Welcome to Compliance Hot Spots, our briefing on compliance, enforcement and government affairs. As always, thanks for reading, and we value any feedback. Tips or other other suggestions? What's on your plate? Contact me at [email protected] or 202-828-0315, or follow me on Twitter @cryanbarber. Let's get started.

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What's Next at NY Attorney General's Office?

New York Attorney General Eric Schneiderman's resignation Tuesday in response to claims of physical abuse raised questions about the future of the office at a time when Democratic state attorneys general are ramping up to fill in the void left by federal regulators' laissez faire turn on enforcement and compliance matters.

Schneiderman has long been a defender of—and advocate for— the Consumer Financial Protection Bureau, and he's been a leading voice on consumer protection among state attorneys general.

Just recently, Schneiderman joined with more than a dozen state AGs in urging the Mulvaney-led CFPB to keep in place the agency's process for issuing so-called civil investigative demands. And the New York attorney general's office teamed with the CFPB to sue RD Legal Funding, accusing the company of scamming 9/11 first responders and National Football League concussion victims out of compensation funds. Schneiderman in December told President Trump that White House Budget Director Mick Mulvaney's past attacks on the CFPB should disqualify him from serving as interim director.

Goodwin Procter partner Tony Alexis, a former CFPB enforcement director, said Tuesday he doesn't expect Schneiderman's resignation to diminish the force of the Empire State's attorney general's office. Noting the joke that “AG” stands for “aspiring governor,” Alexis said the office has historically been aggressive, “going back to Gov. Cuomo and, before that, Gov. Spitzer.”

“I don't think [Schneiderman's resignation is] going to change too much in what they consider to be their hot buttons, what they consider the things they want to focus on,” said Alexis, who joined Goodwin Procter's Washington office last year.

New York Solicitor General Barbara Underwood became acting attorney general after Eric Schneiderman's resignation. My colleague Marcia Coyle spoke with Underwood in 2011 about her long career in the law, and Bloomberg has more here. My colleague Colby Hamilton in New York looks at the succession process in motion now.

“Nothing is going to change,” James Tierney, a former attorney general of Maine, told The New York Times. “No change—zero.”

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No Slowdown on the Sanctions Front

Putting the Russia investigation aside, the Trump administration has been defined by its full-scale push to roll back regulations. Those efforts, hailed by Trump and his top lieutenants for spurring economic growth, have been accompanied by a feeling of a lighter touch from enforcers at federal regulatory agencies.

Not with sanctions. On a recent webcast, lawyers at Gibson, Dunn & Crutcher said the administration has been enforcing sanctions violations with gusto, a trend that flies in the face of the narrative of reined back regulatory scrutiny.

“Despite the theme of less regulation that you've heard, from time to time, in this space there's been dramatically more enforcement and regulation,” said Gibson Dunn partner F. Joseph Warin, co-leader of the firm's white collar defense and investigations group.

As an example, Warin and other Gibson Dunn lawyers pointed to the case of CSE Global, a Singapore-based technology company that paid $12 million last year to settle Treasury Department allegations that a subsidiary committed 104 apparent violations of sanctions against Iran. The case underscored how the Treasury Department's Office of Foreign Assets Control is targeting financial transactions that use U.S. dollars, even if the transaction at issue involves entities outside the United States.

“The lesson here is that the jurisdictional hooks are getting broader and broader,” said Gibson Dunn partner Adam Smith. “And if OFAC wants to find jurisdiction, they're going to be able to do it.”

“We just got a request in in the last two weeks: 'Please tell us every correspondent bank that this money touched.' And it was a European transaction,” Warin added. “They're mining for the jurisdictional hook.”

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Around the Web: Going Out and (Almost) In at the Commissions—and More

Christine Wilson (above) may be confirmed, but the former Delta Airlines executive might spend the summer unemployed while she waits to fill her seat on the Federal Trade Commission. Why the delay? Commissioner Maureen Ohlhausen isn't budging until she is confirmed for a federal judgeship or reaches the end of her term, which expires in September. Ohlhausen, a nominee for the Federal Claims Court, served as the agency's interim leader in the months leading to the confirmation of FTC Chairman Joseph Simons, a former antitrust partner at Paul, Weiss, Rifkind, Wharton & Garrison. Simons on Tuesday named his senior staff, largely keeping many leaders in place. [Politico]

But don't worry about about Commissioner-to-be Wilson. In her financial disclosure, Wilson said she anticipated receiving a severance of between $1 million and $5 million. [National Law Journal]

Meanwhile….

