Compliance Culture

Practical insights for compliance and ethics professionals and commentary on the intersection of compliance and culture.

Selected Dirty Money episodes for corporate compliance

Dirty Money is a documentary series that premiered on Netflix in January 2018.  The series focuses on different case studies of corporate corruption.  The documentaries delve into the political and cultural causes behind the key events in each case, motivations of the individuals involved, and the way that society has been impacted by these situations, some of which remain under investigation or legal challenge.  While all the episodes are interesting to study for general themes of corporate compliance and/or ethical culture and organizational integrity, four of the episodes are especially relevant.

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Round-up on compliance issues with GDPR implementation

GDPR – the General Data Protection Regulation – is intended to establish a stronger, unified system of protection of personal data for individuals and businesses within the European Union. GDPR was adopted directly by the European Parliament, the Council of the European Union, and the European Commission on April 27, 2016. Following a two-year transition period, GDPR will become directly binding and enforceable as of May 25, 2018.

GDPR is an improvement upon the 1995 Data Protection Directive, intended to enhance control by individuals over their own personal data and accountability for organizations in how they collect, handle, and maintain it. The Data Protection Directive was implemented by individual law in each of the EU nations and therefore created a patchwork of standards and practices varying between the member states.   GDPR therefore is intended to simplify and integrate requirements in a more cohesive and competent supervisory model.

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Round-up on FCC compliance

This is the seventh in a series of seven posts about regulatory compliance priorities and enforcement trends.  The first post was about the Commodity Futures Trading Commission (CFTC).  The second post was about the Federal Trade Commission (FTC).  The third post was about the Securities & Exchange Commission (SEC).  The fourth post was about the Food & Drug Administration (FDA).  The fifth post was about the U.S. Department of Agriculture (USDA).  Last week’s post was about the Environmental Protection Agency (EPA).  Finally, today’s post, the final one, will be about the Federal Communications Commission (FCC).

The U.S. Federal Communications Commission (FCC) is the US regulator charged with supervising interstate communications via the mediums of radio, television, wire, satellite, and cable.  The FCC was created by the Communications Act of 1934 to replace the Federal Radio commission, a predecessor regulator with jurisdiction over radio only, and incorporate the telecommunications regulation responsibilities of the Interstate Commerce Commission, in recognition of the advancement of communication and broadcasting technologies.

The modern FCC has six main operating objectives: providing affordable access to broadband internet; maintaining a competitive framework for communications services providers; ensuring the efficiency and efficacy of spectrum (radio); setting media regulations which encourage digitalisation, competition, and diversity; cooperating with public safety and homeland security crisis communications; and contributing to ongoing modernization of the FCC itself as innovation evolves.  Within these objectives, the FCC sets media policy pertaining to broadcast, cable, and satellite television and broadcast radio regarding content, indecency, ownership, and transition to digital.  Interstate telecommunications services including landed telephone, internet, mobile services, and a variety of other radio and broadcasting networks and databases are also within the FCC’s purview.

Certainly the biggest story in recent years involving the FCC has been the changes to the Obama-era Net Neutrality rule.  For a basic but thorough explanation of Net Neutrality, recent changes to its regulatory handling, and the various interests at stake, check out this QuickTake from Bloomberg.

