On August 6, 2020, President Trump signed the “Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States,” requiring, among other things, the U.S. government to purchase “essential” medicines and medical supplies produced domestically, rather than abroad. Citing a need to reduce U.S. dependence on foreign suppliers, the Order sets forth several new requirements aimed at establishing reliable, long-term domestic production of essential drugs and devices, including their component parts. To be clear, this is a tall order: the Food and Drug Administration (FDA) will need to assemble a list of critical supplies and medicines; agencies will need to assess ways to secure the supply chain for both equipment and medicines; the Environmental Protection Agency (EPA) will need to consider how it can accelerate domestic manufacturing requests; the U.S. Trade Representative (USTR) and the Department of Defense (DOD) will need to re-negotiate the terms of international agreements; the Department of Veterans Affairs (VA) may (or may not) be exempted; and – lest it go without saying – everyone will have to update their regulations. While this “Buy American” requirement seems to take effect as soon as the FDA issues its list of critical materials, the Order may leave intact (at least temporarily) some exceptions, which may allow companies time to examine and adjust their supply chains. Over the longer term, most required agency actions are ordered to be realized within 90-180 days, but the inevitable regulatory updates will lag (far?) behind. For now, we find ourselves in a bit of a Twilight Zone – “the middle ground between light and shadow, between science and superstition, and … between the pit of man’s fears and the summit of his knowledge” – forced to guess which parts of this new Order are real and immediate, and which will leave us stuck in a “darker dimension.” Continue Reading
A recent enforcement action offers a glimpse of the Financial Industry Regulatory Authority’s (“FINRA”) expectations for firms conducting anti-money laundering (“AML”) due diligence and transaction monitoring. On July 27, 2020, FINRA settled with broker-dealer JKR & Company (“JKR”) over allegations that the firm failed to detect, investigate, and report suspicious activity in four customer accounts in violation of FINRA Rules 3310(a) and 2010. JKR agreed to a $50,000 fine and a censure to resolve the matter. The settlement is notable in that FINRA applied transaction monitoring and due diligence expectations common in the banking industry to a broker-dealer. It also serves as a reminder that FINRA expects member firms to not only establish written AML policies and procedures, but also to put their AML programs into practice in order to meet their regulatory obligations. Continue Reading
NIST’s news draft guidance, Special Publication 800-53B, Control Baselines for Information Systems and Organizations, provides important information on selecting both security and privacy control baselines for the Federal Government. These control baselines are from NIST Special Publication 800-53 and have been moved to this separate publication “so the SP 800-53 [can] serve as a consolidated catalog of security and privacy controls regardless of how those controls [are] used by different communities of interest.” The new guidance addresses federal information systems and is applicable to information systems used or operated by an agency, a contractor on behalf of an agency, or another organization on behalf of an agency. Continue Reading
You got to know when to hold ‘em,
Know when to fold ‘em,
Know when to walk way,
And know when to run.
Such is the advice of the unnamed gambler from the late Kenny Rogers’ 1978 hit single, “The Gambler.” While the eponymous hero of that song may have believed his advice to be sound, there remains the undeniable fact that regardless of whatever skill you may have “out of readin’ people’s faces,” there always will be an element of chance to whether you will win at the table. You can never know when to hold ‘em or when to fold ‘em a hundred percent of the time. More often than not, for the casual card player, luck is the determinative factor. Indeed, it is the risk of not really knowing whether “every hand’s a winner” or “every hand’s a loser” that makes the game exciting in the first place. Continue Reading
On July 15, 2020, the Department of Justice (“DOJ”) charged Andrew Marnell with bank fraud in connection with $8.5 million worth of Paycheck Protection Program (“PPP”) loans he obtained for fake business expenses, that were then spent on gambling and stock market bets, incurring millions of dollars in losses. See United States v. Marnell, No. 2:20-mj-03313-DUTY (C.D. Cal. Jul. 15, 2020). Continue Reading
NIST recently released the final public draft of SP 800-172, Enhanced Security Requirements for Protecting Controlled Unclassified Information: A Supplement to NIST Special Publication 800-171 (formerly Draft NIST SP 800-171B). NIST is proposing additional security requirements for certain CUI in non-federal systems that is associated with critical programs or high value assets and is soliciting public comments through August 21, 2020. Continue Reading
On July 14, 2020 the Department of Defense (“DoD”), General Services Administration (“GSA”), and the National Aeronautics and Space Administration (“NASA”) published an Interim Rule amending the Federal Acquisition Regulation (“FAR”) in order to implement Section 889(a)(1)(B) of the FY 2019 National Defense Authorization Act (“NDAA”). The Interim Rule is effective August 13, 2020, and applies to all solicitations issued after (or resulting in contracts that will be awarded after) the effective date. Interested parties have until September 14, 2020 to submit written comments for consideration in the formation of the Final Rule. Continue Reading
On June 16, 2020, the U.S. Court of Appeals for the District of Columbia Circuit held that the Securities and Exchange Commission (“SEC”) lacks the authority to administer a two-year pilot program designed to review the fees and rebate structure used by U.S. stock exchanges. As discussed in our previous article, major U.S. exchanges, such as New York Stock Exchange, CBOE, Global Markets, and Nasdaq sought review to challenge the pilot program. In New York Stock Exchange LLC v. SEC, No. 19-1042 (D.C. Cir. Jun. 16, 2020), the Court sided with the exchanges, holding that the SEC exceeded its authority by creating a program whose thrust was merely to test whether the current pricing structure was problematic. Continue Reading
Just as you’re probably tired of reading COVID-19 articles, we’ve grown tired of writing them. So, in an effort to party like it’s 2019, we’ve decided to survey the non-COVID-19 initiatives underway at the General Services Administration (“GSA”) while everyone is working from home. Our survey shows progress continues on Multiple Award Schedule (“MAS”) modifications, a new Verified Product Portal (“VPP”) is on the horizon, and work related to Sections 846 and 889 conSetinues to progress. Obviously, none of these has anything to do with COVID-19, but they will have an impact on your Federal business, whether you’re working from home or (eventually, and soon we hope) back in the office. Here’s a look of major projects GSA has been working on while you’ve been social distancing. Continue Reading
On Monday, the Supreme Court placed significant limits on the Securities and Exchange Commission’s (“SEC”) ability to seek disgorgement, a powerful tool that often was used more like a penalty than an equitable remedy. The Supreme Court held the SEC may only seek disgorgement of ill-gotten gains that do not exceed a wrongdoer’s net profits and are awarded for victims under 15 U.S.C. §78u(d)(5)’s provision of equitable relief. This opinion reaffirms the SEC’s power to seek disgorgement of ill-gotten gains through civil actions as equitable relief, eliminating any doubt created by its prior opinion in Kokesh v. SEC. However, the Supreme Court left a few key questions for lower courts to decide, such as what may be considered legitimate expenses and deducted from a disgorgement award, and whether the Government can retain the funds disgorged by the defendants. The resolution of these issues may provide additional relief to future defendants in SEC enforcement cases.