The 38th Annual National Institute on White Collar Crime, hosted by the American Bar Association (ABA), took place in early March 2023. The conference featured speakers from across the nation, including officials from the Department of Justice (DOJ), Securities and Exchange Commission (SEC), and Commodities and Futures Trading Commission (CFTC), as well as members of the white collar defense bar, and senior legal and compliance officers from several global corporations. Below are highlights from several conference sessions.
Kenneth Polite, Jr., the assistant attorney general for the DOJ's Criminal Division, addressed institute attendees on the final morning of events. His remarks emphasized the DOJ's focus on fraud enforcement in the immediate future.
First, he described how the DOJ would use data analytics to assist its detection of wrongdoing prior to formal investigations. The Health Care Fraud unit has already successfully used this to identify violators, and other divisions intend to use this technology to identify, investigate, and prosecute offenders. Second, he discussed changes to the Evaluation of Corporate Compliance Programs (ECCP) document. This document outlines the factors prosecutors will consider when assessing the effectiveness of a company's compliance program in the context of criminal investigations.
An important update includes managing the use of personal devices for business purposes, including the use of ephemeral messaging apps. When determining whether criminal charges will be filed, the DOJ will consider which policies a company has adopted and how these compliance policies are communicated and enforced.
The DOJ will also consider compensation structures and seek to have companies incentivize disclosure through their compensation plans. Companies should examine their compensation structures to determine whether and how to implement procedures to claw back compensation from employees who engage in wrongdoing.
It is clear from Polite's address, in combination with Deputy Attorney General Lisa Monaco's remarks, that the DOJ will place more emphasis on fraud enforcement. Companies should carefully review their corporate compliance policies and take steps to critically assess these programs to help prepare for and align with DOJ's new expectations.
One of the most popular panel discussions from the conference was on the topic of "Defending False Claims Act Cases." DOJ's lack of filing 31 U.S.C. § 3730 (c)(2)(A) motions to dismiss relator-initiated cases was a hot topic of conversation.
The False Claims Act (FCA)statute was last amended in 1986. Since then, DOJ has only filed motions to dismiss pursuant to 31 U.S.C. § 3730 (c)(2)(A) in 120 cases. This is a mere drop in the bucket compared to the several hundreds of qui tam cases filed each year.
The panel surmised the U.S. Supreme Court's impending ruling in United States ex rel. Polansky v. Executive Health Resources, Inc., No. 21-1053, will shed light on the government's authority to dismiss relator-initiated cases under § 3730 (c)(2)(A). The panel also focused on the Supreme Court's highly anticipated ruling in United States ex rel. Proctor v. Safeway, Inc., No. 21-111 (consolidated with United States ex rel. Schutte v. SuperValu Inc., No. 21-1326). In Proctor/Schutte, the Supreme Court may resolve a circuit split on the proper scienter standard under the FCA. This decision may significantly impact many investigations and future cases.
Finally, the ABA presented a special session titled "Conversation with the Enforcers & Regulators," featuring panelists from the DOJ, the SEC, the CFTC, and the U.S. Attorney's Office for the Southern District of New York (SDNY).
Each panelist provided an overview of their top enforcement priorities:
- An increase in enforcement efforts on cryptocurrency and digital assets. Part of the focus on cryptocurrency is the constantly changing regulatory landscape. All panelists emphasized investor protection, with increased enforcement focus on crypto-intermediaries who fail to register with the SEC.
- A general increase in enforcement efforts in 2023, with a higher volume of cases.
- Finally, the SEC indicated it would expect higher penalties to resolve its enforcement matters. This is meant to force corporations to recalibrate the importance of compliance.
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