Welcome to Compliance Hot Spots, our snapshot on white-collar, regulatory and compliance news and trends. On tap: Williams & Connolly is defending Fifth Third Bank in a new, and rare, Trump-era CFPB enforcement action. Plus: US Attorney General William Barr's reshuffling his front office. And Crowell & Moring is boosting its state attorneys general practice. Scroll down for Who Got the work, major headlines and more notable moves.

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!

Williams & Connolly Takes on the CFPB (Again)

A team from Williams & Connolly is defending Fifth Third Bank against charges it fraudulently opened accounts without customers' consent, in a case reminiscent of the Consumer Financial Protection Bureau's crackdown on Wells Fargo in 2016.

In a lawsuit filed Monday in Illinois federal court, the CFPB alleged that Fifth Third Bank transferred money from customers' existing accounts to open new, unauthorized accounts in their names. The bureau also accused the Fifth Third of opening credit card accounts for consumers and enrolling them in online services without prior authorization, alleging that the bank knew about the misconduct since at least 2008 and took inadequate steps to address it.

"In short, Fifth Third focused on its own financial interests to the detriment of consumers," the CFPB said.

Fifth Third is represented by a pair of Williams & Connolly partners, Ryan Scarborough and John Villa, who previously defended TCF Bank against the CFPB. In that case, filed in Minnesota federal court, TCF Bank agreed to pay $30 million to resolve claims that it misled customers about overdraft services.

Fifth Third disclosed last week that the CFPB planned to file a lawsuit. The bank said it planned to "defend itself vigorously" and that it did not believe the facts warranted an enforcement proceeding.

Fifth Third contends there was no evidence of "systemic misconduct" and disputed that its compensation system incentivized employees to open accounts without authorization. In doing so, Fifth Third appeared to distance itself from Wells Fargo without naming the bank, which paid $185 million in 2016 to resolve claims that a break-neck culture drove thousands of employees to open unauthorized accounts or enroll customers in services without their consent.

The bank said it had identified fewer than 1,100 unauthorized accounts—or .01 percent of the more than 10 million accounts opened during the seven-year span in question. The bank added that it waived or reimbursed improper charges, which totaled less than $30,000, and disciplined employees engaged in misconduct. Between 2010 and 2016, the bank said, 96 employees resigned or were fired after opening accounts that were deemed suspicious.

"In nearly all cases, this took place before the CFPB even began its investigation," Fifth Third said.

On Tuesday, the Consumer Bankers Association issued a statement that questioned the CFPB enforcement action.

"Based on the facts available, Fifth Third acted to put safeguards in place to prevent the type of behavior taken by fewer than 100 now-former employees out of a 27,000 person customer-facing team," Richard Hunt, president and CEO of the Consumer Bankers Association, said. "We absolutely need strong consumer regulations and CBA is ready to work with the CFPB to ensure regulatory standards remain at the highest level, but regulators should likewise use their best judgment to determine when something should be handled through supervision and when it should be handled through enforcement so resources are most effectively utilized."

Barr Reshuffles Front Office Staff

A year after taking the reins of the Justice Department, Attorney General William Barr has named an adviser and former Trump White House lawyer, Will Levi, as his new chief of staff.

Levi replaces Brian Rabbitt, another former White House lawyer, who has taken a top role in the Justice Department's criminal division. The reshuffling had been planned for months, according to Justice Department officials familiar with the move, as Rabbitt wanted to return to the white-collar enforcement issues he handled as an associate at the law firm Williams & Connolly and, later, as a top adviser to Jay Clayton, the chairman of the Securities and Exchange Commission.

Rabbitt is expected to continue working closely with Barr's front office as the principal deputy assistant attorney general in the criminal division. He succeeds John P. Cronan, who recently had a confirmation hearing for a seat on the U.S. District Court for the Southern District of New York.

A former Sidley Austin associate and clerk for Justice Samuel Alito Jr., Levi is among the several onetime White House lawyers who have worked as top advisers to Barr. Levi left the White House counsel's office for the U.S. Justice Department in late 2018, when Matt Whitaker was serving as the acting attorney general following the ouster of Jeff Sessions.

After Barr's confirmation, Levi remained a counselor in the Justice Department's front office and earned the trust of the attorney general, officials said, as he offered advice on national security, civil and criminal matters.

