Welcome to Compliance Hot Spots, and good luck to the Washington Nationals and Houston Astros tonight. Lots to unpack this week, including a report on SEC's whistleblower regs, and analysis from a major US firm about FARA enforcement. Plus: get ready for an epic government contracts fight in Washington.

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!

 

Whistleblower Vote Postponed, Not Cancelled, SEC's Jane Norberg Says

The U.S. Securities and Exchange Commission last week postponed a vote on proposed changes to the agency's program for rewarding tipsters, pleasing whistleblower advocates who'd raised concerns that the reform package would deter insiders from coming forward with information about corporate misconduct.

But the SEC does not appear to be standing down for long.

During an appearance Wednesday at the Securities Enforcement Forum, Jane Norberg (above), the chief of the SEC's whistleblower program, stressed that the commissioners had not "cancelled" but rather postponed the vote. The SEC is expected to reschedule the vote for November.

Norberg said the SEC postponed the meeting "because they were still receiving outreach and comment from interested people. And so they wanted to keep that dialogue going and that conversation going."

"I think it just shows that the commission is being incredibly thoughtful around what these final rules are going to say," she said.

Under the rules of the SEC's whistleblower program, tipsters are entitled to receive between 10 and 30 percent of monetary sanctions collected in an enforcement action. Whistleblower advocates have been troubled by several portions of the reform package, including a proposal to give commissioners wider discretion to lower the very largest awards so that the payout "does not exceed an amount that is reasonably necessary to reward the whistleblower."

The SEC's decision to delay the vote followed a lobbying campaign by leading members of the whistleblower bar, including Labaton Sucharow partner Jordan Thomas and Phillips & Cohen partner Sean McKessy, the first director of the commission's whistleblower office.

It also came against the backdrop of the House's ongoing impeachment inquiry, an investigation that stems from an intelligence community whistleblower who came forward with information about President Donald Trump's purported efforts to pressure Ukraine to investigate former Vice President Joe Biden and his son Hunter.

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New 'Foreign Agent' Disclosure Forms Could Facilitate False-Statement Cases

A month after the U.S. Justice Department released an updated system for receiving disclosures of advocacy work for foreign clients, a team at Covington & Burling has identified a seemingly minor change that could help prosecutors bring charges against lobbyists who make false statements about their activities.

Under the new system, lobbyists and others registering for the first time as "foreign agents" will be required to detail their influence efforts for overseas powers in web-based questionnaires. The new filings, submitted under the decades-old Foreign Agents Registration Act, will require those advocates to answer each question on the form. Under the previous, PDF-based system, filers could leave some sections blank.

In one crucial regard, however, the new system veers away from keyboard and calls for putting pen to paper. As Covington noted in a recent client alert, the new system will require filers to scan a document with their actual signature, as opposed to clicking a box to indicate an electronic signature.

"This new requirement will strengthen the accountability of filers for the submissions, for electronic signatures were sometimes executed by counsel or other authorized party," wrote the Covington team, including Robert Kelner and Brian Smith, both partners in the firm's political law group. "This may facilitate false statements prosecutions in certain situations."

 

Who Got the Work

>> A team from Paul Hastings—including Luc Despins, Michael Fitzgerald and Pedro Jimenez—have registered under the Foreign Agents Registration Act to advocate for Petroleos de Venezuela, S.A.'s ad-hoc board of directors. The registration, which appears to be the firm's first-ever under FARA, stated the firm would "support as needed certain governmental relations and activities involving communications with the United States government pertaining to certain bonds issued by Petroleos de Venezuela, S.A. and its affiliates." The firm said it would bill standard hourly rates, which were identified as between $635 to $1,560. Fitzgerald, a New York-based partner, heads the firm's Latin America practice group.

>> Bruce Newman of Wilmer Cutler Pickering Hale and Dorr represented BNP Paribas in a $15 million settlement with the Financial Industry Regulatory Authority over alleged anti-money laundering program failures. The bank did not admit or deny the charges.

>> Scott Resnik of Katten Muchin Rosenman represents a former SEC examiner who was indicted in SDNY for alleged obstruction of justice. "He plans to defend himself vigorously and looks forward to vindicating himself at trial," Resnik told The Wall Street Journal.

