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 are always appreciated. I'm C. Ryan Barber—reach me at [email protected] and 202-828-0315, or follow me on Twitter @cryanbarber. Thanks for reading!

 

SEC Responds to Whistleblower Wait-Times

Ask any whistleblower lawyer and they'll tell you: Every week, they receive calls from frustrated clients asking why they have not yet heard from the U.S. Securities and Exchange Commission.

Indeed, since the start of the SEC's cash-for-tips program, whistleblowers (and their lawyers) have griped about long waits for a decision from the agency about whether an award is warranted. In a Washington federal appeals court, that complaint materialized in the form of a lawsuit from a purported whistleblower who's demanding the SEC give him an answer in coming months.

Responding to the whistleblower, who sued under the pseudonym “John Doe,” the SEC recently opened up about wait-times and delays. The Wall Street Journal reported Tuesday that the case is tied to $519 million settlement involving Teva Pharmaceutical Industries.

The challenger “greatly misapprehends the work, effort, and time involved in reviewing whistleblower claims, including his,” SEC lawyers Thomas Karr and Eric Reicher said in a brief filed in the U.S. Court of Appeals for the D.C. Circuit.

Under the SEC's rules, whistleblowers are entitled to between 10 and 30 percent of that settlement amount, meaning a bounty of between $52 million and almost $156 million is at stake in the Teva case.

The SEC, in its July 11 brief, said the whistleblower was overlooking the “substantial complexities involved in adjudicating claims regarding the Teva matter because, among other things, there are six claimants in this matter (not only Doe as he apparently presumes) amd tje case involves parallel SEC and DOJ cases, requiring information gathering from the DOJ and other authorities.”

And, the SEC said, “Doe ignores that the SEC is processing a voluminous number of other whistleblower applications that require the attention of the commission in addition to this claim.”

Attorneys William Copley and August Matteis Jr. of Washington's Weisbrod Matteis & Copley filed the D.C. Circuit petition for the anonymous whistleblower.

The SEC is taking steps to expedite its review process for whistleblower awards. Since last year, the commission has been considering a rule change that, among other things, would allow the SEC to more quickly deny meritless award applications and permanently bar applicants who repeatedly file frivolous claims.

Jason Zuckerman, of the Washington-based whistleblower firm Zuckerman Law, said those portions of the proposed rule change “should speed things up.”

“But at the end of the day there is a lack of resources in [the SEC's whistleblower] office,” he said. “Hopefully there will be more staffing available for them to process these applications.”

Compliance Headlines: Tumult at Main Justice; CFIUS in Focus; SEC Waivers & More

>> 'A Very Difficult Time': Challenges for Career Lawyers at Trump's DOJ. A Trump tweet, and the aftermath, provided a real-time, unfiltered glimpse into the uncertainty and anxiety that has pervaded U.S. Justice Department litigation over the past two years. [NLJ] Plus: former DOJ lawyer Matthew Collette writes in a new op-ed: “The present state of affairs at the DOJ is so hard to watch. Norms are being smashed as the department sends career attorneys for cringe-worthy appearances to defend administration positions.”

>> Financial Watchdog Shifts From Enforcer to Educator. “Under the leadership of Kathy Kraninger, a Trump appointee who took over the agency seven months ago, the Consumer Financial Protection Bureau has increased its focus on financial literacy.” [WSJ]

>> Survey: Those in Compliance Roles With a Law Degree Earn More. Responses to a survey from BarkerGilmore published Tuesday show that compliance function employees with a Juris Doctor have a higher median total compensation than those who do not have the degree, my colleague Dan Clark reports. [Law.com]

>> DOJ Wants Conflicts Inquiry On Firms in College Bribery Case. “The government is asking the court in the college admissions bribery scandal to conduct an inquiry on whether there's a conflict of interest for Latham & Watkins, Ropes & Gray, and Nixon Peabody, which have signed up to represent some of the defendants.” [Bloomberg Law]

>> Demand Grows for Lawyers in Secretive World of CFIUS. “Leading global law firms are engaged in a bidding war for attorneys versed in the ways of US foreign investment reviews as Washington steps up its scrutiny of deals on national security grounds.” [Financial Times] More reading here from Ryan Lovelace, our business of law reporter in DC: CFIUS Arms Race Heats Up With Hires at V&E, Linklaters, Norton Rose Fulbright

>> SEC Chairman's Stance on Waivers Gives Companies More Certainty But Does Little to Stem Controversy. “The new policy doesn't substantively change the SEC's decision-making process on waivers, but it may make it easier for companies to enter into settlement agreements, said David Kornblau, a securities enforcement lawyer at Covington & Burling LLP. 'It allows the companies to make those decisions in a much more certain and rational way'”[WSJ]

>> These Republicans Signed the 'Never Trump' Letters in 2016. Now Some Are Having Second Thoughts. “While some have become prominent figures of the anti-Trump resistance—denouncing him in op-eds and on cable news—others have offered policy advice from outside perches, and a select few have quietly, though mostly unsuccessfully, angled for administration jobs, hopeful that a mea culpa could end their days in purgatory.” [The Washington Post]

>> Justice Department Extends Compliance Breaks to Antitrust Offenders. “The U.S. Justice Department will begin rewarding companies that have systems in place to prevent antitrust crimes at the time a breach occurs, according to a senior official. A company that can show it had a strong compliance program can receive discounts off fines and a more lenient type of settlement, Assistant Attorney General Makan Delrahim, who runs the department's antitrust division, said in prepared remarks for a corporate compliance event Thursday at New York University's law school.” [WSJ] More here at Corporate Counsel: New Antitrust Charging Policy to Reward Companies' Good Faith Compliance Efforts

Notable Moves & Announcements

• Peter Marta, most recently chief cybersecurity lawyer at JPMorgan Chase & Co., has joined the privacy and cybersecurity practice of Hogan Lovells in New York as a partner, where he plans to help clients handle regulatory issues and cyber threats, my colleague Jack Newsham reports.

• Murphy & McGonigle said it added securities lawyer Thomas Ferrigno as a shareholder, after a relatively quick stint at Nelson Mullins Riley & Scarborough, my colleague Ryan Lovelace reports. Ferrigno, based in Washington, is a former chief counsel of the U.S. Securities and Exchange Commission's division of enforcement who left the government for Nelson Mullins in October 2017.

• Covington & Burling has hired Jeremy Newell as a partner in the financial services group in Washington. Newell was formerly executive vice president and general counsel at the Bank Policy Institute.

• DLA Piper said Tony Samp has joined the firm as a policy advisor in Washington. Samp most recently served as senior policy advisor to Sen. Martin Heinrich, D-New Mexico.

• Deborah Shelton, formerly the head of the food and drug practice at McCarter & English, has joined Arent Fox as a partner. As part of her practice, Shelton will advise clients on regulations affecting cannabis products, the firm said, helping companies respond to “shifting legal and public policy issues at the federal level.”