Welcome to Compliance Hot Spots, our snapshot on white-collar, regulatory and compliance news and trends. On tap: Federal prosecutors are raising disqualification questions involving a Skadden partner representing a client in a CFTC case in Chicago. Plus: a judge just unsealed her order disqualifying Sidley Austin's James Cole in the Huawei case in New York. Scroll down for more, including: Three things general counsel should know about the feds' big tech investigations; Who Got the work, major headlines notable moves and more.

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

 

 

 

DOJ's Maneuvering Could Scuttle Skadden Partner in Chicago Case

Federal prosecutors are putting a squeeze on Skadden, Arps, Slate, Meagher & Flom in a Chicago case involving former and current precious metals traders at JPMorgan Chase & Co. Lawyers at the Justice Department's fraud section have raised questions about whether Skadden partner David Meister should be disqualified based on his earlier service as the enforcement director at the U.S. Commodity Future Trading Commission.

Meister led the enforcement division at the CFTC from 2011 to 2013 before rejoining Skadden in 2014, and he's now the head of Skadden's government enforcement and white-collar crime group in New York. Skadden, like many major U.S. law firms, is home to a cadre of former government officials. Former CFTC general counsel Jonathan Marcus joined the firm in 2017.

The Chicago case involves three JPMorgan execs: Gregg Smith, an executive director and trader; Michael Nowak, a managing director who ran the global precious metals desk; and Christopher Jordan, an executive director and trader. Lawyers from Kobre & Kim represented Smith, and a team from Akin Gump Strauss Hauer & Feld are advocating for Jordan. The defendants are charged in a racketeering conspiracy in connection with the alleged manipulation of the markets for precious metals futures contracts.

Prosecutors told the Chicago court that Meister, representing Nowak, may have acquired confidential information during his tenure as the CFTC enforcement director. "It is difficult for the government to see how, consistent with the applicable Rules of Professional Conduct, a lawyer can defend a client against allegations that the client made false statements in connection with a CFTC investigation when that lawyer was personally and substantially involved with that same investigation while the CFTC enforcement director," Matthew Sullivan, a fraud section trial attorney, told the court Monday.

Skadden lawyers have told the court that Meister "does not believe he has any confidential CFTC information that could be used to defend Mr. Nowak. They also said that Meister's "duty of confidentiality to the CFTC under the applicable ethical rules creates, at most, a potential conflict that can be waived by Mr. Nowak." The Skadden team also includes Jocelyn Strauber and Chad Silverman.

Skadden said it referred Nowak to independent counsel to review any potential conflict. That independent counsel, Andrew Porter of Salvatore, Prescott, Porter & Porter, said Nowak waived any actual or potential conflict.

The dispute is reminiscent of the Justice Department's recent bid to disqualify Sidley Austin partner James Cole from defending Huawei based on his past experience as the deputy attorney general. A federal judge in Brooklyn agreed last year to boot Cole from the case based on his supervision of an unspecified investigation during the Obama administration. A fuller order detailing the reasons was unsealed Tuesday.

 

 

Big Tech Antitrust Investigations: 3 Things for General Counsel to Know

General counsel in other companies and other industries may think big tech's antitrust woes don't affect them, but they should reconsider, David Reichenberg, an antitrust litigator and member at Cozen O'Connor, told our colleague MP McQueen in a piece over at Law.com. "Investigation into big tech companies has ramifications for other companies in tech and non-tech," he said.

While the investigations are ongoing in the tech space, they could have broader implications, said Jon Dubrow, antitrust partner at McDermott Will & Emery and co-head of its antitrust mergers focus group.

Three things to think about: 1) General counsel should think carefully about antitrust risks, even in the absence of attention from a government enforcer, said David Reichenberg, an antitrust litigator and member at Cozen O'Connor. 2) Investigations could have spillover effects on companies that engage with or rely on those big tech platforms. 3) Antitrust investigations could have an impact on business negotiations between Big Tech and other companies.

