Welcome to Compliance Hot Spots, our briefing on compliance, enforcement and government affairs. And welcome back from what was hopefully a fun and restful Memorial Day weekend. Let’s get right into it: With the pace of investigations, it’s always tough to know when to start drawing conclusions about enforcement action under a new administration. But the numbers from the first year-and-a-half of the Trump presidency, are starting to paint a picture of reduced activity. Also, we look this week at the DOJ’s effort to be more transparent about its approach—under the Foreign Agents Registration Act—when firms and individuals need to disclose their lobbying advocacy. Some links below might require a registration or subscription. As always, thanks for reading, and we value any feedback. Tips or other other suggestions? What’s on your plate? Contact me at cbarber@alm.com or 202-828-0315, or follow me on Twitter @cryanbarber.

Reaching New Low for White-Collar Cases

Donald Trump entered office with a decidedly pro-business tone. Trump's U.S. attorney general pick, Jeff Sessions, the Alabama Republican senator, came to the post with anti-immigration and anti-drug interests—but little passion, at least publicly, for fighting white-collar crime and corporate misconduct. Jay Clayton, Trump's pick to lead the U.S. Securities and Exchange Commission, specialized in capital formation during his partnership at Sullivan & Cromwell. Obama's last SEC chair, Mary Jo White, was a former U.S. attorney with deep prosecution chops. All of this created a sense that white-collar enforcement would lighten up under Trump. Nearly a year and a half into his presidency, the numbers are backing up that notion. ➤➤ White-collar prosecutions are on track to hit a 20-year low, according to Syracuse University’s Transactional Records Access Clearinghouse, a nonprofit research center that analyzes government data. The center, known as TRAC, found in its latest report, published last week, that about 3,250 cases were brought between October 2017 and April—a 4.4 percent drop from the same period in fiscal year 2017 and a 33.5 percent decline from five years ago. "These recent trends continue a long term slide in the level of federal fraud prosecutions. Indeed, current levels represent the lowest number of white collar prosecutions in more than 20 years," according to the latest TRAC report. (Bloomberg has more here on the report.) Over at the SEC, meanwhile, penalties fell to a four-year low in the fiscal year that ended in September 2017, according to figures prepared by Georgetown University law professor Urska Velikonja. The SEC’s co-director of enforcement, Stephanie Avakian, has cautioned against reading too much into the drop in penalties. But Clayton has questioned in the past whether large fines simply hurt shareholders. In remarks last Wednesday, Deputy Attorney General Rod Rosenstein reiterated his call to end to the days of multiple agencies “piling on” penalties against a company over the same misconduct. “It is important for us to be aggressive in pursuing wrongdoers,” Rosenstein said. “But we should discourage disproportionate enforcement of laws by multiple authorities.” Rosenstein also highlighted steps the DOJ has taken under his watch to incentivize self-reporting misconduct by holding out reduced penalties as the carrot for companies that come forward about misdeeds. (He’s also nudged the Senate, not so subtly, to pick up the pace and confirm Trump’s nominees for top DOJ posts, namely the pick to lead the criminal division, Kirkland & Ellis partner Brian Benczkowski.) Those vacancies make a difference. Writing in the New York Law Journal, Robert Anello and Richard Albert of Morvillo Abramowitz Grand Iason & Anello noted in February that the leadership vacuum could be to blame for white-collar enforcement receiving less attention. “Federal law enforcement officials have enunciated a clear focus on non-white-collar crimes and, with numerous vacancies in the Justice Department, this shifting focus is likely to result in a decrease in white-collar investigations and prosecutions—a notion supported by anecdotal reports from white-collar practitioners,” Anello and Albert wrote.