Who Got the Work

>> Paul Hastings LLP represented U.S.-based aircraft manufacturer ONE Aviation in connection with a CFIUS review process. The Chinese-controlled investment company Citiking International US LLC, will acquire ONE Aviation. Paul Hastings said its client had obtained clearance from the Committee on Foreign Investment in the United States. Citiking is acquiring ONE Aviation from Chapter 11 bankruptcy. The Paul Hastings CFIUS team was led by partners Scott Flicker and Robert Silvers, and senior associate Randall Johnston. Flicker, chair of the firm's trade controls practice, leads the Washington office.

>> Lawyers from Munger, Tolles & Olson and Orrick, Herrington & Sutcliffe are representing LinkedIn at the U.S. Supreme Court in a new case questioning the scope of the federal Computer Fraud and Abuse Act. Munger's Donald Verrilli Jr. (at left) is counsel of record on the petition. LinkedIn is challenging a Ninth Circuit opinion that upheld an injunction against LinkedIn in a suit brought by the data miner hiQ Inc. My colleague Ross Todd has more here.

>> Squire Patton Boggs, representing the government of Angola, asked the White House for a meeting and photo-op between the country's leader, Joao Lourengo, and President Donald Trump. Pitching the "opportunity" to a White House adviser, Squire Patton Boggs partner David Schnittger said the "heads of state meeting that would underscore the president's commitment to Africa, and to Americans of African descent and offer a counter to the growing influence of other nations in the continent." The law firm revealed the meeting request under the Foreign Agents Registration Act, a law requiring the disclosure of lobbying and other advocacy for overseas powers.

Compliance Reading Corner

Coronavirus's Spread Could Complicate Corporate Anti-Bribery Efforts. "As the epidemic spreads, compliance officers and the lawyers tasked with conducting internal investigations and bribery risk assessments have had to postpone meetings and interviews with witnesses. In most cases, on-site visits or interviews can be delayed without great consequence. But for investigations into potentially ongoing misconduct, the delays could allow compliance breaches to fester. 'The identification of potential misconduct won't happen,' said Nathaniel Edmonds, a partner at Paul Hastings LLP. 'It will delay the review—meaning the misconduct, corruption or fraud could get bigger.'" [WSJ] More here at The Washington Post: SEC Asks Employees to Work from Home

Federal Ethics Officer Drank on the Job, Visited Strip Clubs, Watchdog Says. "The ethics officer for a federal agency that oversees credit unions abruptly retired when confronted with allegations that he drank and visited strip clubs with his deputy during work hours, according to an internal investigation." [WSJ] Law.com has more here, Credit Union Times has more here. Read the inspector general's report here.

Wells Fargo Was Promised Soft Handling by Trump Appointee, Democrats Say. "Given their conversations with [Eric] Blankenstein, the bank's leaders were expecting to be able to resolve the active investigation with the agency in private, without paying more fines. They expressed surprise, according to the report, when members of the agency's staff said two months later that they were not aware of Mr. Blankenstein's assurances." [NYT] The Washington Post has more here.

Former U.S. Bank Risk Officer Pays $450K for AML Compliance Failures. "The former chief operational risk officer at U.S. Bank National Association has agreed to pay a $450,000 penalty for his role in the bank failing to implement and maintain an effective anti-money laundering compliance program, the Treasury Department's Financial Crimes Enforcement Network announced." [Compliance Week] Read the FinCEN order here.

CFPB the Latest Federal Agency to Propose Whistleblower Program. "The CFPB whistleblower proposal would mirror similar whistleblower award programs already in place with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Whistleblowers would only be eligible to receive an award on a CFPB administrative proceeding or court action exceeding $1 million and must provide "original information" to the agency—information that leads to a successful enforcement action." [Compliance Week]

Courts and cases

DOJ Defends Broad Power to Dismiss Whistleblowers' Fraud Claims. The U.S. Justice Department has sought to stave off a challenge to its sweeping authority to dismiss whistleblower cases alleging fraud against the federal government, arguing at the U.S. Supreme Court that its decisions to toss complaints under the False Claims Act are largely "unreviewable." [NLJ]

NY Judge Freezes Hedge Fund Manager Philip Falcone's Assets. "A New York judge has frozen assets belonging to hedge fund manager Philip Falcone and his Harbinger Offshore fund after he failed to pay millions in legal fees to a Manhattan law firm that defended him in high-stakes litigation against US regulators." [Financial Times]

