Welcome to Compliance Hot Spots, and good evening from Washington. Hope everyone had a good Thanksgiving holiday. Scroll down for highlights from a new Hughes Hubbard report on government enforcement. Plus, our weekly spotlight on the firms and lawyers involved in the big cases, and check out all the new moves—including where Michael Dreeben's landed.

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, and follow me on Twitter @cryanbarber.

 

'Simply Maintaining a Compliance Program Is Not Enough'

Through speeches and policy tweaks, the U.S. Justice Department has taken several steps in the past year to clarify how it credits companies for voluntarily disclosing corporate misdeeds.

But actions always speak louder than words. And in the past 12 months, multiple enforcement actions have provided insight into how the Justice Department is approaching corporate misconduct, including overseas bribery.

In a new report, the law firm Hughes Hubbard & Reed has recapped the past year the U.S. government's enforcement of its chief anti-bribery law—the Foreign Corrupt Practices Act. The 175-page report features analysis of some of the most noteworthy enforcement actions of the past year, including Walmart's $282 million settlement resolving a long-running investigation into overseas bribery.

That settlement and others came against the backdrop of policies aimed at encouraging companies to voluntarily disclose FCPA violations, along with newly issued guidance spelling out what the Justice Department wants to see in compliance programs designed to head off or detect misconduct.

Laura Perkins, a leader of Hughes Hubbard & Reed's anticorruption and internal investigation's practice, said the Justice Department's recent track record shows federal prosecutors "have become more advanced in this space, they're not going away in this space, and that they expect more from companies and compliance at companies."

"If you look at the resolutions, that comes through," said Perkins, a former assistant chief in the Justice Department's FCPA unit. "The benefits of self reporting, cooperating and remediating have gotten better and clearer, and therefore the expectations have gotten higher, and they're trying to make them clearer, as well."

Some highlights from the report:

>>> A limited monitorship: Walmart's settlement came with the requirement that the company hire a compliance monitor. But, as the Hughes Hubbard report noted, the monitorship was tailored to cover specific areas—including real estate transactions, along with licensing and permitting—in four countries. It appeared to reflect guidance issued last year by the head of the Justice Department's criminal division, Assistant Attorney General Brian Benczkowski, that called for limiting the scope of such engagements to address "specific issues and concerns that created the need for the monitor."

Perkins said the Walmart settlement opens the door for other companies to press for limited monitorships. "The argument will exist for a lot of companies," she said.

>>> Need for teeth in a compliance program: "Year after year, enforcement actions illustrate that simply maintaining a compliance program is not enough. Compliance programs and internal controls must be adequate and effective at preventing and detecting misconduct."

In the report, Hughes Hubbard points to an August settlement in which Deutsche Bank paid $16 million to resolve claims that it hired relatives of government officials in Russia and China to build business. In that case, the Securities and Exchange Commission alleged that the bank employees ignored policies concerning the hiring of relatives of foreign government officials.

 

CFIUS Annual Report Shows Big Jump in Investigations

The latest annual report released by the Committee on Foreign Investment in the United States, the interagency panel at the Treasury Department that reviews transactions for potential national security risks, shows that the number of notices filed increased significantly from 2014 through 2017, and the number of investigations rose 237%, our colleague MP McQueen reports at Law.com.

The annual report for 2016 and 2017, the last years for which statistics were published, shows the number of CFIUS notices filed at the panel rose 61% from 147 in 2014 to 237 in 2017. The number of investigations rose from 51 to 172. Notices filed dipped slightly only in 2015 from the year before to 143, but it was followed by a big jump to 172 in 2016, during the Obama administration and has risen steadily since.

"This report shows what many of us following CFIUS activity for years have long known—oversight of foreign investments into U.S. companies is on the rise," said Hogan Lovells partner Anne Salladin (at left), who worked for nearly two decades in the Office of the Assistant General Counsel for International Affairs in the Treasury Department. "It's just another sign that U.S. companies considering any level of foreign investment must have CFIUS on their radar."

