Good evening, and welcome back to Compliance Hot Spots, our weekly snapshot of white-collar enforcement, regulatory and news and trends. On deck this week: A look at a new advisory released by the Justice Department that might be unwelcome for lawyers interested in avoiding registration as a "foreign agent." Also, an extraordinary standoff between U.S. Attorney General William Barr and the top federal prosecutor in Manhattan puts the head of the Securities and Exchange Commission in a tight spot. And Jonathan Kravis, the prosecutor who resigned in protest of Barr's intervention in the Roger Stone sentencing, finds a home in Big Law.

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

DOJ Takes Broad View of Legal Work Requiring 'Foreign-Agent' Disclosure

In a newly released advisory opinion, the U.S. Justice Department has asserted an expansive view of the conduct that would require lawyers to register as so-called "foreign agents" in connection with their work for overseas governments and other interests.

The opinion, issued to an unidentified law firm in April, spells out five types of tasks that the Justice Department views as triggering an obligation for lawyers to disclose their work for foreign clients under the Foreign Agents Registration Act, a decades-old law designed to shine a light on lobbying and other influence work for overseas interests.

FARA includes exemptions for litigation and other legal services, but limits of that carveout begin to blur when a lawyer provides public relations advice and other counsel that veers into a more political domain. In its April 21 advisory opinion, the DOJ concluded that the following activities fell outside the so-called lawyers' exemption and triggered a need to register:

• Providing legal analysis and advice on matters—including pending legislation, and executive decisions and policy—concerning relations between the U.S. and the foreign country at issue.

• Attending regular meetings between embassy officials and a foreign country's U.S.-based lobbyists where proposed legislation and legislative strategy are discussed

• Sharing materials prepared by the law firm with a foreign country's lobbyists and public relations consultants on pending legislation

• Drafting, at the request of a foreign country's U.S. embassy, potential responses responses to media inquiries "to be delivered by the embassy about litigation" handled by the law firm

• Providing an embassy with written arguments against passage of a resolution in Congress

"DOJ is indicating here that law firms representing foreign governments will need to tightly manage their work in order to avoid registration, including placing restrictions on what many would consider core legal services," said Matthew Sanderson, a partner at Caplin & Drysdale who has counseled law firms on FARA.

Sanderson said he was particularly struck by the portions of the opinion addressing the attendance of meetings with lobbyists and assisting with talking points tied to court litigation.

Before the opinion, Sanderson said he would have advised lawyers that they could attend strategy discussions about proposed legislation without triggering FARA. His advice, he said, would have been: "Don't participate in formulating the strategy, be quiet, but you can be there."

Sanderson added that the DOJ had taken an expansive, and perhaps even "questionable," approach in asserting that FARA requires lawyers to register if, in the course of representing a foreign client in court, they assist with responses to the media. That service, he said, is a "core role" for a lawyer in litigation.

"They have to tell the PR people or the client what is correct or not correct about the talking points they want to use. They can have a detrimental effect on the litigation if they're incorrect," Sanderson said.

>>> Add this to the list of recent steps by the Justice Department to ratchet up enforcement of FARA. In recent months—and for the first time in a quarter century—the Justice Department has begun to send what amount to cease-and-desist orders targeting perceived shortcomings in disclosures of influence work for foreign powers. The so-called deficiency notices give firms 10 days to either correct their past disclosures, cease their work—or be deemed in violation of FARA. Read all about it here.

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WIPL is known for having some of the most engaging and energizing keynote speakers attend to share their thoughts, experiences, war stories and tips on effective leadership. And this year is no exception. This year, we are grateful to welcome two remarkable women come and inspire us: Tina Tchen, the President and CEO of the "Times Up" Legal Defense Fund and Paula Boggs, Founder of Boggs Media LLC and Former Executive Vice President, General Counsel and Secretary, Law and Corporate Affairs at Starbucks from 2002-2012. READ MORE

Who Got the Work

>> Paul, Weiss, Rifkind, Wharton & Garrison partner Daniel Kramer counseled AmTrust Financial Services Inc. as the insurance firm reached a settlement with the Securities and Exchange Commission, resolving claims it failed to disclose significant information about how the company estimated its insurance losses and reserves. AmTrust Financial Services Inc. and its former chief financial officer, Ronald E. Pipoly Jr., agreed to pay a combined $10.5 million as part of the settlement. Pipoly was represented by Mark Cohen at Cohen & Gresser LLP.

>> "The one-time Wells Fargo executives who are facing civil charges include former retail banking head Carrie Tolstedt, who is represented by Williams & Connolly; longtime general counsel James Strother, who has lawyers at Orrick, Herrington & Sutcliffe; and chief auditor David Julian, who is represented by WilmerHale," The American Banker reports. "The firms are mounting vigorous defenses of the ex- bankers, even though their cases are being heard in a forum that some observers believe offers a home-field advantage to the government. The cases represent one of the largest efforts ever by U.S. bank regulators to punish individual bankers."

