and congressional inquiries focused on market power, privacy and data protection.

“As we think about antitrust enforcement in the digital economy, the key issues that antitrust enforcers must untangle are whether a company is growing due to superior price, quality, and innovation, or whether some transaction or business practice is, on balance, anticompetitive in purpose and effect,” Makan Delrahim (above), the head of DOJ's antitrust division, said in remarks Tuesday in Israel.

Delrahim also said: “The current landscape suggests there are only one or two significant players in important digital spaces, including internet search, social networks, mobile and desktop operating systems, and electronic book sales.” (Read more at Business Insider.)

Some of the key points, arguments and observations that are being made right now:

>> Antitrust laws are not so outdated to target tech companies. ”The antitrust trust laws have for a century done a very, very good job at evolving with the times. I think it would take an awful lot to make us suggest some kind of general change to antitrust law,” Bruce Hoffmann, director of the FTC's competition bureau, told Bloomberg.

>> The new scrutiny will tax the resources of the company's government affairs teams and outside counsel. Google is the industry's biggest spender in Washington, according to CNBC. But Facebook and Amazon are both at record-level spending. Bloomberg Law reports: “A looming government antitrust probe is Silicon Valley's biggest nightmare—and a massive win for big law firms.” How Douglas Melamed (at left), a former antitrust lawyer at DOJ, put it: “This is what they dream of, these big resource intensive matters.”

>> Meanwhile, tech companies are revamping their teams. “Over the past year, Facebook has appointed new heads of its legal and communications teams, as well as hiring Nick Clegg, Britain's former deputy prime minister, to lead its lobbying and public-relations efforts overall,” the WSJ reports. The New York Times reported: Google, Facebook, Apple and Amazon “have intensified their efforts to lure lobbyists with strong connections to the White House, the regulatory agencies and Republicans and Democrats in Congress.”

>> Don't forget about state attorneys general. “Several state attorneys general and aides said a core group of AGs has been discussing how to address antitrust-related concerns around big tech companies for some months. One official estimated the number of attorneys general who are involved at between 12 and 20,” according to the WSJ. More here at Politico: FTC Takes Tech Scrutiny to Heart of Silicon Valley.

Bipartisan Push to Revamp FARA Enforcement

“FARA” perhaps hasn't reached “FCPA” in that pantheon of Washington acronyms, but there's still time. The Foreign Agents Registration Act has received newfound attention over the past couple of years as the centerpiece of special counsel-related investigations and prosecutions. The decades-old law requires law firms, lobbyists and consultants to disclose certain advocacy for foreign governments.

“Everybody and his brother is starting a FARA practice—or claiming to already have one,” Robert Kelner, chair of Covington & Burling's elections and political law practice, told my colleague Ryan Lovelace late last year. The D.C. judge presiding in the Paul Manafort case remarked in March that the foreign-lobbying law is no “pesky regulation.”

The FARA news this week: a bipartisan coalition of U.S. senators, led by Chuck Grassley, R-Iowa (above), “introduced legislation to shine a light on efforts by foreign interests to influence American policy and public opinion.” Read the nuts and bolts here about the Foreign Agents Disclosure and Registration Enhancement Act of 2019. The cosponsors: Senators Dianne Feinstein, D-California, John Cornyn, R-Texas, Jeanne Shaheen, D-New Hampshire, Marco Rubio, R-Florida, and Todd Young, R-Indiana.

“If lobbyists or public relations firms are peddling policy preferences at the behest of foreign powers, we ought to know about it,” Grassley said in an op-ed this week at the WSJ. “I'm introducing bipartisan legislation to beef up enforcement against clandestine foreign influence campaigns and encourage greater compliance with the often-ignored registration requirements for lobbyists working on behalf of foreign entities.”

Several highlights:

>> Prosecutors would have power to issue “civil investigative demands,” and any recipient could take the demand to a trial court to modify or challenge it.

>> The legislation would increase criminal fines for a willful violation from $10,000 to $200,000. Civil penalties would be established for failure to file a timely or complete registration statement.

>> A new examination of an exemption to FARA that allows registration under the less-onerous Lobbying Disclosure Act. “It's time we ask whether this exemption continues to serve the public interest,” Grassley wrote in his op-ed.

Who Got the Work

>> Boeing has tapped Big Law defense lawyers in the 737 Max investigation. “The three attorneys leading the defense team are Mark Filip (above left) of the law firm Kirkland & Ellis, who served as deputy attorney general under President George W. Bush; Richard Cullen (above, middle) of McGuireWoods, a Virginia-based law and crisis-management firm; and William Burck (at right), co-managing partner of the Washington, D.C., office of Quinn Emanuel Urquhart & Sullivan,” according to the Seattle Times. My colleague Dan Packel has more here at Law.com.