The share of transactions reviewed that were in financial services companies rose from 26% to 46% from 2014 to 2017, whereas mining and manufacturing both saw their share of reviewed transactions decline.

 

Who Got the Work

>> Prominent Gibson, Dunn & Crutcher lawyers in Washington and Los Angeles are working with Morrison & Foerster on behalf of Amazon.com Inc. to sue the U.S. Defense Department over its decision to award a $10 billion cloud-computing contract to rival Microsoft Corp. The Gibson Dunn team includes Ted Olson (above), Theodore Boutrous, F. Joseph Warin and Andrew Tulumello. Kevin Mullen, co-chair of Morrison & Foerster's government contracts and public procurement practice, is lead counsel for Amazon in its Federal Claims lawsuit. Robert Metzger of the Washington litigation boutique Rogers Joseph O'Donnell is the chief lawyer for Microsoft, which intervened in the case to defend the Pentagon's award. Bloomberg has more here on Amazon's lawsuit.

>> William Burck and Bill Weinreb of Quinn Emanuel are on the defense team for Parker "Pete" Petit, former CEO of the Georgia-based biotech company MiMedx Group Inc. in a new SEC enforcement action. The SEC last week accused MiMedx and former executives with accounting fraud. The defense lawyers for Petit also include Michael Volkov at Volkov Law Group LLC and Eric Bruce at Freshfields Bruckhaus Deringer. Burck and Weinreb also represent William C. Taylor, former chief operating officer at MiMedx. The company agreed to resolve the claims without admitting or denying liability. Separately, prosecutors filed criminal charges against Petit and Taylor. Lawyers for Petit and Taylor issued statements denying the government's criminal claims.

>> "The Securities and Exchange Commission today amended a complaint to charge four former executives of Outcome Health, a private healthcare advertising company, with fraud in raising nearly half a billion dollars by falsely portraying the company as an overwhelming success to investors, clients, and auditors," the SEC said in a statement. Read the amended complaint here. Anton Valukas (at left) of Jenner & Block represents former Outcome Health CEO Rishi Shah; former Outcome president Shradha Agarwal is represented by Christina Egan of McGuireWoods; and Robert Michels of Winston & Strawn represents Outcome Health. Reuters has more here.

>> Covington & Burling partner Arlo Devlin-Brown was on the defense team in Manhattan for former Locke Lord partner Mark S. Scott, convicted on a charge of conspiracy to commit bank fraud and conspiracy to launder $400 million in proceeds from a cryptocurrency scam. Devlin-Brown said his client is "disappointed in the jury's verdict and plans to appeal." Scott was also represented by Miami-based white-collar defense lawyer David Garvin.

>> Nelson Mullins Riley & Scarborough reported receiving $895,000 from the State of Qatar since late May in a new Foreign Agents Registration Act filing at the U.S. Justice Department. The firm also recently has advised the Province of Saskatchewan ($190,000 since July) and the Embassy of the Republic of Korea ($150,000 since August).

 

Compliance Reading Corner

CFTC Relying More Heavily on Coordination with Criminal Prosecutors. "A big reason for the upswing: The agency has strengthened its relationship with the U.S. Justice Department, sharing information on cases in which it spots potential criminal activity. Doing so has enabled the CFTC to send a stronger message to the companies it regulates, and to the individuals those companies employ, lawyers said." [The Wall Street Journal]

Navigating the Modern Corporate Investigation. "As we head into 2020, it is clear that a new revolution is upon us. Tomorrow's firm will not only be tasked with collecting information but critically sorting through massive amounts for the relevant kernels that clients need." [NLJ]

Judge Rejects Move to Disqualify Lawyer in State AG's Challenge to T-Mobile / Sprint Deal. "U.S. Magistrate Judge Robert Lehrburger said the Department of Justice waited too long to seek the disqualification of Glenn Pomerantz, who had represented the department in 2011 when it stopped AT&T's purchase of T-Mobile. He also said Pomerantz's firm, Munger, Tolles & Olson LLP, could stay on the case." [Reuters]

