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.
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Compliance
The CARES Act – Who’s Minding the Store?
By Jennifer N. Le & Scott Roybal on
There is more than $2 trillion on the line and the multi-trillion-dollar question is: Who’s minding the store? On March 27, 2020, in response to the financial set-back created by the novel COVID-19 pandemic, President Trump signed into law the more than $2 trillion Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) – by far the largest economic relief package in U.S. history.[1] The CARES Act’s purpose is to keep the U.S. economy afloat and provide relief to struggling Americans, large corporate sectors, and small businesses while the nation battles this pandemic. With $500 billion allocated for big corporations, $377 billion for small businesses, and another $153.5 billion for healthcare, these relief moneys (like with most government funds) are sure to come with strings attached in the form of complex regulations and substantial oversight, with enforcement not far behind.…
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Gifting Goods & Services to the U.S. Government in the Wake of the Coronavirus Outbreak
By Jonathan Aronie, Jennifer N. Le & Laura Alexander on
COVID-19 (a.k.a. the Coronavirus) is upon us and it looks like it is here to stay, at least for the foreseeable future. In January, the Department of Health and Human Services declared the Coronavirus outbreak to constitute a Public Health Emergency, and on March 13, 2020, President Trump declared it a National Emergency. The President noted that the spread of the virus “threatens to strain our Nation’s healthcare systems.” As medical needs surge coupled with increases in state and city shutdowns to combat and contain the virus, a drain on government resources is almost certain. As such, in the wake of the Coronavirus outbreak, many companies are looking for ways to help, and some are willing to do so at no cost through free goods and services to the United States Government in hopes of alleviating such strain. Many companies, however, fear that such gifts might be prohibited under federal gift rules and the Antideficiency Act (an Act originating in the 1880s that, in some cases, prevents the Government from accepting voluntary services). This article explores how companies can provide free goods and services to the Government within the strictures of applicable statutes and regulations.…
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“Brand Memo” Prohibits US DOJ From Converting Agency Guidance Into Binding Legal Obligations In Civil Enforcement Actions
By Emily Theriault on
On January 25, 2018, Associate Attorney General Rachel Brand issued a memorandum (the “Brand Memo”) limiting the use of agency guidance documents in affirmative civil enforcement cases. The memorandum builds on Attorney General Jeff Sessions’ November 16, 2017 memorandum prohibiting DOJ from promulgating guidance documents that create rights or obligations that are binding on regulated parties. When DOJ issues a guidance document with voluntary standards, it must also contain a statement that noncompliance is not subject to future DOJ enforcement actions. The Brand Memo makes clear that this principle also applies to other agencies’ guidance documents. In other words, agency guidance, in and of itself, cannot create new binding legal requirements.…
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Watching the Detectives: The SEC Launches a Dedicated FINRA Oversight Unit
By Sarah Aberg on
Posted in Compliance, Regulations
The SEC has launched a dedicated team to oversee FINRA, according to remarks by Marc Wyatt, Director of the SEC’s Office of Compliance Inspections and Examinations (“OCIE”). Congress has vested the SEC with the power to supervise FINRA, including the authority to inspect and examine. The new unit, named FINRA and Securities Industry Oversight (“FISIO”), is headed by Kevin Goodman, head of the SEC’s broker-dealer exam program. On Oct. 17, 2016, Wyatt spoke at the National Society of Compliance Professionals 2016 National Conference in Washington, D.C., where he made the announcement. According to Wyatt, the new FISIO team includes “roughly 40 people” throughout the country, and consolidates the SEC’s oversight of FINRA “into a single group.” The FISIO team will oversee FINRA to ensure “that it’s fulfilling its mandate in terms of evaluating its member broker-dealers.” On a separate panel at the event, Goodman noted that before FISIO, the SEC examined FINRA through “programmatic” exams focused on a particular FINRA operation (e.g., exams, enforcement, dispute resolution programs) and “oversight” exams that assessed “the quality of the individual examinations” that FINRA conducts on broker-dealers. According to Goodman, FISIO will “combin[e] those two functions into one,” which he described as “not only powerful but efficient as well.”…
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SEC Steps Up Cybersecurity Enforcement with $1 Million Fine Against Morgan Stanley
By Jeff Kern & Christopher Bosch on
Posted in Compliance, Cybersecurity
