It’s been more than six months since President Donald Trump stepped into office. In an administration still riddled with job vacancies and with few, if any, major legislative victories, uncertainty remains about the direction of policies and enforcement priorities out of Washington.
At the American Bar Association's annual meeting in New York City on Thursday, attorneys from government and the private sector sat on a panel to discuss what they hope – and suspect – the future of white-collar crime enforcement will be under Trump.
Changes So Far?
“With respect to cases, cases we will be pursuing, nothing at all has changed,” said panelist Robert Zink, acting principal deputy chief of the fraud section at the U.S. Department of Justice. “Really, the primary shift is in personnel,” he said, citing Trump’s recent hiring freeze.
Even so, Zink pointed out that the fraud section at DOJ has a sizable workforce of more than 100 federal prosecutors, who he expects will “continue to bring cases with fervor.” The only significant difference that Zink has seen so far is that there has been an enforcement focus on the opioid crisis, and that’s expected to continue.
From the in-house perspective, change has been felt, according to panelist Mei Lin Kwan‐Gett, deputy general counsel and global head of litigation at Citigroup Inc. “[From] my experience and those of others I talk to, from the election in November until Inauguration Day, there was a huge flurry of activity,” she said. “So, there was a big push, I think, by a number of regulators to try to clean some things up.”
However, Kwan-Gett added, in her view, enforcement seems to have slowed in the spring, especially with larger cases in which the leadership of a head regulator—who, in some instances, has not yet been appointed by Trump— would be needed to determine the case’s direction. “And so, I can’t tell yet how much of the relative lull has been just due to a time of transition and how much of it might actually be due to a change in philosophy,” she said.
Corporate Criminal Liability
In the U.S., a company can be held liable if any employee engages in criminal conduct for the benefit of the company, which is interpreted broadly. Some say too broadly. Is this ripe for change under the new administration?
David Anders, a partner at Wachtell, Lipton, Rosen & Katz, who focuses on white-collar defense said that change in this area would be difficult, but it’s certainly worth trying.
“A big part of what we do on the defense side is, you’re sort of stuck with the fact that if you find wrongdoing from anybody, then you have no ability to sort of defend yourself as the corporation,” he said. “It’s basically just—it’s looking to the discretion of the prosecutors to sort of assess your cooperation and all of the other different factors that are considered.”
Zink’s response was that the state of the law is as it should be. But he believes prosecutors could do a better job of making clear to companies that “there will be tangible, appreciable benefits in the form of declinations and disgorgement if you come in and cooperate and you remediate and you give us everything.”
He added: “I think you will see in the next year to two years, actions reflecting that reality.”
In recent years, investigations, especially those targeting financial institutions, have involved a so-called “regulatory pile-on” in which a number of regulators engage in one matter.
At Citigroup, this has resulted in “numerous resolutions where as many as seven regulators were participating,” Kwan‐Gett said.
“I feel like, back in the day, the regulators and prosecutors had a lot more respect for each other’s turf and even if there was a lot of overlap in turf, if somebody had jumped in already, others would stand down,” she explained. “That’s really not the case anymore,” she said, listing off a number of regulators that routinely engage financial institutions, including the DOJ, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, state AGs, state consumer protection boards and local district attorneys.
It’d be helpful if regulators would aim to be more coordinated and would let one take the lead, but part of the problem, Kwan‐Gett said, is that fining corporations is a revenue source for agencies, so there’s “not as much incentive” for them to back down.
Kwan-Gett said she’s hopeful that there might be some change on this front, but it might be difficult because of the number of constituencies involved. “It’s going to be a slow pendulum swing if the pendulum does manage to swing back,” she explained.