>> Arnold & Porter Kaye Scholer's Craig Holman is lead counsel for Oracle Corp. in its quest challenging the Pentagon's $10 billion cloud-computing contract. That award went to Microsoft Corp., which apparently "surprised" Amazon Web Services, which had been a contender. Holman, who leads the firm's government contracts groups, is pressing a Federal Circuit appeal after a judge ruled Oracle lacked standing to challenge the bid process. Crowell & Moring represented AWS in the Federal Claims court.

 

Compliance Reading Corner

>> Federal Judge Vacates $16M Settlement After Parties Claim Press Release Violated Secrecy Provisions. "A federal judge in Chicago has tossed a $16 million settlement between Kraft Foods Group Inc. and the U.S. Commodity Futures Trading Commission after Kraft Foods claimed that the CFTC's public statements about the deal violated its confidentiality provision." [ABA Journal]

>> Supreme Court Review Could Undercut CFPB Enforcement. "The Consumer Financial Protection Bureau could lose leverage in enforcement negotiations as the Supreme Court considers whether its leadership structure is unconstitutional." [Bloomberg Law]

>> Ex-KPMG Director Claimed He Was Fired After Questioning Audit Staffing. KPMG LLC has reached a settlement with a former managing director who claimed he was fired last year in retaliation for raising concerns that the firm was understaffing audits of public companies, just months after the U.S. Securities and Exchange Commission faulted it for failing to properly vet the financial statements of an oil and gas company. Sidley Austin represented the company, and lawyers from Outten & Golden represented the former director. [NLJ]

>> Tech Firms Ramp Up Lobbying as Antitrust Scrutiny Grows. "The tech lobbying uptick comes amid heightened scrutiny of tech companies in Washington. Facebook is facing antitrust investigations from the Federal Trade Commission, the Justice Department and state attorneys general. Amazon is a target of a nascent Federal Trade Commission probe into its market power." [WSJ]

>> Before Deadly Crashes, Boeing Pushed for Law that Undercut Oversight. "The lobbying effort barely registered in the country's vast political machine. Boeing's push, and the use of industry language in the crucial paragraphs, was standard amid the deregulatory drive by many businesses." [NYT]

>> Facebook Robocall Case Gives Justices Shot to Define Autodialer. "Facebook Inc.'s U.S. Supreme Court challenge of a lower court ruling it can be sued for violating the federal robocall law gives the justices the chance to specify what kind of technology businesses can use to make such calls." [Bloomberg Law]

 

Notable Moves & More

>> Baker McKenzie is looking to break down the walls between financial regulation and enforcement work with the hire of four new partners, including three from Morgan, Lewis & Bockius, to launch a new North American practice, my colleague Dan Packel reports. Amy Greer, based in New York and Washington, and Jennifer Klass, based in New York, will co-chair the new practice, to be known as the financial regulation and enforcement group. They are joined by their former Morgan Lewis colleague, Chicago-based Peter K.M. Chan, along with Washington-based A. Valerie Mirko, who previously was general counsel at the North American Securities Administrators Association. Also: A group of three lawyers joined Baker McKenzie's securities litigation and enforcement practice in Los Angeles. Of counsel Aaron Goodman and counsel Ben Turner join from DLA Piper, and associate Sara Pitt joins from Pepper Hamilton.

>> Shearman & Sterling is the latest to beef up its CFIUS practice, adding John Beahn as partner in Washington, my colleague Patrick Smith reports. Beahn was most recently a partner in the telecommunications practice at DLA Piper, which he joined in January 2018 after practicing in the CFIUS and communications groups at Skadden, Arps, Slate, Meagher & Flom.

>> Ryan Shores, formerly a Shearman & Sterling partner, has joined the U.S. Justice Department "to help oversee its probe of Alphabet's Google, Facebook and other big tech firms," Reuters reports. Shores, who clerked for the late Chief Justice William Rehnquist, was added to the front office of Deputy Attorney General Jeffrey Rosen.

>> Former U.S. Securities and Exchange Commission senior counsel Jake Prudhomme has joined Crypto Asset Rating Inc. as the financial technology startup's first chief legal officer.

>> Two former government attorneys and a White & Case white-collar partner have formed Fridman Fels & Soto, a Coral Gables boutique focused on white-collar defense, internal investigations, and civil litigation, my colleague Dylan Jackson reports. Partners Adam Fels, Alex Soto and Daniel Fridman, formerly at White & Case, worked as assistant U.S. attorneys in the Southern District of Florida early in their careers before leaving to follow different paths.