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08 March 2021
With a new administration comes new policies and enforcement priorities. President Biden's administration has already been active, and this article discusses where the administration is likely to focus its civil and criminal enforcement efforts in the months and years ahead. Although it has been just over a month, the Biden administration has hit the ground running, issuing a flurry of executive orders, actions and memoranda with sweeping implications affecting a wide range of key issues, including:
In criminal enforcement, the Department of Justice (DOJ) has rescinded the Trump administration's policy that prosecutors charge the harshest available crime and seek the stiffest penalties. This action does not necessarily presage a less vigorous approach to criminal enforcement under the Biden administration, but instead it may be a return to permitting federal prosecutors to exercise more discretion.
The Biden administration shows no signs of slowing down and is on pace for the most active first 100 days of a presidency in recent history. Additional activity in a variety of areas is expected, including in the areas discussed below.
Given the substantial government funds allocated to the COVID-19 pandemic relief, it is expected that there will be an increase in efforts to investigate and prosecute COVID-19-related fraud. At both the state and federal level, enforcement positions and committees have been created solely for this purpose. For example, the Coronavirus Aid, Relief and Economic Securities Act created the following to oversee COVID-19 related government spending:
At the state level, efforts to uncover fraud are also being coordinated. For example, the Delaware US Attorney's Office and Delaware attorney general formed a COVID-19 anti-fraud coalition to monitor, identify and investigate pandemic-related misconduct.
Certain actions may be exempted from COVID-19-related prosecutions. For example, former Department of Health and Human Services (HHS) Secretary Alex Azar issued a waiver for Stark Law penalties to ensure that healthcare tools and services could be made more readily available where needed. In addition, an HHS Office of the Inspector General policy statement issued on 3 April 2020 noted that arrangements satisfying the Stark Law blanket waivers will not be subject to additional scrutiny under the Anti-Kickback Statute.
Aggressive enforcement of the Foreign Corrupt Practices Act (FCPA) is expected to continue under the Biden administration. The number of individual prosecutions under the FCPA have markedly increased over the past five years and it will likely persist through 2021 (for further details please see "Individual prosecutions under FCPA: more trials and more case law"). FCPA investigations of public companies will likely increase during the Biden administration. Although the newly initiated enforcement actions under Trump's administration remained consistent with historical average, with six of the ten largest FCPA settlements in history resolved during his tenure, the number of new FCPA-related investigations disclosed by public companies dropped precipitously during Trump's four years. According to data collected by Stanford Law School's FCPA clearinghouse, only four new DOJ or Securities and Exchange Commission FCPA-related investigations were disclosed by public companies in 2020, this is compared to:
In contrast, 27 such investigations were disclosed in 2016 – the final year of the Obama administration.
Although the number of newly charged cases may decrease in 2021, continued cross-border collaboration is expected. In 2020 US enforcement agencies cooperated to resolve FCPA investigations with global enforcers in:
Corporations that resolved FCPA investigations in 2020 were participants in numerous industry sectors, most frequently operating within:
These trends are expected to continue in 2021.
It is likely that the Biden administration will devote more attention to consumer fraud, spearheaded by the Consumer Financial Protection Bureau (CFPB). The nomination of Rohit Chopra, former CFPB assistant director and student loan ombudsman, signals a shift back to the more active and aggressive posture of the CFPB as established under the Obama administration. Increased oversight and enforcement actions against for-profit colleges should be expected. Larger companies should also expect increased scrutiny – especially with the surge of consumer complaints stemming from the pandemic. In addition, a revival in fair-lending investigations of disparities in loans by race or ethnicity is anticipated. It may be worth looking out for new rules and regulations that enhance consumer protections. A regulatory response to recent stock market activity involving GameStop can be expected. Although the fallout of this surprising market behaviour remains unclear, possible responses include a ban on short selling, safeguards on shutting down trades to ensure equity in access and increased disclosure requirements for stock brokers on the extent to which their customers make or lose money.
As the Biden administration progresses through its first 100 days and beyond, companies should fortify their compliance programmes as a proactive defence against enforcement actions. Companies should look internally and evaluate risks with particular consideration for administration priorities. This risk assessment can help to inform updates to compliance protocols. Efforts to prioritise compliance should be well documented. Finally, companies should develop a crisis management plan with legal counsel, with protocols for activating communications, legal and policy advisers when calamity strikes.(1)
For further information on this topic please contact Stephanie Yonekura at Hogan Lovells US LLP's Los Angeles office by telephone (+1 310 785 4600) or email (email@example.com). Alternatively, contact Lillian S Hardy, Peter S Spivack or Hunter Davis at Hogan Lovells US LLP's Washington DC office by telephone (+1 202 637 5600) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Hogan Lovells US LLP website can be accessed at www.hoganlovells.com.
(1) Further information is available here.
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