➤➤ In the early months of the Trump administration, Michael Piwowar had his day in the sun as the Securities Exchange Commission's interim chairman. A frequent critic of Dodd-Frank regulations, Piwowar jump-started deregulation for the financial industry, but now he's calling it quits. He plans to leave the agency in July regardless of whether a successor is in the waiting—an unlikely scenario—creating the likelihood of a deadlocked SEC. That'll slow things down. [WSJ]

➤➤ An “international regulatory celebrity.” (Let's please not make that a thing.) That's how the New York Times described Margrethe Vestager, Europe's competition commissioner, who's emerged as the most aggressive regulator of Silicon Valley. She's taking a forward-looking view of competition, focusing her concerns around Apple's planned acquisition of Shazam, for instance, around control over consumer data. “Europe is acting to enforce antitrust laws where the U.S. is not,” said Jeremy Stoppelman, the chief executive of Yelp.

➤➤ Not just across the pond but among U.S. whistleblower advocates, the case involving Barclays CEO Jes Staley has drawn close attention. Staley infamously tried to track down a whistleblower who contacted the Barclays board with concerns about an executive and friend Staley hired for a senior position. Rather than order his termination, British regulators have decided to fine Staley. The amount Staley will be fined has not yet been determined, but the precise figure is irrelevant,” writes Phillips & Cohen partner Erika Kelton, a whistleblower attorney. “The more important takeaway is that the financial watchdogs' decision in effect shelters CEOs who try to retaliate against whistleblowers by allowing them to keep their jobs.” [Forbes]

Let's remember: The United Kingdom does not reward whistleblowers for their help bringing enforcement actions, prompting some firms to view the European country as a hunting ground for tipster clients. [New York Times]

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Who Got the Work

Here we go again: For the second time in more than two years, a federal appeals court has tossed the conviction of former Jefferies Group LLC managing director Jesse Litvak, who is currently serving a two-year prison term for lying to customers about the prices of mortgage-backed bonds. Litvak, represented by Williams & Connolly partner Kannon Shanmugam, was the first of more than a half-dozen traders to be charged with fraud for lying to clients. His 2013 arrest sent shockwaves through Wall Street, prompting resignations and suspensions as financial firms tightened up their sales tactics. [Bloomberg]

The “pharma bro” has yet another legal woe. The former top lawyer and chief compliance officer at Turing Pharmaceuticals has sued the company's former CEO, Martin Shkreli, alleging that he “undertook a campaign of harassment and character assassination” against her. Eve Costopoulos, who served as Turing's general counsel from 2015 to 2017, hired Hach Rose Schirripa & Cheverie partner Daniel Rehns to bring the case, which will play out in Manhattan federal court while Shkreli serves a seven-year sentence for securities fraud. [NY Daily News]

Facebook has turned to former Republican Sen. Jon Kyl, now a lawyer at Covington & Burling, to examine whether the social media giant censors conservative voices. Conservatives have alleged Facebook bias for years. In 2016, the Republican-led Senate Commerce Committee sent a letter to Facebook CEO Mark Zuckerberg with questions about whether conservative voices were being blocked from appearing on the “Trending Topics” feature. [Axios]

Sullivan & Cromwell helped Wells Fargo settle a class action over the bank's sales practice scandal for $480 million, my colleague Ben Hancock at The Recorder reports. “We are making strong progress in our work to rebuild trust, and this represents another step forward,” Wells Fargo CEO Tim Sloan said of the settlement, which requires court approval. Sullivan & Cromwell also advised Wells Fargo in its recent $1 billion settlement with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency over mortgage and auto lending abuses.

M&T Bank's vice president of regulatory affairs, Lauren Tennes, has registered to lobby on banking and financial services regulation. According to her LinkedIn bio, Tennes worked in government relations for Freddie Mac and Sallie Mae before joining M&T Bank in 2014.

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New Hires, Promotions & Nominations

  • Wilmer Hale partner Dan Berkovitz in next in line for a Democratic seat on the Commodity Futures Trading Commission, where he formerly was the Obama-era general counsel. Berkovitz, at Wilmer since 2013, has represented some of the country's biggest financial institutions, according to a newly disclosed financial disclosure report that my colleague Mike Scarcella first reported at NLJ. Berkovitz reported more than $1.18 million in Wilmer partnership income, the report showed.
  • Uber's hired former National Transportation Safety Board chairman Christopher Hart to advise the company. The move comes as the board investigates a collision that killed a woman who was walking across a street in Tempe, Arizona, Bloomberg reports. Uber's internal investigation determined that its sensors spotted the woman, but error-correcting software meant to avoid unnecessary braking directed the car to continue, The Information reports.
  • Checking in with former Federal Reserve member Daniel Tarullo. A decade after the financial meltdown, and a year after resigning from the Fed, the primary architect of post-crisis restrictions on financial firms is back home in Boston, at Harvard, teaching law. His resignation last year, for many, signaled a turn in the tides from to deregulation. [WSJ]
  • Hughes Hubbard & Reed announced Tuesday that it snagged international trade partner Ryan Fayhee from Baker McKenzie. “I once thought—when I was with the DOJ starting in on sanctions work in 2008—that we'd never be busier,” Fayhee said. “Here we are with Iran in the news today, and also Russia and North Korea.”