 

 

Compliance Headlines: What Caught My Eye

Judge Unseals Decision Disqualifying Sidley's James Cole from Huawei Defense. A New York federal trial judge on Tuesday partially unsealed a ruling that provided the court's basis for stopping Sidley Austin partner James Cole (above), a former Obama-era Justice Department leader, from serving as a defender for the Chinese telecommunications giant Huawei in a U.S. criminal case. Huawei is still represented by other lawyers at Sidley; Jenner & Block; and Steptoe & Johnson LLP. [NLJ]

Justice Department Unease With Barr Goes Beyond the Stone Case. "While Barr's issues have only recently spilled into the open, the disquiet in the ranks started much earlier, officials inside the department say. Among some of the issues: a top-down management style, with the micro-managing Barr notorious for weighing in on matters usually left for less-senior officials, and a focus that broadly appears more centered on matters in Washington—and more specifically things the president cares about. Current and former Justice officials describe an attorney general who doesn't readily take advice and is prone to right wing conspiracies that he reads in fringe conservative sites on the Internet." [CNN] More drama here at The New York Times: D.C. Prosecutorsʼ Tensions With Justice Dept. Began Long Before Stone Sentencing

Courts and cases

Former Morgan Stanley Lawyer's Retaliation Complaint Is Dismissed. A retaliation claim brought by a former Morgan Stanley in-house lawyer who was based at a subsidiary in Hong Kong falls outside the scope of a federal corporate fraud law that more broadly protects domestic whistleblowers, a U.S. Labor Department judge said in a new order that embraces earlier decisions limiting the reach of the statute. The ruling against Christopher Garvey, formerly among Morgan Stanley's top lawyers in Hong Kong, was the latest decision exploring the contours of anti-retaliation provisions of the Sarbanes-Oxley Act of 2002. [NLJ]

DOJ Solicited Outside Law Firm for Help With Tech Antitrust Case. "The U.S. Justice Department has sought outside legal help to bolster its antitrust investigations of large technology platforms, according to two people familiar with the matter, in a sign that the government may be preparing a lawsuit against one or more of the companies. The department approached at least one law firm about working on the government's behalf, said the people. That firm—Kellogg Hansen Todd Figel & Frederick PLLC—declined to take on the assignment because of a conflict, according to one of the people, who asked not to be named because the investigation is confidential." [Bloomberg Law]

Huawei Fails to Overturn U.S. Ban on Federal Contracting. "Huawei Technologies USA Inc. failed to convince a Texas federal court that the U.S. government's decision to ban the company from federal contracting constituted an unconstitutional bill of attainder." [Bloomberg Law]

Compliance

More Than Half of 'Most Ethical' Companies Have Chief Ethics or Compliance Officers. Roughly 60% of the companies named on Tuesday as Ethisphere Institute's most ethical for 2020 have an independent chief compliance or ethics officer who reports directly to the CEO rather than the manager of another business function. AT&T Inc., U.S. Bancorp and LinkedIn are among the 132 companies Ethisphere named to be the most ethical for 2020. [Law.com]

Former DLA Litigation Chair and In-House Counsel Create Corporate Compliance Boutique. Former DLA Piper Miami litigation chair Angela Crawford (at left) and Rolls-Royce in-house counsel Lila Acharya have formed the firm Crawford & Acharya, a corporate compliance boutique based out of Boston and Miami. Crawford, who is based in Miami, spent 12 years at DLA Piper, rising to the head of the firm's Miami litigation practice in 2017. Before that, she spent a year as an Assistant U.S. attorney in Illinois and five years as a litigator at Kirkland & Ellis. [The American Lawyer]

FTC Commissioner's Social Media Statement Is a Heads-Up to Advertisers, Influencers. Statements from Federal Trade Commissioner Rohit Chopra earlier this month that the FTC had voted to launch a "close and careful review" of its non-binding endorsement guides and a "self-critical analysis" of its enforcement approach may signal an impending crackdown on social media influencers, advertisers and even their tech platforms, lawyers say. [Corporate Counsel]