>> Perry Lange of Wilmer Cutler Pickering Hale and Dorr represented Toshiba Corp. and Jeff White of Weil Gotshal & Manges represented Canon Inc. in an antitrust-related action brought by the Justice Department and FTC. The agencies resolved a $5 million civil-penalty complaint lodged in Washington's federal trial court against the two companies over allegations involving certain notifications of the Hart-Scott Rodino Act. My colleague Phillip Bantz has more here.

>> “A California debt collection law firm has hired one of the appellate bar's biggest names to handle its Supreme Court challenge of the Consumer Financial Protection Bureau's constitutionality. Kannon Shanmugam (at left) of Paul Weiss Rifkind Wharton & Garrison LLP will lead Seila Law LLC's case at the Supreme Court level, according to court filings June 7,” Bloomberg Law reports. Shanmugam last week asked the Ninth Circuit to pause its mandate as Seila prepares to turn to the Supreme Court.

>> “The head of U.S. sales for Fiat Chrysler Automobiles NV filed a federal whistleblower lawsuit against the automaker Wednesday, claiming he has been made a scapegoat for inflated vehicle sales practices under investigation by federal agents,” the Detroit News reports. Read the complaint here in the U.S. District Court for the Eastern District of Michigan. Deborah Gordon and Elizabeth Taylor represent the plaintiff, Reid Bigland. A team from Sullivan & Cromwell—including Jacob Cohenand Julia Jordan—represent FCA North America Holdings with Thomas Cranmer of Miller, Canfield, Paddock and Stone. The Wall Street Journal has more here.

>> New York-based Smith Villazor LLP's Patrick Smith and Nicholas Karasimasrepresented a former Goldman Sachs banker, Woojae Jung, who was sentenced to three months in prison for insider trading. Bloomberg has more here. “Mr. Jung is a man of outstanding character who crossed the line in a misguided attempt to help someone close to him,” the defense lawyers said in their sentencing memo. Here's a link to DOJ's press announcement. Assistant U.S. Attorney Andrew Thomas in SDNY was in charge of the case.

>> Meet the lawyers who defended former U.S. Representative Aaron Schock in a public-corruption case. As subpoenas for testimony and records made that clear, Schock called McGuireWoods partner George Terwilliger III about taking up his defense.

>> A team from Holland & Knight, including Norma Krayem, has registered to lobby for Virginia-based Block.One on policy related to blockchain technology. Krayem, a senior policy advisor, leads the firm's global cybersecurity and privacy policy and regulation team. She formerly was deputy chief of staff at the U.S. Department of Transportation.

Compliance Headlines: Stories I'm Reading

>> Arnold & Porter's Amy Jeffress Will Be Defense Witness for Gregory Craig. Defense lawyers for ex-Skadden Arps partner Gregory Craig said they planned to call Arnold & Porter white-collar partner Amy Jeffress (above) to bolster Craig's claims he wasn't required to register his Ukraine work under the federal Foreign Agents Registration Act. The government said it's not planning to call any expert witnesses at trial, which is set for August. [NLJ]

>> Novartis's Secret Settlement Talks Revealed in Accidental Filing. “On Tuesday, a letter inadvertently made public said the parties had made 'significant progress' on reaching a deal. The letter, written to Gardephe by lawyers for U.S. Attorney Geoffrey Berman, was filed in the court docket and then removed a short time later by the judge's staff. The letter confirmed that there is a 'monetary aspect' of the settlement that has been submitted to the Justice Department for expedited approval.” [Bloomberg]

>> IRS Wins Again in Closely Watched Intel Tax Case. “A federal appeals court upheld tax regulations on certain cross-border cost-sharing agreements within corporations, delivering a victory for the Internal Revenue Service over Intel Corp. in a case closely watched by tech companies.” Read the Ninth Circuit's decision here. U.S. Justice Department lawyer Arthur Catterall argued for the IRS, and Donald Falkof Mayer Brown argued for Intel. [WSJ]

>> Deutsche Bank Finds Serious Failings in Payments Screening. “Deutsche Bank has discovered serious failings in its anti-money laundering and sanctions controls that allowed cheques and high-value electronic payments to be processed without proper screening. The weaknesses lasted years, internal auditors found, in the latest compliance problem for the embattled German lender.” The bank said in a statement: “We carried out a regular scheduled audit into our cheque processing processes, which was completed last year and did not identify any AML or sanctions breaches. We have invested substantially in our IT and anti-financial crime capabilities.” [Financial Times] The NYT has more here.