Who Got the Work

Pfizer Inc. has agreed to pay $23.8 million to resolve U.S. Justice Departmentclaims that the drug company "used a foundation as a conduit to pay the copays of Medicare patients taking three Pfizer drugs." The company said in a statement that the "resolution reflects the company’s desire to put this legal matter behind it and focus on the needs of patients." Pfizer signed a five-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General. Ropes & Gray partner Joshua Levy in Boston, co-chair of the firm's litigation and enforcement practice, represented Pfizer along with DLA Piper partner John Rah in Washington. Rady Johnson, Pfizer's chief compliance and risk officer, also signed the agreement. Read the corporate integrity agreement here. “Our corporate integrity agreement promotes independence between Pfizer and any patient assistance programs to which it may donate,” Gregory Demske, chief counsel to the HHS inspector general said in a statement. “Without true independence, as we have seen in this case, drug companies may use patient assistance programs as conduits for improper payments that harm Medicare.” • The Minnesota community bank KleinBank, represented by John Lundquist of Minnesota's Fredrikson & Byron, agreed to resolve an Obama-era "redlining" lending discrimination case. KleinBank, the largest family-owned bank in Minnesota, must "ensure that its mortgage lending services are made available on a non-discriminatory basis," according to a U.S. Justice Department announcement. Read the settlement agreement here. A team from Manatt, Phelps & Phillips—including Richard Gottlieb, co-chair of the firm's financial services group—looked at why the resolution matters: "The DOJ could have dropped this suit, but instead pursued it to closure, obtaining meaningful relief. Filed in the last days of the Obama administration, the DOJ suit was one of many fair lending suits brought by a more activist department. As the first fair lending settlement reached during President Trump’s administration, the agreement provides some insight into the new DOJ’s take on the issue. Most notably, while the Minnesota bank must make changes to its CRA assessment area and spend hundreds of thousands of dollars on advertising and a special purpose credit program, the bank was not hit with a civil penalty." • The U.S. Justice Department on Tuesday said Bayer AG must divest businesses and assets worth about $9 billion to complete its $66 billion acquisition of Monsanto Company. The government said the proposed divestiture to BASF would resolve the Antitrust Division's competition concerns. Sullivan & Cromwell represented Bayer; Arnold & Porter for Monsanto; Weil, Gotshal & Manges for BASF. “This comprehensive structural solution to significant horizontal and vertical competition concerns—the largest merger divestiture ever required by the United States—preserves competition in the sale of these critical agricultural products and protects American farmers and consumers,” Makan Delrahim, the assistant attorney general in charge of the Antitrust Division, said in a statement. “We commend the parties for working with the Antitrust Division to resolve our concerns on behalf of American consumers.” • International trade lawyers are making hay as sanctions shine. Amanda DeBusk, Dechert's international trade chair, described an “avalanche of activity.” “It’s not just sanctions about one country, it’s about multiple countries, all coming at once,” she said. Holland & Knight partner Jon Epstein said the present circumstances are "like taking a drink out of a fire hose." My colleague Dan Packel at American Lawyer has more here.

Compliance Roundup: GDPR & Whistleblowers | Ethics 'Nudge' | Accenture's Anti-Corruption Efforts | DOJ's FARA Memos

One gray area in the Europe's new GDPR: whistleblowing hotlines. The WSJ reports: "The privacy overhaul, painted with a broad brush, left gray areas when it comes to data collected via whistleblowing hotlines, which often channel highly sensitive allegations from corporate staff to management, say privacy and compliance experts and hotline operators." [Wall Street Journal] More reading on GDPR from my colleague Gabrielle Orum Hernández over at LegalTech News: Why blockchain poses an unusual challenge for GDPR compliance. Some good pieces around the web that are worth checking out... ➤➤ "Eli Lilly and other companies are looking to influence how people make decisions and are using 'nudges,' or choice architecture, as a way to promote ethical behavior among their employees. Nudges are one of the ways businesses are deploying behavioral ethics to reaffirm their values and to keep employees focused on questions of ethics and compliance as they engage in their daily work." [Wall Street Journal] ➤➤ Chad Jerdee, Accenture’s general counsel and chief compliance officer, talks with Big Law Business about effective anti-corruption efforts. Among other nuggets: "We also have a global gifts-and-entertainment tool, where people can quickly assess if a gift or entertainment, whether for a government or a non-government client, is appropriate. Sometimes the assessment is purely automated, when, for example, it is clearly within policy and no red flags are raised." [Big Law Business]

➤➤ The U.S. Justice Department is moving to post advisory opinions addressing compliance with the Foreign Agents Registration Act, the decades-old law dusted off and gaining prominence as part of the special counsel's case against Paul Manafort. The advisory opinions, although redacted, would reveal DOJ insight into when a law firm or lobby shop must comply with FARA for ongoing advocacy for a foreign company or government. Covington & Burling's Robert Kelner (at left) told me: “I think this could make a big difference in how firms advise clients on FARA compliance because, up until now, we’ve all had to do a great deal of reading the tea leaves rather than having actual legal precedents to look at. The thing about having precedents is it allows you to not only understand the department’s position but, more importantly. to hold them to it.” [National Law Journal] ➤➤ Mick Mulvaney, sitting down with Bloomberg News, opens up about his plans to reshape the Consumer Financial Protection Bureau—or, as he would call it, the Bureau of Consumer Financial Protection. “We are still Elizabeth Warren’s child ... As long as we’re identified with that one person, we’ll never be taken as seriously as a regulator as we should.”

The Latest Promotions & New Hires

• Blake Lawit has been named new general counsel to LinkedIn. Lawit joined the professional networking platform in 2010 as director of legal. He succeeds Michael Callahan, who this year took a post at Stanford Law School. • Facebook Inc. named Stephen Deadman as data protection officer, an integral position as Europe's new data privacy laws are set to take effect. • Avi Schick, a former president and COO of Empire State Development Corp., has joined Troutman Sanders as head of the firm's government investigations, compliance and enforcement practice in New York. • Financial services data provider RNN Group has hired Jay Carter as general counsel and chief compliance officer. Carter formerly was senior corporate counsel at Resurgent Capital Services. Please send me any new hires, promotions and laterals. Contact me at cbarber@alm.com or 202-828-0315. That's all for this week. We welcome feedback and suggestions, so don't be a stranger.