Lobbying

How the Drug Lobby Lost Its Mojo in Washington. "The drug industry doesn't pack the lobbying punch it once did, and one sign is something rare in the capital today—a dose of bipartisanship." [WSJ]

 

 

Who Got the Work

>> Sullivan & Cromwell's Nicolas Bourtin, managing partner of the firm's criminal defense and investigations group and co-head of the FCPA and anti-corruption team, was a lead advocate for Wells Fargo in a $3 billion settlement resolving claims tied to the fake-accounts scandal. Sullivan & Cromwell litigation partner Christopher Viapiano was also counsel to Wells Fargo. "Wells Fargo repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings," Stephanie Avakian, co-director of the SEC's division of enforcement, said in a statement. "This settlement holds Wells Fargo responsible for its fraud and furthers the SEC's goal of returning funds to harmed investors." Read the SEC's order here. The Justice Department's statements of facts is here.

>> Sullivan & Cromwell partners Stephen Ehrenberg and Sharon Nelles advised Diageo as the leading alcohol producer reached a $5 million settlement with the Securities and Exchange Commission. The commission alleged that Diageo, the company behind popular brands including Smirnoff and Johnnie Walker, pressured distributors to buy products in excess of consumer demand, creating a misimpression of strong sales growth in financial disclosures.

>> Kirkland & Ellis partner Katherine Rocco is counsel to Olympus and Liqui-Box, and Joseph Matelis of Sullivan & Cromwell is representing DS Smith plc, in an antitrust action the U.S. Justice Department filed last week in Washington's federal trial court. Katrina Rouse, chief of the DOJ's defense, industrials and aerospace section, was among the antitrust lawyers who signed the complaint.

>> Covington & Burling partner Jerry Hodgkins represented Enigma MPC as the blockchain technology startup negotiated a $500,000 settlement with the SEC, resolving claims that it conducted an unregistered initial coin offering, or ICO. As part of the settlement, Enigma agreed to return funds to harmed investors, register its tokens as securities and make periodic reports to the SEC.

>> Brownstein Hyatt Farber Schreck has inked a $10,000 monthly contract to serve as policy advisors to the Liberian International Ship & Corporate Registry, according to a new Foreign Agents Registration Act disclosure on file at the U.S. Justice Department. Former U.S. Rep. Ed Royce, who chaired the House Foreign Affairs Committee from 2013 to 2019, will supervise and coordinate most of the work on the contract.

 

 

Notable Moves & More

• Crowell & Moring boosted its anti-money laundering, economic sanctions, and CFIUS practices, hiring Caroline Brown, a former attorney in the U.S. Department of the Treasury and the U.S. Department of Justice's National Security Division. Brown joins as a partner in the international trade and white-collar and enforcement groups.

• Alston & Bird said it has recruited white-collar defense lawyer Joey Burby from Bryan Cave Leighton Paisner. Burby was an associate at Alston until he landed a job with the Atlanta U.S. attorney's office in 2002.

• Skadden, Arps, Slate, Meagher & Flom said it's hired William McConagha, a 17-year Food and Drug Administration veteran. McConagha arrives from Sidley Austin and will be a partner in Washington, D.C. He had been a partner at Sidley Austin since 2012 in that firm's food and drug practice.

• Kramer Levin Naftalis & Frankel said Barry Berke has returned to the firm after serving as special counsel to the House Judiciary Committee. "Barry demonstrated his extraordinary skills as a trial lawyer in presenting a complex set of facts to the American people during the historic impeachment proceedings," said Paul Schoeman, a co-managing partner at Kramer Levin who also co-chairs the firm's white-collar group.

• Buckley LLP has hired Daniel Alonso, a former head of the criminal division of the U.S. attorney's office in Brooklyn, as a white-collar defense partner. Alonso was previously managing director and general counsel of Exiger, a global compliance and risk management firm specializing in technology solutions for corporate compliance.