2013 Enforcement Predictions

by Michael Volkov

imagesCA10XBFJI always like to make predictions at the beginning of each year. My track record is plus and minus – sometimes on target, sometimes off-target.

The biggest story in the last five years has been the rise of FCPA enforcement.  That story was eclipsed last year by the LIBOR scandal, AML/Sanctions enforcement, off-label marketing and criminal antitrust enforcement.

Looking ahead, I do not expect much to change in the enforcement arena.  Here is what my crystal ball shows:

LIBOR – the number one story for 2013 will be LIBOR prosecutions and settlements.  We have already seen some early settlements in this area, and more are sure to follow.  As the international enforcement continues, more financial institutions will cooperate, leading to more cases against financial institutions.  2013 will be the zenith year for settlements – watch as banks start to fall in line.  The Antitrust and Fraud Divisions will continue to lead in this enforcement area.imagesCATPO1EN

False Claims ActAfter another record-setting year in 2012, the False Claims Act continues to be the primary risk for companies which fall under its jurisdiction.  There is no greater risk for companies – no question.  The government is dedicating more resources to False Claims Act enforcement, securing bigger awards, and ramping up for even greater enforcement in the healthcare sector.  As long as government expenditures for healthcare continue to grow, False Claims Act enforcement will continue to grow.  Service providers and equipment suppliers will be targeted.

Antitrust Enforcement – While all the attention has been given to civil antitrust enforcement, criminal antitrust enforcement had a big year in 2012 with roughly $1.1 billion collected in fines, and a major trial win in California against AU Optronics and several executives, resulting in a $500 million fine against AY Optronics.  Aside from these high-profile wins, the Antitrust Division is continuing its major investigation of the automobile supply industry.  Last year, the Antitrust Division secured a $470 million fine against Yazaki Corporation in this investigation.

FCPA Enforcement — FCPA predictions are hard to make given the number of investigations, reliance on outside counsel to conduct and report on progress, and the competing priorities.  The FCPA bread and butter is corporate internal investigations, voluntary disclosures, and supervision of outside investigations, leading to declinations or settlements.  The FCPA “slow down” was inevitable given Congressional attention, DOJ/SEC’s need to prepare and issue detailed FCPA Guidance and the number of trials which required allocation of trial resources.

FCPA enforcement, however, will rise and probably by a major factor.  Why?  There are a number of major cases under investigation which are likely to be resolved this year.  These include Avon, Weatherford, and Alstom.  These three cases could single-handedly surpass the $1 billion fine amount.  Aside from these significant cases, there are still a number of ongoing major investigations which will be resolved during the year.imagesCA652XZ1

Off-Label Marketing/Anti-Kickback Enforcement – The GSK settlement for over $3 billion was the high-water mark for off-label enforcement.  The Second Circuit’s Caronia decision has thrown a huge monkey wrench into the DOJ off-label enforcement program.  Until this issue is resolved by an en banc and/or Supreme Court decision, DOJ and HHS will have to take a pause in some of their ongoing investigations.  Caronia is not a “slam dunk” decision given the FDA’s competing interest in protecting the integrity of its approval process.  Moreover, Caronia’s facts are limited to government prosecution of an individual for “truthful” statements about a specific off-label use of a drug.  Caronia would not apply to “untruthful” statements about an off-label use of a drug, or statements promoting a disapproved use of a drug.  In the interim, DOJ and HHS will devote greater attention to anti-kickback prosecutions.

Anti-Money Laundering (“AML”)/Sanctions – After a huge year in AML and sanctions enforcement, 2013 will continue to be a big year with even greater focus on export controls and sanctions violations.  The Justice Department is expanding its efforts and building on new initiatives.  I expect that sanctions enforcement against financial institutions and other businesses may be a major story this year, especially with the recent increase in penalties and changes to the trade secrets enforcement laws.

AML enforcement will continue to grow against non-bank financial institutions.  Until more resources are dedicated to this effort, AML enforcement will continue at a relatively low rate against these companies.

imagesCA2N4Y01Consumer Financial Protection Bureau – With the re-election of President Obama and Democrat control of the Senate, the CFPB will continue to spread its wings.  Last year, we saw the beginning of some of its efforts against mortgage, credit card and debt collection companies.  This year, the CFPB will add to the list, fair lending enforcement and target auto lenders for examinations and enforcement.  The CFPB has a unique regime which enables it to conduct detailed examinations and then initiate enforcement actions.  It has the resources and the legal framework to make a huge splash during 2013.  Stay tuned.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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