Welcome to Compliance Hot Spots, our snapshot on white-collar, regulatory and compliance news and trends. In your inbox this week: the Justice Department has freshened up its guidance for prosecutors to evaluate the effectiveness of corporate compliance programs, former prosecutor Andrew Weissmann addresses whether DOJ needs a dedicated compliance expert (again), and King & Spalding tangles with its former client WhatsApp.

Thanks for reading, and we'd love your feedback. Contact C. Ryan Barber in Washington at [email protected] and at 202-828-0315. Follow @cryanbarber.

DOJ Updates Guidance for Assessing Compliance Programs

A year after issuing guidance for prosecutors to evaluate compliance programs, the Justice Department this week made several updates stressing the need to assess how regularly companies revisit and adjust their internal efforts to guard against fraud and other misconduct.

While directed at prosecutors, the publicly available guidance has a second audience, providing companies insight into how the Justice Department judges programs to prevent corporate misdeeds. For companies facing investigations, those considerations can make the difference between receiving leniency from the Justice Department or facing a costly criminal prosecution.

The updated guidance introduces new language explicitly instructing prosecutors to address whether companies have continuously reviewed their compliance programs and, when necessary, updated their policies and procedures.

Matt Miner, a Morgan, Lewis & Bockius partner and former top official in the Justice Department's criminal division, described the revisions as "refinements and clarifications, all with an eye toward emphasizing the need for programs to adapt and measure their own effectiveness."

"The programs need to be learning and evolving based upon risk, based upon lessons learned. That dynamic aspect is really expressed in all these changes throughout," Miner said.

In one section, for instance, the Justice Department urges prosecutors to ask not only whether companies conduct periodic reviews of their compliance programs but whether those assessments are "limited to a 'snapshot' in time or based upon continuous access" to useful information.

"Has the periodic review led to updates in policies, procedures, and controls?" the updated guidance asks.

Elsewhere in the updated guidance, the Justice Department emphasizes the need for compliance programs to be "adequately resourced and empowered." It stresses the significance of compliance professionals having access to internal data that might shed light on the effectiveness of programs to stave off misconduct.

The guidance also suggests that the Justice Department wants companies to keep a watchful eye over outside consultants and other third parties, whose conduct can give rise to allegations of foreign bribery and other misconduct.

"Does the company engage in risk management of third parties throughout the lifespan of the relationship, or primarily during the onboarding process," the updated guidance asks.

Who Got the Work

>> Skadden, Arps, Slate, Meagher & Flom partner Kenneth Schwartz was counsel to Odyssey Investment Partners Fund V, LP in a U.S. Justice Department antitrust investigation involving competition for the sale of geostationary satellite antennas in the United States. Jay Owen, assistant chief of the defense, industrials, and aerospace section of the DOJ antitrust division, was a lead attorney for the government. Read the government's proposed final judgment, which includes a divestiture component.

>> A team at Dechert LLP, including former Trump White House lawyer Michael McGinley and former federal prosecutor Andrew Boutros, filed an amicus brief on behalf of Senate Majority Leader Mitch McConnell and other Republican senators urging the D.C. Circuit to order the dismissal of Michael Flynn's case. In a 25-page brief, the GOP lawmakers challenged U.S. District Judge Emmet Sullivan's decision to appoint an outside lawyer to oppose the Justice Department's move to drop the prosecution, arguing the veteran of Washington's federal trial court lacks the authority to take the prosecutorial reins or to appoint a private party to step into the prosecution's shoes." Sullivan is represented by trial lawyer Beth Wilkinson of Wilkinson Walsh.

>> Lawyers from Linklaters, including partner Adam Lurie, head of the firm's dispute resolution practice in the U.S. and the Americas, are advocating for the Department for International Trade, Government of the United Kingdom, according to a new registration on file at the U.S. Justice Department. Linklaters has worked with other firms—including Harris, Wiltshire & Grannis; Steptoe & Johnson LLP; and Fragomen—on advocacy for the U.K. trade agency.

>> Perkins Coie litigation partner Adam Schuman was counsel to BitClave PTE Ltd. in an SEC enforcement action in which the blockchain services company agreed to pay disgorgement of $25,500,000, prejudgment interest of $3,444,197, and a penalty of $400,000 for allegedly conducting an unregistered initial coin offering (ICO) of digital asset securities. The SEC concluded that BitClave violated registration provisions of federal securities laws. The company did not admit or deny the allegations.