>> The utility giant Commonwealth Edison paid Jenner & Block nearly $2.4 million in 2019 as it faced a sprawling corruption investigation focused on its lobbying practices in Illinois. That total topped what the power company had reported paying Jenner & Block in the previous four years combined. [WBEZ]

>> Wilmer Cutler Pickering Hale and Dorr filed a lawsuit on behalf of Cayuga Nation alleging that the Department of Interior has failed to take action on the tribe's 15-year-old application to take land in New York into trust. "The Nation's application has been pending before Interior for more than fifteen years, far longer than any other currently pending land-into-trust application," wrote Wilmer Hale partner Daniel Volchok. More at the Auburn Citizen.

>> Brownstein Hyatt Farber Shreck signed the National League of Cities as a lobbying client. "National League of Cities' decision to hire the lobbying firm came as a number of cities have turned to K Street for aid securing aid from the federal government," Politico reports.

Compliance Reading Corner

Jay Clayton, Low-Profile Regulator, Is Catapulted Into a Political Fight. "In a private discussion with Attorney General William P. Barr, Mr. Clayton, 53, expressed interest in becoming the top prosecutor for the Southern District of New York, according to a Justice Department official. After a lifetime of practicing securities law and prepping companies for initial public offerings, Mr. Clayton told friends he saw the job as a way to establish his litigation credentials, according to people who know him." [NYT] Meanwhile, the House Judiciary Committee is preparing to subpoena Barr, Politico reports. More here on Clayton's background as a private corporate lawyer,

'Afraid of the President': Ex-Mueller Prosecutor Will Accuse Barr DOJ of Political Interference in Stone Case. "What I heard—repeatedly—was that Roger Stone was being treated differently from any other defendant because of his relationship to the President," AUSA Aaron Zelinsky is expected to say at tomorrow's House Judiciary hearing. "I was told that the Acting U.S. Attorney for the District of Columbia, Timothy Shea, was receiving heavy pressure from the highest levels of the Department of Justice to cut Stone a break." [NLJ] The New York Times has more here.

Supreme Court Upholds SEC's Ability to Recover Ill-Gotten Gains From Financial Fraud, With Limits. "The Supreme Court upheld the Securities and Exchange Commission's ability to recover ill-gotten gains from those who commit financial fraud, but said there were limits to how far the government could go. The court, in an 8-1 opinion by Justice Sonia Sotomayor on Monday, said the SEC's attempted recoveries couldn't exceed a wrongdoer's net profits and should be done with an aim of benefiting investors who were victims of an alleged fraud." [WSJ] More here at NYT.

Ex-Hunton Partner Agrees to 3-Year Suspension After Insider Trading Conviction. Robert Schulman was convicted by a New York federal jury on securities fraud and conspiracy charges for tipping off an investment adviser about Pfizer Inc.'s $3.6 billion acquisition of King Pharmaceuticals Inc. in 2010. A partner at Hunton & Williams at the time, Schulman was privy to information about the merger several months before it was publicly announced. [NLJ]

Treasury, SBA ease path for loan forgiveness after outcry. "The Small Business Administration and the Treasury Department released a three-page "EZ" loan forgiveness form that certain borrowers from the so-called Paycheck Protection Program would be able to use. The administration said it requires fewer calculations and less documentation than the full application. The initial version of the forgiveness form was 11 pages." [Politico]

Watchdogs Warn Government Faces Difficulties Stopping Fraud in Coronavirus Relief. "The committee of government watchdogs overseeing the federal government's response to the Covid-19 pandemic warned Wednesday that federal agencies face significant challenges rapidly doling out $2 trillion in relief money while stopping fraud and misuse of the funds." [CNN]

Watching Amazon—How a Hill Investigation Can Morph Into Criminal Inquiry. "Congressional investigations into business practices can transform into a criminal inquiry if the government believes a company or representatives lied or obstructed the investigation. Bradley A. Marcus, counsel at Buckley LLP, looks at Capitol Hill's interest in 2019 testimony of Amazon's associate general counsel and potential legal issues facing Amazon and other companies in congressional investigations." [Bloomberg Law]

Notable Moves & More

>> Munger, Tolles & Olson has hired Jonathan Kravis (above), a former federal prosecutor who resigned in protest of the Justice Department leadership's intervention in the sentencing of Roger Stone, as a partner in the firm's Washington office.Kravis joins a Munger Tolles office headed by Donald Verrilli Jr., Verrilli said he contacted Kravis shortly after he stepped down as a prosecutor. His message to Kravis: If he was considering private practice, "we would love to have a chance to talk to him." Verrilli said the firm was drawn to Kravis based on his "extraordinary record as a trial lawyer," along with his "character and integrity." Also, he said, Kravis has a "track record as mentor to younger lawyers."

>> SEC lawyer Caroline Crenshaw was picked for a seat on the commission, the White House said last week. Crenshaw is now serving as senior counsel. Crenshaw practiced at Sutherland, Asbill & Brennan in Washington before joining the agency in 2013. My colleague Melanie Waddell at ThinkAdvisor has more here.

>> The SEC said Jennifer Leete has been named associate director in the division of enforcement. Leete earlier was an associate at Baker & Botts for four years. Leete succeeds Antonia Chion, who retired in February 2020.