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Enforcement Edge
May 24, 2024

Views From the Top: Hot Issues & Trends in White Collar Fraud Enforcement

Enforcement Edge: Shining Light on Government Enforcement

This week, Arnold & Porter hosted its Views From the Top program focused on “Hot Issues & Trends in White Collar Fraud Enforcement,” featuring Ismail Ramsey (United States Attorney (USA), Northern District of California), Monique Winkler (Regional Director, Securities and Exchange Commission), and Leslie Wulff (Chief, Department of Justice (DOJ) Antitrust Division, San Francisco). Each official highlighted noteworthy enforcement actions from the past year, discussed their policies on hybrid work, and reiterated the importance of voluntary self-disclosure and active communication during investigations.

Intellectual Property Theft Remains an Enforcement Priority: Protecting intellectual property in Silicon Valley remains a top priority for the U.S. Attorney’s Office, particularly regarding valuable trade secrets that bolster the nation’s economic and military advantage. The office has established a standalone cybersecurity and national security unit and continues to be the most active district in the Disruptive Technology Strikeforce. This joint initiative with DOJ and the Department of Commerce aims to safeguard sensitive technologies from adversarial acquisition. The SEC’s regional priorities include disclosures related to the use of artificial intelligence (AI), cyber security, information asymmetries, API security, as well as cryptocurrencies and cyber trading.

Whistleblowers and Self-Disclosure: The Northern District of California, along with the Southern District of New York, has launched a new Whistleblower Pilot Program to encourage individuals’ voluntary self-disclosure of criminal conduct, including intellectual property theft. USA Ramsey described this policy as complementing existing incentives for timely self-disclosure. Ramsey also noted recent instances where voluntary and full cooperation by companies led to declinations in prosecutions. However, USA Ramsey also acknowledged the challenges companies face in having employees report as whistleblowers before the companies have had an opportunity to conduct an internal investigation and assess whether to engage in voluntary self-disclosure. As we have reported in our May 21, 2024 blog, companies often face a complicated set of calculations when considering the downstream impacts of voluntary self-disclosure on potential civil litigation.

For the SEC, meaningful cooperation is more than merely complying with subpoenas or avoiding obstruction. Companies are encouraged to share key documents or witnesses that the SEC did not identify, and to proactively mitigate and remediate harm to demonstrate meaningful cooperation during investigations. Although there is no specific SEC policy on cooperation benefits, Regional Director Winkler noted that the SEC consistently rewarded cooperation and compliance over the past year. However, she also admitted that because the SEC does not issue public declinations, it may be hard for potential cooperators to assess the SEC’s track record on cooperation.

Cooperation Is Key: Regional Director Winkler recommended that companies communicate early and often with the SEC to understand how their cooperation is perceived and how they can better assist during investigations. Chief Wulff emphasized DOJ’s efforts to develop cooperation policies similar to the Antitrust Division’s corporate leniency policy, which offers unique protection through corporate non-prosecution privileges for reporting unlawful conduct of other firms.

Remote Work: While the SEC and Antitrust Division continue to operate in a hybrid work environment, the United States Attorney’s Office in the Northern District has returned to a five-day in-person schedule for all attorneys, with all its staff to follow by September. Situational telework remains an option, but USA Ramsey aims to ensure that attorneys are available in the office every day of the week. All three leaders encouraged members of the defense bar to engage in person with their offices, and to expect in-person meetings for their clients seeking cooperation credit.

If you have questions, please reach out to the authors of this post or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations practice group.

* Lily Cao and Sam Abrams, summer associates at Arnold & Porter’s San Francisco office, contributed to this blog.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.