>> Milbank Tweed Partner Antonia Apps on Connolly and the Government's Micromanaging of Internal Investigations. “The case is meant to be a warning for the government that it should not conduct the level of direction that appears to have happened in this particular case. There can be a line between the government providing too much direction to outside counsel conducting an investigation and one where the government steps back, takes its hands off the wheel, and allows outside counsel to conduct the investigation and come back and present to the government the key findings of the case in ways that would not cross the line that Judge McMahon identified in the case.” [Corporate Crime Reporter]

>>Delay in Huawei Ban Is Sought by White House Budget Office. “The acting budget chief for the White House has called for a two-year delay of part of a federal measure that is aimed at Huawei Technologies, the Chinese telecom giant … Russell T. Vought, the acting director of the Office of Management and Budget, said enacting the ban within one year, as planned, would cause too much burden for American companies.” [NYT]

>> Fed Lifts Requirements on JPMorgan Stemming From 'London Whale' Losses. “JPMorgan has made “substantial improvements” in its risk management and internal auditing controls, the Fed said Thursday in a statement announcing the termination of a 2013 order that placed additional scrutiny on the bank.” [WSJ]

Notable Moves & Announcements

• Raj De (above) has been appointed as the managing partner of Mayer Brown's Washington office, succeeding Daniel Masur, who had held the role since 2013. De, a former general counsel to the National Security Agency, leads the firm's cybersecurity and data privacy practice, and he is a co-leader of the firm's national security practice.

• Heath Tarbert has been confirmed as CFTC chairman. Tarbert formerly was an Allen & Overy partner and he earlier clerked for Justice Clarence Thomas on the U.S. Supreme Court. At Allen & Overy, the regulatory partner represented some of the world's largest banks and financial institutions. He reported receiving $1.36 million in partnership share on the financial disclosure he filed in May. Tarbert was confirmed in October 2017 as assistant secretary of the U.S. Treasury Department, international markets and development.

• The U.S. Justice Department's Ephraim Wernick, an assistant chief in the Foreign Corrupt Practices Act unit, is joining Vinson & Elkins in Washington, according to The Wall Street Journal. Wernick has spent more than a decade at Main Justice.

• Jennifer Acuña (at left) has joined KPMG LLP in Washington as a principal in the federal legislative and regulatory services group. She recently served as chief tax counsel to the Senate Finance Committee and previously was tax counsel for the Committee on Ways and Means in the U.S. House of Representatives. Acuña will work with John Gimigliano, principal in charge of KPMG's federal tax legislative and regulatory group. “Jennifer played a key role at every stage of tax reform, in the House and in the Senate,” Gimigliano said.

• Greenberg Traurig said Monday that Alston & Bird's Robert C. Jones has joined the firm as co-chairman of its federal government law and policy practice. Jones was previously the leader of Alston's legislative and public policy group, my colleague Ryan Lovelace reports.

• Reed Smith has hired regulatory enforcement partner Dora Wang in Shanghai, as demand for legal advice related to regulatory compliance and enforcement actions continues to rise as a result of the escalating China-U.S. trade war. U.S.-qualified Wang, who previously worked at Morgan, Lewis & Bockius, will also spend time in New York.

• Matt Baughman, a former associate deputy attorney general, has returned to King & Spalding as a partner in the firm's special matters and government investigations team in Atlanta. While at the Justice Department, serving under then-Deputy Attorney General Rod Rosenstein, Baughman oversaw white-collar criminal enforcement and the rollout of policies for crediting companies for cooperating with investigations.

• The SEC named David Peavler, general counsel to HD Vest Inc., as the new director of the regional office in Fort Worth. A veteran of the SEC's enforcement division, Peavler earlier served as associate director of the office, where he led “significant investigations and enforcement matters,” including one against a Houston-area businessman who ran a $114 million Ponzi scheme. Before joining the SEC as a staff attorney in 2000, Peavler was a partner at the firm that is now Locke Lord, where he represented accounting firms in securities class actions. The Dallas Morning News has more here.

• Former Maryland attorney general Douglas Gansler has left Buckley to start a new state attorneys general practice at Cadwalader, Wickersham & Taft. Gansler, who arrives at Cadwalader on Monday, will work in its Washington office as partner in its global litigation group and its white-collar defense and investigations practice.

• Erik Baptist, formerly at the EPA, has joined Wiley Rein as partner in the environment and product regulation practice. Baptist had served as deputy assistant administrator for law and policy in the office of chemical safety and pollution prevention at the EPA.

• The Bank Policy Institute, a nonpartisan public policy and advocacy group in Washington, D.C., has picked John Court as general counsel. Court has served as BPI's senior vice president and deputy GC since July. Court's soon-to-be predecessor, Jeremy Newell, who also is BPI's executive vice president and chief operating officer, is leaving the group to join Covington & Burling, my colleague Phillip Bantz reports.

• Dan Burstein has joined the crypto custody and investment platform Paxos as general counsel and chief compliance officer. “He started his career at a high-profile New York law firm, helped lead the New York Department of Financial Services and then was a leading consultant specializing in investigations and compliance for fintechs, banks, and other financial institutions,” the firm said. My colleague Caroline Spiezio has more here.