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Sarah Aberg is special counsel in the White Collar Defense and Corporate Investigations Group in the firm's New York office.

On November 19, 2020, Peter Driscoll, director of the Office of Compliance Inspection and Examination (“OCIE”) of the Securities and Exchange Commission (“SEC”), gave a speech urging advisory firms to empower their Chief Compliance Officers (“CCOs”). The speech, made at the SEC’s annual compliance outreach conference, accompanied OCIE’s Risk Alert, issued the same day, identifying notable deficiencies and weaknesses regarding Registered Investment Advisors (“RIAs”) CCOs and compliance departments. Driscoll’s speech complemented the Risk Alert by outlining the fundamental requirements for CCOs: “empowered, senior and with authority.”
Continue Reading OCIE Director Instructs Advisers to Empower Chief Compliance Officers

For the first time outside of the originating case itself, a federal appeals court was called upon to apply the principles governing disgorgement in SEC enforcement actions established by the United States Supreme Court’s high-profile decision in Liu v. Securities & Exchange Comm’n, No. 18-1501, 2020 WL 3405845 (U.S. June 22, 2020) (see our prior blog article here).  In Securities & Exchange Comm’n v. Yang, No. 19-55289, 2020 WL 4530630 (9th Cir. Aug. 6, 2020), the United States Court of Appeals for the Ninth Circuit reviewed a district court order, issued eighteen months before the Supreme Court spoke in Liu, awarding the SEC disgorgement.  In an unpublished memorandum decision, the Court of Appeals reversed the disgorgement awards and remanded the case to the district court to explicitly determine whether the awards comported with the requirements for such relief under Liu.  The Yang decision drew attention because it served as an example of how the high court’s decision is impacting appellate review of disgorgement awards.  If Yang is any indication, courts of appeal will be remanding cases to district courts with instruction to reach specific findings regarding compliance with Liu’s disgorgement requirements.
Continue Reading Ninth Circuit Reverses SEC Disgorgement Award and Remands in First Decision Post-Liu

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 FINRA Settlement Highlights Importance of Anti-Money Laundering Due Diligence and Monitoring

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 DOJ Cracks Down on COVID-Relief Fraud

On June 4, 2020, the Jury Subgroup of the COVID-19 Judicial Task Force of the U.S. federal courts issued a report (the “Report”) containing recommendations for conducting jury trials and convening grand juries during the pandemic.  Although many federal courts have continued to hold remote hearings and conferences over the last few months, jury trials have largely been suspended across the country to protect the safety of potential jurors and court personnel.  However, as government stay-at-home orders are lifted and courts prepare to reopen their doors, advocates have called for the reinstatement of jury trials to maintain litigants’ constitutional rights and preserve public confidence in the courts.  Convened to recommend directives and policy changes related to the COVID-19 health emergency, the Task Force is made up of federal judges, clerks, attorneys, and executives from a number of circuits across the U.S.
Continue Reading COVID-19 Judicial Task Force Proposes Protocols to Reinstate Jury Trials

The United States Department of Justice (DOJ) released updated guidance regarding its Evaluation of Corporate Compliance Programs on June 1, 2020.  The release comes just over a year since the guidance was last updated in April 2019.[1]  While these latest changes are less extensive than the most recent ones, there are some key differences that suggest the DOJ may be shifting some areas of focus when it comes to assessing the effectiveness of corporate compliance programs.
Continue Reading DOJ Updates Corporate Compliance Guidance

On May 4, 2020, the Securities and Exchange Commission (“SEC”) issued a temporary final rule easing some restrictions on small businesses seeking to raise capital pursuant to Regulation Crowdfunding (“Reg CF”).  The SEC made the move in response to feedback from its Small Business Capital Formation Advisory Committee and other outreach conducted by SEC staff regarding the industry’s urgent need for expedited access to capital while maintaining investor protections as the COVID-19 pandemic persists.
Continue Reading SEC Offers Limited Rule Relief to Spur Small Business Crowdfunding During Pandemic

A January proposal to give banks compliance slack floated by a high-ranking Federal Reserve Board (“FRB”) official has not yet gained the traction its supporters had hoped for.
Continue Reading Fed’s Vice Chair for Supervision Proposes a Deregulatory Approach to Limit the Scope of “Matters Requiring Attention” used in Bank Examinations

The SEC has transitioned to a “full telework posture” in response to the outbreak of COVID-19 in the United States.  However, the Commission is taking pains to assure market participants that it is still business as usual at the SEC.  The Commission recently published the SEC Coronavirus (COVID-19) Response on its website, which summarizes, among other things, market monitoring priorities, guidance and targeted assistance and relief, and investor protection efforts the SEC is undertaking in response to the Coronavirus.
Continue Reading The SEC’s COVID-19 Response