Judge Says Amazon 'Likely to Succeed' on Key Argument in Pentagon Cloud Lawsuit. "A federal judge has concluded that a bid protest lawsuit brought by Amazon over President Trump's intervention in an important Pentagon cloud computing contract 'is likely to succeed on the merits' of one of its central arguments, according to a court document made public Friday. The document provides the first indication of how Court of Federal Claims judge Patricia Campbell-Smith might rule in a high-stakes bid protest over the Pentagon's JEDI cloud computing contract, which was awarded to Microsoft last October following intervention from the White House and members of Congress." [The Washington Post] Read the opinion here.

Kraft, Mondelez to End Fight With Regulator Over Manipulation Claims. "Kraft Foods Group Inc. and Mondelez Global are poised to pay $16 million to settle regulatory allegations they manipulated the market for wheat futures. The deal, if approved by a federal court in Chicago, would resolve an unusual legal standoff: The companies had accused the Commodity Futures Trading Commission of violating an earlier settlement with them by commenting on it. The deal had limited what could be said about the case." [WSJ]

AT&T Cooperates With Justice Department in Google Probe. "AT&T has conferred several times with Justice officials to share its views that Google is stifling competition in the advertising sector, where AT&T is seeking to make inroads with its Xandr division, the people said." [WSJ]

Controversial DOJ Wire Act Memo Faces US Appeals Court Scrutiny. New Jersey and Pennsylvania are opposing a new Justice Department legal memo that would expose state lottery systems to criminal prosecution. Greenberg Traurig filed Pennsylvania's brief, while New Jersey's was filed by in-house lawyers for the state. Covington & Burling is counsel for the Association of Gaming Equipment Manufacturers, and Sidley Austin represents International Game Technology. Lawyers from Gibson, Dunn & Crutcher represent a direct party challenging the DOJ's memo. [NLJ]

Notable Moves & Announcements

• Crowell & Moring said it was expanding its state attorneys general enforcement practice with the hiring of Natalie Ludaway (at left), former chief deputy attorney general for the District of Columbia. Ludaway, who will be a partner in Washington, spent five years as the second-in-charge under D.C. Attorney General Karl Racine. "The Office of Attorney General for the District of Columbia's loss is Crowell & Moring's gain. Natalie is an exceptional lawyer and a selfless leader," Racine said in a statement. "Indeed, Natalie is the rare lawyer who takes the time necessary to develop a deep understanding of the needs of her clients, creatively crafts the winning strategy, and identifies the mix of talent necessary to achieve the clients' objective." In case you missed it last year, read NLJ editor in chief Lisa Helem's interview here with Racine.

• Kirkland & Ellis is adding Ivan Schlager, the former leader of Skadden, Arps, Slate, Meagher & Flom's national security practice, as a partner in the firm's Washington office. Schlager, who will bring to Kirkland substantial expertise in shepherding transactions past the Committee on Foreign Investment in the United States, spent the last two decades with Skadden. The Financial Times has more here.

• Baker & Hostetler continues to draw on talent from Winston & Strawn to build its presence in California, announcing Monday that has landed the firm's former white-collar co-chair, Robb Adkins, to lead a new San Francisco office. Baker & Hostetler announced its ambitions for growth in California last January when it hired Eric Sagerman to lead the firm's Los Angeles office. Sagerman's additions since switching firms have included former Winston litigators Kim Morris (at left) and Robert Julian and former Pillsbury Winthrop Shaw Pittman restructuring expert Cecily Dumas.

• Wachtell Lipton Rosen & Katz is hiring Sarah Eddy, former criminal appeals chief at the U.S. attorney's office for the Southern District of New York, Law360 reports. Eddy has served for 10 years as an assistant U.S. attorney in Manhattan.

• Hughes Hubbard & Reed is bolstering its white-collar defense and anti-corruption practice in Paris with the addition of a three-lawyer team from the litigation boutique Boken Avocats. Félix de Belloy, a co-founder of Boken, joins as a partner along with two associates, Ralph Moughanie and Laureen Bokanda-Masson.

• Loeb & Loeb LLP said James Czaban has joined the firm's Washington office as a partner in the FDA regulatory and compliance department. He was previously at DLA Piper as partner and chair of their FDA group.