The first 100 days of President Biden's administration, not least its appointments to key leadership positions, suggest that it will investigate and pursue white collar cases much more aggressively than the Trump administration, during which white collar fines and prosecutions significantly declined. Attorney General Merrick Garland, former D.C. Circuit Judge, has emphasized that the prosecution of public corruption and fraud schemes related to COVID-19 will be Department of Justice ("DOJ") priorities. The new Chairman of the Securities and Exchange Commission ("SEC"), Gary Gensler, significantly increased enforcement when he was the head of the Commodities Futures Trading Commission and is expected to do the same at the SEC.
In addition to the Biden administration's anticipated focus on financial and corporate frauds, other likely areas of investigation include CARES Act and False Claims Act violations, as well as health care fraud and associated violations. The National Defense Authorization Act of 2021 should significantly enhance anti-money laundering enforcement by mandating disclosures concerning the true owners of shell companies and by expanding the U.S. government's authority to demand information from non-U.S. banks with correspondent accounts in the U.S. Further, the SEC has made clear that it would heighten its scrutiny of Special Purpose Acquisition Companies—known as SPACs—due to their recent popularity and would also closely monitor the extreme volatility of some stocks’ trading prices created by "meme stock" investing.
Finally, considering President Biden’s interest in protecting the environment we can expect both the DOJ and the SEC to focus on this area. Since Biden's inauguration, the SEC has already issued several statements regarding Environmental, Social and Governance ("ESG") disclosures and candidate Biden called for the creation of an Environmental and Climate Justice Division within the DOJ.
Corporations should prepare by reviewing and, if necessary, revisiting their compliance programs and related policies and procedures. Companies should also carefully document accounting, public disclosure and other potentially market moving decisions, as law enforcement agencies will likely inquire how these decisions were made and whether internal policies and procedures have been followed. Further, companies should specifically revisit disclosures relating to ESG considerations.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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