On January 20, 2021, Joseph R. Biden, Jr. was inaugurated as the forty-sixth President of the United States. With the change in Presidential administration, we expect new priorities with regard to compliance and anti-corruption enforcement.
Department of Justice / FCPA Enforcement
President Biden has nominated Merrick Garland as attorney general. Garland currently serves as judge of the United States Court of Appeals for the District of Columbia Circuit but spent a portion of his career at the Department of Justice (DOJ) in rising levels of authority. Under Garland, we expect white collar enforcement, particularly corporate prosecutions, will increase during the next four years.
Although conventional wisdom may have considered the prior Trump administration as pro-business and laissez-faire toward enforcement, the Trump DOJ imposed record penalties for violations of the Foreign Corrupt Practices Act (FCPA). Yet, the eye-popping amount of sanctions masks the fact that fewer new FCPA investigations were begun in each year of Trump’s Presidency. Indeed, although six of the top ten biggest FCPA sanctions were handed down during the last four years, each of those investigations began under the previous Obama administration. In addition, DOJ policy shifts during the past four years have meant a reduction in the number of corporate monitors, even when significant sanctions were imposed. The Biden DOJ is likely to increase the number of new investigations and impose more corporate monitors when it identifies violations.
The DOJ’s recent update to its Evaluation of Corporate Compliance Programs is likely to remain unchanged in the short term. This update focused on companies’ investment in formal compliance programs, ensuring that compliance departments have appropriate access to data, adjust to lessons learned, and perform fulsome due diligence.
Securities and Exchange Commission
Biden also nominated Gary Gensler to run the Securities and Exchange Commission (SEC). Mr. Gensler is the former head of the U.S. Commodity Futures Trading Commission (CFTC). Gensler was known as an aggressive regulator as head of the CFTC. Under Gensler, the CFTC brought a record number of enforcement actions and imposed a record of amount of penalties against financial institutions. He will likely resume where he left off if he takes over the SEC. We expect that the Gensler-led SEC will tighten regulations and increase enforcement of public companies and, specifically, financial institutions. In addition, there was a significant increase in SEC enforcement under the Obama administration from 2009-2016 that tailed off during Trump’s term in office. We anticipate that Biden’s administration will look more like the former and implement tighter regulation and increased enforcement.