Welcome to Compliance Hot Spots, our snapshot on white-collar, regulatory and compliance news and trends. A judge just dismissed a closely watched challenge to the SEC's "no admit, no deny" rules, and compliance pros are concerned about squeezed budgets. Plus: Mayer Brown's bolstered its white-collar practice, and Citgo names a new chief compliance officer. USDOJ and the FTC are facing off this week in the 9th Circuit. And Hogan Lovells inks a $75K monthly contract with the Georgian Dream Party.

Tips, feedback and general thoughts on your practices are always appreciated. Contact C. Ryan Barber in Washington at [email protected] and 202-828-0315. Follow him on Twitter @cryanbarber. Contact Mike Scarcella at [email protected] and follow him on Twitter @Mikescarcella. Thanks for reading!

Compliance Leaders Say Budgets Squeezed

A new survey from Hogan Lovells suggests their budgets of chief compliance officers are being squeezed rather than expanding to meet the need, my colleague Sue Reisinger reports at Corporate Counsel.

The survey looked at all aspects of anti-bribery and corruption compliance and collected opinions from 700 chief compliance officers and heads of legal departments at multinational companies with at least 2,000 employees in the U.S., Europe and Asia. Compliance leaders in the tech, media and telecom companies are more likely to be dealing with budget cuts and a lack of focus on compliance than in any other industry sector, the survey showed.

"I found that somewhat surprising," Hogan Lovells partner Stephanie Yonekura in Los Angeles told Corporate Counsel. "It looks like compliance teams are being squeezed in terms of dollars and numbers."

The dip, Yonekura said, may correlate with a ramp-up of budgets in 2015-2016 when the Obama administration was undertaking numerous prosecutions. The pace of that ramp-up has not continued under the Trump administration, she said.

"Some compliance budgets are continuing to decrease," Yonekura said, "on what I believe is a misconception by companies that they don't have to be concerned about FCPA [Foreign Corrupt Practices Act] enforcement, or based on complacency because they think their industries won't be targeted."

Challenge to 'No Deny' SEC Settlements Is Denied (But Not on the Merits)

A federal judge on Monday dismissed a challenge to the U.S. Securities and Exchange Commission's longstanding policy of blocking defendants from settling enforcement actions while still publicly denying misconduct, an approach that has riled companies and individuals.

U.S. District Judge Amy Berman Jackson (above) did not rule on the merits of the SEC's decades-old approach which is reflected in boilerplate settlement language stating that defendants "neither admit nor deny" the charges levied against them.

Jackson instead based her decision on procedural grounds, ruling that the Cato Institute lacked standing to bring a First Amendment challenge the SEC's so-called "gag rule," in part because the conservative group was not the subject of an investigation or settlement with the SEC.

"Because the court has no power to hear the case, this opinion does not address the merits of the dispute, and it should not be read to express any view about the wisdom of the policy," Jackson wrote in her ruling.

Who Got the Work

>> McDermott Will & Emery counsel Stephen Ryan, head of the firm's government strategies practice, has registered to lobby for Wolters Kluwer Health. The registration said the firm would advocate on "efforts to support current U.S. government policy regarding publication of federally funded research, and issues related to scientific, technical and medical publications."

>> Hogan Lovells has been retained by the Georgian Dream Party "to render advice and representation relating to strengthening the political, economic, and social aspects of the U.S.-Georgia bilateral relationship," according to a new Foreign Agents Registration Act filing at the U.S. Justice Department. Hogan Lovells said the firm will be paid a monthly retainer of $75,000 a month, starting Feb. 1 and ending Jan. 31, 2021. The firm said in the filing: "To this end, the registrant will provide legal analysis, counsel and strategy development to the foreign principal. The registrant will also engage in public advocacy before officials of the Legislative and Executive branches of the U.S. Government affecting the interests of the Georgian Dream Party and the Government of Georgia." The team is led by former Sen. Norm Coleman and includes partners Ivan Zapien, Mike Bell, and Aaron Cutler. Coleman said in a statement: "Georgia has long been a close ally and strategic partner for the U.S. in a challenging region. We look forward to working with the governing political party in forging even closer ties with the U.S."

>> Steptoe & Johnson LLP and McGuireWoods Consulting said they were lobbying for Americans for Transparency and Accountability on issues related to the Foreign Sovereign Immunities Act. H.R. 4189, a focus of the lobbying, would "allow claims against foreign states for unlawful computer intrusion, and for other purposes."

Compliance Reading Corner

Federal agencies

Katie Porter v. Kathy Kraninger. "There are at least two takeaways from these exchanges. One has to do with the level of Director Kraninger's knowledge about the area over which she has jurisdiction, though her command of consumer financial law has certainly (to use one of the Director's favorite words) improved dramatically during her tenure. The other takeaway, which to me is more worrisome, involves consumer education." [Consumer Law & Policy Blog]

Ex-Willkie Co-Chair Can't Practice Before SEC After College Scam. "Gordon Caplan, a former co-chairman of Willkie Farr & Gallagher LLP, can't represent clients before the SEC following his involvement in last year's college admissions scandal, the agency said." [Bloomberg Law]

US Regulators Face Off in 5G Court Tussle Over Qualcomm. "The Trump administration is set for an unusual courtroom showdown on Thursday between lawyers of two federal antitrust agencies who will argue opposite sides of a Qualcomm case that could help shape the race to develop 5G technology." William Baer, former Justice Department antitrust leader and now a fellow at the Brookings Institution said: "This is not just unusual, it's more directly confrontational than anything I've ever seen." [Financial Times]

