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The V&E Report
Insights in Government Enforcement and Investigations

FINRA Gives Broker-Dealers New Tips for Spotting Fraud and Money Laundering

On May 6, 2019, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-18 to help broker-dealers recognize and report potential fraud and money laundering. The notice does not alter the current reporting requirements for broker-dealers, but rather provides practical advice by citing 97 red flags that could signal suspicious trading activity.

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  • 15
  • May
  • 2019


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Federal Cybersecurity Regulations Pose New FCA Risk to Defense Contractors

Defense contractors who falsely claim that they are compliant with federal cybersecurity acquisition regulations may face liability under the False Claims Act (“FCA”) in light of a recent decision from the Eastern District of California. The case, United States ex rel. Markus v. Aerojet Rocketdyne Holdings, Inc.,1 demonstrates the substantial liability risk that defense contractors face as they struggle to meet the government’s cybersecurity standards.

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Clarity for Crypto: Commissioner Peirce wants the SEC to Refine Fintech Regulation

On May 9, 2019, SEC Commissioner Hester M. Peirce delivered a speech via video conference to the Securities Enforcement Forum lamenting the Commission’s failure to develop meaningful regulation in the realm of cryptocurrency and emphasizing the need for clear regulation that would be meaningful and not overly burdensome. Commissioner Peirce’s address highlighted several grey areas in the current regulatory landscape regarding cryptocurrency.

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Brace Yourself: DOJ Demonstrates it Can Adapt to Technological Advances in Healthcare Industry

Although it is sometimes difficult for regulators to keep pace with innovation, telemedicine — the use of telecommunication and information technology to provide medical care remotely — is both rapidly evolving and under intense scrutiny. Just last month, DOJ announced charges against 24 individuals in what it touts is the largest telemedicine-related fraud case to-date, demonstrating DOJ’s ability to pursue complex and rapidly changing industries such as this one.

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Investigation Outsourcing: When Do Companies Become Arms of the State?

A recent decision by a district judge in the Southern District of New York demonstrates that when a company’s outside counsel conducts an investigation in connection with a government investigation of the company, the Government’s involvement in shaping, directing and relying upon that investigation will be closely scrutinized.1 If the Government cannot demonstrate that it has not simply “outsourced” its investigative function, the company and its outside counsel may be seen as tools of the Government and arms of the State.

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Updated DOJ Guidance Provides Useful Roadmap for Implementing and Enhancing Corporate Compliance Programs

On Tuesday, the U.S. Department of Justice released perhaps the most comprehensive guidance to date on how prosecutors evaluate the design, implementation, and effectiveness of corporate compliance programs in making charging decisions, framing sentencing recommendations, and determining whether on-going corporate compliance obligations, such as the imposition of a monitor, may be necessary as part of any enforcement resolution. In announcing the release of the Criminal Division’s Evaluation of Corporate Compliance Programs guidance document (“Guidance”), DOJ Criminal Division, Assistant Attorney General Brian A. Benczkowski explained that the updated guidance is intended to align the Fraud Section’s 2017 guidance with other Department instructions and legal standards, and to provide greater transparency into prosecutors’ assessments.

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DOJ Announces First Criminal Charges Against a Distributor in the Fight Against Opioids

Last week, the U.S. Department of Justice took an important step in the fight against opioid abuse, announcing the first criminal charges against a pharmaceutical distribution company for its part in perpetuating the opioid crisis by ignoring red flags of abuse. Charges were brought against Rochester Drug Co-Operative (“RDC”), one of the ten largest pharmaceutical distributors, and two of its executives.

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  • 24
  • April
  • 2019


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Government’s Filing of Complaint Against Private Equity Company Signals New Focus on Private Equity and Other Investors

In a new development in False Claims Act (“FCA”) litigation, the United States Department of Justice (“DOJ”) has filed a complaint-in-intervention naming, among other defendants, California-based private equity firm, Riordan, Lewis & Haden, Inc. (“RLH”). The lawsuit, United States ex rel. Medrano and Lopez v. Diabetic Care Rx, LLC dba Patient Care America, et. al., No. 15-CV-62617 (S.D. Fla.), was originally brought by two former employees of Diabetic Care Rx, LLC d/b/a Patient Care America (“PCA”) acting as relators, but as permitted under the FCA, the United States has intervened in the matter.

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Bid-Rigging Bonanza: DOJ Announces Criminal Charges in Three New Investigations

The Department of Justice (“DOJ”) ended its recent drought of new criminal antitrust cases by bringing bid-rigging charges under the Sherman Act against individuals in three separate cases over the past few weeks.1 These charges, two of which involve guilty pleas, are the first in each case, and confirm the Department’s continued prioritization of public bid-rigging cases and focus on individual accountability in the prosecution of criminal antitrust violations.

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If You Give A Cop Your Passcode... Court Considers Whether Using Voluntarily-Provided Codes Violates the Fourth Amendment

The Colorado Supreme Court held last week that when a defendant voluntarily disclosed his four-digit passcode for what he thought was a limited purpose and an officer used the code to search the defendant’s entire phone, it did not violate the Fourth Amendment. The court reasoned that the defendant “had no legitimate expectation of privacy in the digits of his passcode after providing them to [a police officer].”1

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