Welcome to Compliance Hot Spots, our weekly summary of news and analysis on regulatory, compliance and enforcement trends. This week we're highlighting: White-collar recruitment and new attacks on the Consumer Financial Protection Bureau. Scroll down for Who Got the Work, and all the new moves.

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!

 

 

Law Firms, Ex-Prosecutors Adapt Amid White-Collar Slowdown

What's the Trump-era diminished white-collar enforcement mean for law firm recruitment and hiring?

My colleague Jack Newsham reports a general slowdown in hiring demand, and some white-collar defense attorneys are shifting practices to focus on other areas. Other white-collar practice heads said the supply of potential hires hasn't fluctuated much either way. Read our full report here.

• Jeff Liebster, a recruiter at Major, Lindsey & Africa, said firms are still hiring but being more choosy in the white-collar arena. “Firms are not building benches. Firms are responding to strategic needs,” he said.

• White-collar practice heads and office leaders say they are keeping their lawyers busy with internal investigations, health care fraud and Foreign Corrupt Practices Act compliance and enforcement.

• Brad Karp, chairman of Paul, Weiss, Rifkind, Wharton & Garrison, said there has long been an “ebb and flow” to enforcement and said his firm didn't make partnership decisions based on “short-term market dynamics.”

• On the West Coast, the lateral market for such talent has been heating up in recent months as firms gear up to represent tech giants in a range of high-profile and nonpublic investigations involving theft of trade secrets, privacy and other matters.

 

 

Business Groups Line Up Against CFPB

Business advocates are lining up against the Consumer Financial Protection Bureau in a case at the U.S. Supreme Court. Paul Weiss partner Kannon Shanmugamrepresents Seila Law LLC in pushing to overturn a Ninth Circuit decision upholding the agency's independent, single-director design as constitutional. Scott Keller of Baker Botts filed an amicus brief in the Supreme Court this week on behalf of the Cato Institute backing Seila Law. “The statute here goes too far, granting a single director an unprecedented amount of independence from the political branches,” wrote Keller, a former Texas solicitor general who now leads the Baker Botts appellate practice. Keller's successor, Kyle Hawkins, filed a brief for Texas and other red states. Read more from my colleague Nate Robson: Current and Former Texas Solicitors General Line Up Against CFPB.

Mayer Brown's Andrew Pincus filed a brief on behalf of the U.S. Chamber of Commerce in support of Seila Law. “The Bureau has exercised vast authority over the past six years, dramatically reshaping markets for entire categories of consumer financial products and services. Its regulations reach all corners of the consumer financial services market, covering companies large and small. And more Bureau regulations have been proposed,” Pincus wrote.

The U.S. Justice Department got an extension to file its brief next month, and we can expect SG Noel Francisco will challenge the constitutionality of the consumer bureau's structure. DOJ pitched the justices on taking up the issue, but not using a D.C. Circuit case as the vehicle. (The case at the high court last year would have caused now-Justice Brett Kavanaugh to recuse.) Kavanaugh has assailed the power of the bureau, calling it “massive” and “unchecked.”

 

 

Who Got the Work

>> Facebook turned to Wilmer Cutler Pickering Hale and Dorr partner Benjamin Neaderland as it negotiated a $100 million settlement with the Securities and Exchange Commission, resolving claims that the tech giant made misleading disclosures about the risk of misuse of user date. The SEC alleged that Facebook's disclosures presented the risk of data misuse as merely hypothetical when, in fact, the company was aware that a third-party developer had misused data.

>> A team from Alston & Bird has registered to lobby for CVS Health on “issues related to the implementation of health care reform and issues related to PBMs and drug pricing.” The team includes former North Dakota Rep. Earl Pomeroy and Michael Park, former health policy counsel at the Senate Finance Committee.

>> Holland & Knight ”has been engaged to lobby on behalf of nine individuals who are Indian national guest workers in Saudi Arabia imprisoned for practicing their religious beliefs,” according to a new Foreign Agents Registration Act disclosure.