DOJ Seeks 71 Percent Bump for Antitrust Enforcement. "The Trump administration is asking Congress for 71 percent more money for the Justice Department's antitrust division in the fiscal year that starts Oct. 1—an increase that would allow the agency to hire as many as 44 more staffers. The DOJ's fiscal 2021 budget proposal seeks $53 million in appropriations for the antitrust division, up from $31 million this fiscal year." [Politico]

SEC Seeks to Curb Shareholder Resolutions. "Now the Securities and Exchange Commission wants to make it harder for small shareholders to get resolutions onto company ballots, known as proxies. It says responding to resolutions can pose an undue burden on companies, costing tens of thousands of dollars apiece for research, and printing and mailing of ballots." [WSJ]

Courts and cases

 Amazon's Lawyers Want to Depose Trump in Suit Over $10B Pentagon Contract. Lawyers for web giant Amazon.com Inc. want to depose President Donald Trump in a suit that alleges he asserted "improper pressure" in the Pentagon's decision to award a $10 billion cloud-computing contract to rival Microsoft Corp. Amazon's intent to depose Trump was revealed in newly released court papers Monday in the U.S. Court of Federal Claims in Washington, where Amazon's lawyers at Morrison & Foerster and Gibson, Dunn & Crutcher sued the U.S. Defense Department in December. [NLJ]

Lawyers for Ex-Hedge Fund Execs Push for New Look at Decision They Say 'Upended' Insider-Trading Law. Attorneys for two former hedge fund employees convicted on charges of securities and wire fraud have petitioned for an en banc rehearing of a divided Manhattan appeals court ruling that, they said, dramatically expanded the reach of federal criminal statutes and "upended" decades of settled insider-trading law. [NYLJ] Read the petition here. Reuters has more here.

Facebook and IRS Prepare for $9 Billion U.S. Tax Court Fight. "Facebook Inc. and the Internal Revenue Service will square off in a U.S. Tax Court case that could cost the social-media giant more than $9 billion and shape the government's ability to crack down on companies' efforts to shift profits to low-tax countries. The trial slated to start in the week ahead caps a nine-year dispute over how Facebook structured its international operations. The IRS argues that more of the company's profits should have been taxed at higher rates in the U.S., rather than in the company's Irish subsidiary. Facebook contends that it deserves a refund." [WSJ]

Compliance matters

In-House Compliance Counsel Leading Push for More Guidance from Regulators. A new report from the New York City Bar Association on the increased number of enforcement actions against individual chief compliance officers was sparked by the growing concerns of in-house counsel, my colleague Sue Reisinger reports. [Law.com] Read the report here.

Airbus Compliance Execs Misled General Counsel Who Questioned Bribery Risks. Several members of the compliance team at Airbus SE in France were complicit in the foreign bribery scheme that resulted in the record-high $3.9 billion global settlement last week, according to court documents. [Corporate Counsel]

Increasing Regulation the Reason Top Lawyers Will Send More Work to Outside Counsel. Even chief legal officers and general counsel who plan on hiring more in-house attorneys anticipate a significant amount of work will go to law firms because of the complex regulatory landscape, according to the Association of Corporate Counsel's 2020 Chief Legal Officers Survey. [Law.com]

Fraud, Third-Party Risks Still Top Concerns for Chief Compliance Officers. Most chief compliance officers are focusing on risk around fraud and financial irregularities, followed by diversity and discrimination and health and safety issues, according to a recent poll, my colleage Sue Reisinger reports. [Law.com]

Privacy

Banks, Fintech Startups Clash Over 'the New Oil'—Your Data. "The nation's banks are locked in a bitter fight with upstart technology companies over the control of their customers' financial data—and the consumers whose personal information is at stake are mostly spectators. [Politico]

Notable Moves & Announcements

>> Mayer Brown has hired Michael Levy, a Washington.-based defense attorney who's had a hand in numerous prominent white-collar matters over the past 20 years. Levy, a partner, arrives from Paul Hastings. "For me it was Mayer Brown's commitment to growth in the global enforcement space," that made the firm appealing, Levy said. He also noted the firm's "strong interdisciplinary approach to serving clients." Raj De, managing partner of Mayer Brown's D.C. office, said in a statement: "Michael is well-respected in the D.C. community and widely known as a first rate trial lawyer."

>> The top attorney at Citgo Petroleum Corp. has been given the additional title of chief compliance and ethics officer, the company announced, amid a bribery investigation from the Department of Justice. Jack Lynch who became vice president of legal and government affairs of Citgo in October, has been made the top compliance professional at the oil refinery.

>> DLA Piper said it hired three lawyers from Squire Patton Boggs: partners Matthew Miller and Robert Nolan, and of counsel Michael Fluhr. Miller formerly was Squire's chair of the Northern California litigation practice.

>> Steptoe & Johnson LLP said it added Joe Corrigan as a managing director from Kelley Drye & Warren, where he had been chair of the government contracts team. Steptoe hired Mike Williams, also from Kelley Drye, as a senior government affairs adviser.

>> Willkie Farr & Gallagher said Mark Stancil has joined the firm's Washington office as a partner and will focus on appellate work in commercial litigation, including a focus on investment disputes. Stancil earlier was a partner at Robbins, Russell, Englert, Orseck, Untereiner & Sauber.

>> Cozen O'Connor's public strategies group has hired Evan Preminger, a former assistant secretary for the environment under New York Gov. Andrew Cuomo. "Evan's environmental background is ideally suited to both Cozen O'Connor Public Strategies and the firm's environmental law practices," said Howard Schweitzer, the chief executive of Cozen O'Connor Public Strategies.

>> Morgan, Lewis & Bockius has hired Dennis Gucciardo, a lawyer specializing in Food and Drug Administration regulations, as a partner. Gucciardo, whose practice focuses on advising medical device manufacturers, had been a counsel at Hogan Lovells.