Compliance Reading Corner

King & Spalding Resists WhatsApp's 'Drastic' Disqualification Bid in Cyber Case. King & Spalding's prior legal work for WhatsApp Inc. should not disqualify the firm from representing an adversary that was sued by the popular text messaging service in California federal court, lawyers for the firm told a judge Friday. [NLJ] Read the filing here from Long & Levit. And Cooley's motion for disqualification is here. Ex-King & Spalding partner Chris Wray (above), now the FBI director, was on the team providing advice to WhatsApp in a sealed matter four years ago.

Does the Justice Department Need a Dedicated Compliance Expert? "My biggest concern is not whether the department has somebody internally or externally—there are advantages to both. One thing I liked about having somebody who had worked in a whole variety of companies is that it gave some comfort to companies that when they came in and had their programs evaluated, it wasn't going to be some DOJ lawyer who's never been in a company. It's great to have training. But it's useful, like in many things, to have somebody who owns a program, because then you can make sure that there's consistency and that everyone is devoting the necessary time to the matter at hand." [WSJ]

Penalty Guidance Gives Companies More Transparency, CFTC Official Says. "New guidance on how the nation's derivatives regulator calculates fines is intended to give companies and officials a framework for settlement discussions, an official said. The guidance on civil monetary penalties from the Commodity Futures and Trading Commission lays out factors regulators are meant to consider when calculating fines. It was issued in the form of a memo to CFTC staff by enforcement director James McDonald and released publicly this month." [WSJ]

Companies Must Prioritize Anti-Bribery Compliance During the Pandemic. "Under the pandemic, a relaxation of normal controls, a sense of urgency, and large amounts of money all combine to make a corruption-prone environment for companies that do business globally. Thompson Hine attorneys identify red flags and offer best practices to mitigate the risk of enforcement under the FCPA." [Bloomberg Law]

Latham & Watkins Disqualified From Defense Logistics Protest. "Latham & Watkins LLP can't represent Quantico Tactical Inc. in a pre-award protest of a defense logistics procurement because the law firm previously represented another bidder, Atlantic Diving Supply Inc., the U.S. Court of Federal Claims ruled." [Bloomberg Law] Read the ruling here.

SEC Is Scrutinizing Public Companies Granted Virus Relief Funds. "The U.S. Securities and Exchange Commission has started an inquiry into publicly traded companies that received coronavirus stimulus funds from the federal government, scrutinizing whether representations they made in loan applications were consistent with their disclosures to investors in securities filings, according to three people familiar with the matter." [Bloomberg]

Big Banks Must Face Forex Manipulation Claims, U.S. Judge Rules. "A group of banks failed to persuade a judge to throw out a lawsuit claiming they conspired to rig foreign exchange rates. Sixteen of the world's biggest banks are accused of conspiring, from 2003 to 2013, to manipulate FX benchmark rates and exchange rates offered to customers. On Thursday, U.S. District Judge Lorna Schofield in Manhattan allowed most of the claims to go forward." [Bloomberg]

Notable Moves & More

>> Baker McKenzie said it has brought on white-collar partner Jessica Nall in San Francisco. Nall previously led the white-collar team at Farella Braun & Martel. "The intersection of criminal law, compliance, and technology presents evolving opportunities and risks for our clients, both in the US and internationally," Peter Tomczak, chair of Baker McKenzie's North America litigation and government enforcement practice, said. "Jessica is a talented, collaborative lawyer. Her breadth of knowledge and sound, practical legal advice will provide immediate value to our clients in the Bay Area and beyond by helping them navigate and succeed in this complex enforcement environment." My colleague David Thomas has more here.

>> Former Freshfields Bruckhaus Deringer counsel Brent Wible in Washington is now serving as assistant chief of the U.S. Justice Department's Foreign Corrupt Practices Act unit, The Wall Street Journal reports. Wible served in the Obama White House for a year as senior counsel, according to his LinkedIn bio. HIs career in the law includes serving as an AUSA in the Southern District of New York from 2006 to 2014. Wible clerked for Justice Sonia Sotomayor during her time as an appeals judge on the Second Circuit.

>> Clifford Chance appointed Sharis Pozen, co-head of the antitrust team, to a role on the wider leadership team. Clifford Chance managing partner Matthew Layton stated: "Given Sharis' exceptional legal skills and broad leadership experience, we're excited to bring her perspectives to our leadership group as we execute our strategy and plan for the future."

>> Carolyn Schenck was named national fraud counsel at the IRS serving in the agency's new fraud enforcement program. Schenck has served for more than a decade as counsel to the IRS offshore compliance initiative.