The Securities and Exchange Commission’s (“SEC”) recent $1 million settlement with Morgan Stanley Smith Barney LLC (“MSSB”) marked a turning point in the agency’s focus on cybersecurity issues, an area that the agency has proclaimed a top enforcement priority in recent years. The MSSB settlement addressed various cybersecurity deficiencies that led to the misappropriation of sensitive data for approximately 730,000 customer accounts.…
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Lots of Little Things – FAR Updates from the Federal Acquisition Circular
By Townsend Bourne & David Gallacher on
Every now and then, the FAR Councils issue a Federal Acquisition Circular (FAC) – an update to the Federal Acquisition Regulation implementing a number of changes. Often these changes are rather pro forma. But occasionally, you get a Circular with many different (and interesting) issues. FAC 2005-67, issued in late-June 2013, with rules becoming effective in June and July 2013, is one such circular. We thought it would be helpful to highlight five of these rules that raise interesting and timely issues, especially where they may signal additional changes yet to come.…
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Quick on the Trigger – Period for Contractors to Comment on Past Performance Evaluations Will Shrink from 30 Days to 14 Days
By Sheppard Mullin on
Over the last few years, there has been a significant push to consolidate all contractor information into central locations, and also to ensure that all performance-related information is updated and current (allowing the government customers to have access to the latest and greatest information about how a contractor has performed). Two recent rules – one final and the other proposed – are further implementing this grand plan. See 78 Fed. Reg. 46783 (August 1, 2013) and 78 Fed. Reg. 48123 (August 7, 2013). The final rule standardizes and further clarifies the government’s internal administrative obligations with regard to past performance evaluations, but the new proposed rule will shrink from 30 days to 14 days the period of time that a contractor has to comment on a past performance evaluation. Going forward, contractors will need to be quick on the trigger to ensure that they monitor their past performance evaluations and respond in a timely manner.
Threats and Vulnerabilities – What Every Contractor Should Know About The SBA’s New “Presumed Loss” and “Deemed Certification” Rules
By Sheppard Mullin on
Posted in Compliance, False Claims, FCA, SBA, Set-Aside, Size Standards, Small Business, Subcontracts
Nearly three years ago, on September 27, 2010, the President signed into law the Small Business Jobs Act of 2010 (“Jobs Act”), which directed the Small Business Administration (“SBA”) to implement a variety of small business size and integrity requirements. As noted in our prior blog posting discussing many of these requirements, many of these provisions posed a significant threat to government contractors – both large and small businesses alike. On October 7, 2011, the SBA published its blueprint for implementing the statutory requirements. See 76 Fed. Reg. 52313 (the “Proposed Rule”). The Proposed Rule contained language that many industry participants and observers found alarming, particularly the requirements that:
Meaning Of FCPA’s “Foreign Official” Causes Uncertainty For Companies Doing Business Abroad
By Sheppard Mullin on
By Alison Kleaver and Joseph Barton
One of the goals of the Foreign Corrupt Practices Act (“FCPA”) is to prevent U.S. companies and individuals from paying bribes to foreign officials in exchange for business. To this end, the FCPA prohibits any domestic individual or business entity from making payments to a “foreign official” for the purpose of obtaining or retaining business. 15 U.S.C. § 78dd-2(a)(1). However, who, precisely, qualifies as a “foreign official” is the subject of much uncertainty. In particular, whether employees of a state-owned company qualify as foreign officials for purposes of FCPA is an area of great concern—and potential liability—particularly for U.S. companies doing business in Latin America where governments often have at least some level of involvement in various business sectors from education to utilities to health care.
Deciphering the Alphabet Soup – FAPIIS, CPARS, and PPIRS; Don’t Look For All This In The FAR
By Sheppard Mullin on
By Bruce Shirk and David Gallacher
In March 2010, the U.S. Government rolled out a new tool promised to provide a centralized source for all publicly available contractor past performance and integrity information – the Federal Performance and Integrity Information System (“FAPIIS”). We have written multiple times about it (in June 2010, March 2011, and January 2012), including the importance of monitoring the information entered to ensure that past performance evaluations are accurate, complete, and fair, and also to prevent release of proprietary information to the public. But the system continues to evolve and, as contractors try to manage the information in FAPIIS, many companies find the process baffling due to (among other things) the multiplicity of modules within the system and the acronyms used to identify them. In fairness, government personnel tasked with implementing FAPIIS have developed on-line training to assist contractors in navigating this complex system. That said, not everyone involved in government contracting can or will take the training, but everyone does need a basic understanding of FAPIIS. So keep reading, because you won’t find this information in the FAR.