In the wake of market disruptions triggered by COVID-19, major U.S. government and regulatory enforcement agencies—including the Department of Justice (DOJ), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC)—have begun highlighting potential legal risks to public companies and traders surrounding major shifts to our working landscape, including the temporary "new normal" of remote working. Current social distancing realities mean employees are working from home and, therefore, outside the traditional modes of oversight and supervision.

Once (and possibly even before) working conditions revert back to their "normal" state, it is likely that regulatory inquiries and investigations into potential misconduct during the days of remote working will emerge. Publicly-listed U.S. companies and traders should take steps today in preparation for the regulatory scrutiny of tomorrow.

A Window Into Potential Regulatory Investigations

Recent communications from enforcers and regulators provide insight into what kinds of investigations they may pursue in the coming months. On March 16, U.S. Attorney General William Barr directed all U.S. Attorneys "to prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic." Already there have been investigations and prosecutions stemming from fraudulent provision of goods and services related to COVID-19, and the numbers will only grow as massive amounts of money are distributed by governments, development banks, and NGOs in response to this health and economic crisis.

The SEC released a statement in March reminding public companies to stay vigilant about insider trading as the pandemic continues to impact markets in unprecedented ways. Corporate insiders are gaining access to material nonpublic information of potentially much greater value than is typical, related to government relief and other COVID-19 impacts, and this information may be shared with a far broader audience, extending to lower level employees as well as consultants and outside professionals, in a company's efforts to respond quickly. The risks increase with the SEC extending the time for companies to file their financial disclosures, while the challenges of overseeing dissemination of such information are compounded by the remote working environment.