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Rosenstein to Companies: Help the Justice Department Help You

Before going to law school, rising through the U.S. Justice Department ranks and entering President Donald Trump's crosshairs, Deputy Attorney General Rod Rosenstein was an undergraduate student in the University of Pennsylvania's business school. The experience, he said, taught him that ethical conduct “is a good investment.”

Rosenstein offered this message recently at the International Association of Defense Counsel conference in Chicago: Let's work together. It's a refrain that crosses administrations, to be sure, but the Trump administration is pushing cooperation—and not enforcement—as a way to better change corporate culture.

“When companies are victimized, good in-house counsel, working with the department, can help with damage control and prevent problems from spreading within the company or to other companies,” Rosenstein said in his prepared remarks. “It is often in your interest to help our prosecutors and investigators do our jobs.”

Rosenstein had examples to underscore his case for cooperation. There was the time, for instance, when Goodyear attorneys contacted the Justice Department about two employees in China who stole $1.5 million from the company through a kickback scheme. In 2016, the two men were sentenced to more than two years in prison.

Of course, companies can be held liable for the misconduct of their employees. Just ask any company that's been accused of violating the Foreign Corrupt Practices Act.

Pro tip, courtesy of Rosenstein:

When problems arise, “your goal is for the government to regard you as a victim. And if you want the department to treat a corporate entity as a victim, it should act like a victim and help ensure that the perpetrators are held accountable.”

Last year, Rosenstein effectively made permanent a pilot program for foreign-bribery enforcement was aimed at incentivizing voluntary disclosures of misconduct. Under the new guidance, the department established a presumption not to file charges against companies that meet certain compliance standards.

Without explicitly referencing that guidance, Rosenstein emphasized the possible benefits of strong compliance programs and self-reporting. More from Rosenstein's remarks:

“When something does go wrong, law enforcement should give the greatest consideration to companies that have effective compliance programs in place and timely report the conduct to law enforcement, because that frees up our agents and prosecutors to focus on people who are committing more serious financial crimes or who present other threats to the American people,” he said. “An investment in a strong compliance program can pay dividends if you find your company named as a subject or target.”

In case you missed it… Rosenstein on Tuesday lamented the lack of Senate-confirmed leaders at the Justice Department's headquarters in Washington.

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Who Got the Work: FCPA Edition

➤➤ Wilmer Hale partner Ronald Machen (above), a former U.S. attorney for the District of Columbia, was on the defense team for Panasonic Corp. in a foreign-bribery investigation that ended Monday with $280 million in penalties brought by the Justice Department and SEC. The feds hit a Panasonic subsidiary for an alleged scheme using consultants to conceal payments to third-party sales agents. The subsidiary entered into a deferred prosecution agreement that requires retaining a compliance monitor for two years. The SEC said the company received credit for creating a “office of compliance and ethics” led by a new chief compliance officer. Wilmer partner Matthew Jones, formerly chief of staff to Machen, was also in Panasonic's corner.

➤➤ Dun & Bradstreet, the data and analytics company, snagged the first DOJ declination letter under the department's new corporate foreign-bribery guidance. Peter Spivack, a Hogan Lovells white-collar partner in Washington, represented the company. The Wall Street Journal has more on the declination decision here.

➤➤ Goldman Sachs & Co. is paying $110 million to resolve claims that its foreign exchange traders put clients at a disadvantage by sharing information about orders on an electronic chat room. The settlement terms, with the New York Department of Financial Services and Federal Reserve Board, require Goldman to provide regulators with plans to improve its compliance program. Goldman managing director David Markowitz, formerly a top lawyer at the New York attorney general's office, signed the consent order for the bank.

➤➤ Sushovan Hussain, the former chief financial officer of Autonomy Corp., was found guilty Monday of fraudulently pumping up the software company's financial returns in the run-up to its $11 billion purchase by Hewlett-Packard in 2011, my colleague Ross Todd reports. “Corporate citizens and their shareholders, just like all citizens, deserve the full protection of our criminal laws,” Alex Tse, the acting U.S. attorney in San Francisco, said. Assistant U.S. attorneys Robert Leach, Adam Reeves and William Frentzen prosecuted the case for the government. Hussain's lawyer, John Keker of Keker, Van Nest & Peters, planned to appeal.