 

 

Compliance Reading Room

>> U.S. Sanctions Compliance Fines Hit Decade High. “This year's enforcement actions reflect a broadening range and the diversity of sanctions programs being enforced, said Adam M. Smith, a partner at Gibson, Dunn & Crutcher LLP who served as a senior adviser to the OFAC director under the Obama Administration. 'People have originally long thought of OFAC as a banking enforcement agency,' Mr. Smith said. 'But we're seeing a lot of aggressiveness on the non-bank side and that's a big change.'” [WSJ]

>> Trump's Former Anti-Discrimination Official 'May Have Abused His Authority': Inspector General. “A former top Trump administration appointee at the Consumer Financial Protection Bureau 'may have abused his authority' and 'misused his position for private gain' in an attempt to defuse an article from The Washington Post about online posts in which he questioned whether the n-word was racist, according to an inspector general's report. [The Washington Post] American Banker has more here.

>> CFTC's Glencore Investigation Seen Reflecting Broader U.S. Anti-Corruption Strategy. “The announcement by Glencore is the first disclosure of a CFTC investigation involving potential corruption since the U.S. derivatives regulator announced it was expanding its enforcement remit in March. CFTC enforcement director James McDonald at the time said he was seeking to uncover bribes paid in exchange for commodities-related services.” [Reuters]

>> IRS Sending Warning Letters to More Than 10,000 Cryptocurrency Holders. “The Internal Revenue Service has begun sending letters to more than 10,000 cryptocurrency holders, warning about penalties for failing to report income and pay tax on transactions involving virtual currencies.” [WSJ] Read the IRS news bulletin here. “Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” IRS Commissioner Chuck Rettig (at left) said. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

>> Federal Court Upholds CFTC Enforcement Power Thanks to Grammar. “The futures and derivatives regulator generally doesn't have regulatory authority over retail commodities trading, but its enforcement authority was expanded under the 2010 Dodd-Frank Act. 'A two-letter conjunction and a two-word phrase decide this case,' Judge Eugene Siler, sitting on the U.S. Court of Appeals for the Ninth Circuit, said in a July 25 opinion. 'At stake are hundreds of millions of dollars.'” [Bloomberg Law]

>> Vinson & Elkins Partner Ephraim Wernick on FCPA Enforcement. “I never saw politics play a hand in the enforcement of FCPA cases in the unit. I can't speak to what was happening elsewhere in the Department. But this was not an area where I saw the administration take an active role one way or another.” [Corporate Crime Reporter]

 

 

All the New Moves & Announcements

• “The U.S. Justice Department has appointed Robert Zink as chief of the agency's criminal fraud section,” WSJ reports. Zink, who joined the fraud section in 2010, had served as the acting head since January. The move set in motion a reshuffling within the Justice Department's fraud section, as Joseph Beemsterboer and Daniel Kahn, the respective chiefs of the health care fraud and Foreign Corrupt Practices Act units, rose to become senior deputy chiefs of the section.

• The California boutique Browne George Ross has hired Nathan Hochman from Morgan, Lewis & Bockius. Hochman is a former head of the Justice Department's tax division.

• Robert Cohen, the head of the SEC enforcement division's cyber unit, is leaving the agency after two years overseeing a team that focused on cryptocurrencies and computer hacking. His departure ends a 15-year tenure at the SEC, where he had previously been co-chief of the enforcement division's market abuse unit.

• Crowell & Moring's hired Eric Ransom as senior counsel in the firm's government contracts group. Ransom formerly worked at the U.S. Government Accountability Office Procurement Law Division and the U.S. Senate Committee on Rules and Administration.

• Gray Reed has added former U.S. Securities and Exchange Commission trial lawyer Chris Davis as a partner in Dallas to lead the firm's white-collar defense practice group.