Foreign Bribery Leniency Program Gets Minor Adjustment. "The U.S. Justice Department made several clarifications to its foreign bribery leniency program, in a move officials said was part of a continuing initiative to be transparent to companies. The changes, announced Wednesday, concern language describing how companies can voluntarily disclose possible Foreign Corrupt Practices Act violations, and what information they are expected to share with prosecutors." [The Wall Street Journal]

GM General Counsel, Kirkland Team Leveraged Corruption Probe to Sue FCA. "Carefully tracking a yearslong U.S. attorney's probe into corruption at the United Auto Workers, General Motors Co. general counsel Craig Glidden and his outside counsel at Kirkland & Ellis began to see a pattern emerging." [Law.com]

Federal Courts Continue to Wrestle With Impact of Aggressive DOJ Public Corruption Cases. "Whether by requiring a quid pro quo, or narrowing the definition of official act, the Supreme Court repeatedly has attempted to balance the DOJ's enthusiasm for prosecution with preserving the legitimate functions of public officials in a democracy. But, as recent Circuit Court cases reflect, there is much yet to be resolved." [Law.com]

Federal Trade Commission Carries on Lonely Battle with Qualcomm. "Putting itself on the opposite side of the Trump administration, the Federal Trade Commission defended its antitrust case against Qualcomm Inc., saying a federal judge was right to rule the chipmaker is abusing its patents. The FTC urged an appeals court to affirm a ruling that Qualcomm unfairly leveraged the company's market position to force customers to pay inflated prices for chips and patent royalties. The FTC's filing was made late Friday in the U.S. Court of Appeals in San Francisco." [Bloomberg]

 

New and Notable Moves and More

•  Michael Dreeben (above), a veteran U.S. Supreme Court advocate with 105 oral arguments under his belt, will join O'Melveny & Myers in January as a partner in its appellate and white collar practices, the firm said. Our colleague Tony Mauro has more here.

•  Willkie Farr & Gallagher has hired J. Christopher Giancarlo, former Chairman of the US Commodity Futures Trading Commission, as senior counsel in the New York office. My colleague Patrick Smith has more here.

•  After three years as a top lawyer for the U.S. House of Representatives, Kristin Shapirohas jumped to an elite Justice Department team that has played a prominent role in clashes between Democratic lawmakers and the Trump administration. Shapiro last month joined DOJ's Office of Legal Counsel as an attorney-adviser. Shapiro formerly was an associate at Williams & Connolly.

•  Cooley has brought on prosecutor John Hemann from the U.S. Attorney's Office for the Northern District of California. Hemann, a white-collar partner in the firm's San Francisco office, most recently served as chief of the office's special prosecutions and national security unit and the deputy chief of its criminal division.

•  The Securities and Exchange Commission named Kristina Littman(at left) as the chief of the enforcement division's cyber unit. "Kristy's innovative thinking and extensive experience within the Commission have made her an invaluable advisor and, most importantly, a tireless defender of America's investors," SEC Chairman Jay Clayton said in a statement. "She will be an excellent leader for the Cyber Unit as it continues its work in this critical and continually evolving area." Littman first joined the SEC in 2010 as a staff attorney. Prior to joining the SEC, Littman was a white-collar and securities litigator at Drinker Biddle & Reath.

•  DLA Piper has hired white-collar lawyer Scott Wilson as a partner. Wilson arrives from Boies Schiller Flexner, where he had practiced for about 10 years.

•  CBRE has named Elizabeth Atleeas chief ethics and compliance officer in Los Angeles. Atlee will oversee global ethics and compliance program, including internal audit, policies, training, investigations, communications and monitoring. Atlee was formerly deputy general counsel for global litigation at the firm.