Lobbying Flyaround

Citigroup and Bank of America became two of the latest firms to face blowback over moves—prompted by the school shooting in Florida—to restrict business with the firearms industry. The top Republican on the Senate Banking Committee, U.S. Sen. Mike Crapo, recently criticized the two companies for using their size to influence social policy. The scrutiny underscores the risk that comes with confronting social challenges—particularly on an issue as politically-charged as firearms access. [Bloomberg]

Meanwhile, banks and credit card companies are exploring ways to identify gun purchases in their payments systems, a possible prelude to the financial industry restricting gun sales. Any approach will have to navigate a political firestorm—not just over gun rights but perhaps data privacy, as well. [Wall Street Journal]

—> This week, Glover Park Group filed a lobbying registration for Dick's Sporting Goods to advocate on gun control issues. Dick's announced this year it would stop selling certain assault-style rifles.

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Around the Web: What Whistleblower Lawyers Want from IRS Chief Nominee

—> Will Trump's IRS chief embrace whistleblowers? “Tipsters have helped the Internal Revenue Service collect $3.6 billion since 2007. Whistleblower lawyers hope Charles Rettig, the potential next leader of the agency, will make it easier to bring in still more cash.” [The Wall Street Journal]

—> How to get employees to speak up about their concerns? For starters, have a transparent process for investigating reports of wrongdoing, and understand that your whistleblower probably doesn't enjoy complaining. That's according to Antonio Fernández, the first chief compliance officer for Public Service Enterprise Group Inc. “We've been very intentional in training our managers, supervisors, directors and the part that we emphasize is that most people don't like to complain about something. So bear that in mind.” [Wall Street Journal]

—> The CFPB has scrapped another investigation under interim director Mick Mulvaney. Altisource, a mortgage servicing technology firm, used a recent earnings call to share the news that it would not be the target of a CFPB enforcement action. A company with close ties to Altisource, Ocwen Financial, wasn't so lucky. A year after being sued for the latest time by the CFPB, Ocwen remains locked in litigation against the agency in a Florida federal court. [National Mortgage News]

—> Regulators are paying close attention to how the financial industry is using the “cloud.” Concerned about cyber risks and the trove of information in the hands of Amazon, Google and Microsoft, financial regulators in the U.S. are reviewing bank's relationships with third-party vendors, including cloud providers. The European Union, meanwhile, has asked to see commercial agreements between tech companies and banks. [Financial Times]

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Promotions & New Hires

• Lewis Zirogiannis, chief compliance officer at GE Digital, is leaving the company for one of its top outside firms: Reed Smith. Zirogiannis will be a partner in the firm's global regulatory enforcement practice. Formerly an associate at two other firms, Zirogiannis told The Recorder, “It was a decision to return to private practice. I really have an interest in returning back to private practice, taking the skills I have learned in-house, representing my clients in-house and hopefully being able to use that in a positive way as an outside lawyer for companies as well.”
• Bilal Sayyed is leaving Cadwalader, Wickersham & Taft to join the Federal Trade Commission as director of the agency's Office of Policy Planning. It's a homecoming for Sayyed—he formerly was an attorney advisor in the office from 2004 to 2005. His Big Law stints include McDermott Will & Emery and Kirkland & Ellis.
• Boyd Johnson III, a former No. 2 at the U.S. attorney's office in Manhattan, will become general counsel to Soros Fund Management LLC, a private investment firm controlled by George Soros. Johnson formerly was co-chairman of investigations and criminal litigation at Wilmer Cutler Pickering Hale and Dorr.
• Former MetLife Inc. general counsel Ricardo Anzaldua will take over the top legal post at Freddie Mac. He senior legal adviser in May and will succeed the company's current executive general counsel, William McDavid.
• Brian McCarthy will serve as vice president and general counsel to Nashville-based Patient financial engagement company CarePayment, overseeing the legal, compliance and human resources departments.