  • Cooperation with the FTC: In the aftermath of the rollback of net neutrality protections ensured by the FCC in its December 2017 vote, much of the regulatory attention has been on assurances that the FTC will step into the gap to pick up on vital enforcement efforts.  The two agencies have agreed to a memorandum of understanding on their collaboration with each other, much of which appears to be based on pre-Net Neutrality classifications which established shared jurisdictions for the FCC and the FTC.  The details of this plan, however, both in its depth and its ultimate application, remain to be seen:  FCC and FTC outline how they’ll cooperate after net neutrality vote   
  • Legal engagement with states: Facing regulatory rollback at the federal level and judging legislative action to be unlikely, some states have started to consider creating their own legal frameworks in absence of a higher supervisory authority providing oversight. California is one state which has been vocal about wanting to fill the regulatory gap created by federal rollbacks by creating state systems to establish accountability, and the topic of Net Neutrality is a hot-button one for states to get involved.  Because the FCC’s order bars states from making their own overt rules about Net Neutrality, lawmakers will need to get creative about using their resources and existing regulatory authority to capture broadband internet service providers (ISPs) in their jurisdiction to force constructive compliance:  In the Wake of the FCC’s Net Neutrality Repeal, California Eyes Its Own Net Neutrality Law  
  • …And cities: California is far from the only state spurred into action by the Net Neutrality change, as over 20 states have mounted various challenges to the decision and/or efforts of their own to require ISPs doing business in their states to observe Net Neutrality.  Cities are engaged also, with New York City officials considering the ways the city can enforce the principles of Net Neutrality on its own:  States and Cities Keep the Battle for Net Neutrality Alive 
  • Corporate political engagement: Changes in regulatory position and public policy on topics of great consumer interest are practical candidates on which corporations can engage and take political position. The Net Neutrality repeal was not only controversial but provoked a wide range of emotional and intellectual reactions from the public.  So, it’s an interesting and compelling corporate social responsibility (CSR) tactic for many companies to engage politically about Net Neutrality and thereby enhance their relevance to and credibility with current and prospective customers.  Burger King got a lot of attention for doing so not only boldly but informatively:  Why is Burger King better at explaining net neutrality than the FCC?  

Post-Net Neutrality rule-making, the FCC will likely seek a new alignment on a broad variety of issues impacting its wide mandate.  As demonstrated by the diverse range of priority topics below, the FCC will have a full regulatory agenda for 2018, and rehabilitation of its public image and its processes through which it engages with consumers, lawmakers, and stakeholders, will be a top priority for the agency.  As discussed in this article, the challenges are inherent in rebounding from 2017 and setting a fresh set of priorities for 2018.

As this series on regulatory enforcement and compliance interests has shown, whatever the current rhetoric on the proper reach of supervision may be, these agencies will always have a huge impact on life and business.  Whether this is through regulatory expansion, delay and inaction, or rollback, the choices made on regulatory agendas have sweeping influence on topics as diverse as investor protection, public health and safety, the environment, consumer rights, and all areas of the securities and financial markets.

 

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MiFID II conduct principles and markets integrity

MiFID II – the second Markets in Financial Instruments Directive – became law across the European Union on January 3, 2018.  It’s intended to overhaul the entire supervisory framework for financial sector organizations who are in the EU, have clients in the EU, or wish to have access to or establish equivalency for the markets there.  Its predecessor law, MiFID I, became law in 2004 and was judged to have not stood the test of time in the aftermath of the global financial crisis.  Therefore the seven year drafting process – from 2010 to 2007 – that culminates in MiFID II implementation this year is aimed to set a higher regulatory standard for investment banks, broker-dealers, and other institutional market participants and their employees.

Much of the attention about MiFID II implementation has focused on the burden to organizations from financial costs, human capital and efforts, and changes in commercial strategy that will be required for firms to work toward compliance with the new laws.  The laws are thousands of pages long and touch nearly every area of the financial services markets.  Some of the major areas of focus in MiFID II are investment research, transaction reporting, and brokerage compensation arrangements.  However, the far reach of banking and securities markets activities into the economy means that laws intended to govern this sector have a broad and dramatic scope as well.

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Travel safety and regulation

Travel safety is one of the most important objectives of the overall supervisory agenda.  Consumer protection and public safety intersect in this topic.  Keeping travellers away from harm and maintaining safe and orderly routes and equipment should be the top priority of any commercial entity providing transportation to consumers.  At the same time, companies working in the transportation sector look to legal and regulatory requirements to set minimum standards for safety infrastructure and motivate investments in technology and human capital improvements.  Regulatory action, or inaction, can therefore have a huge impact on protective measures and responses to threats to safety taken by companies such as airlines, rail transit operators, and private transportation providers.

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Round-up on EPA compliance

This is the sixth in a series of seven posts about regulatory compliance priorities and enforcement trends.  The first post was about the Commodity Futures Trading Commission (CFTC).  The second post was about the Federal Trade Commission (FTC).  The third post was about the Securities & Exchange Commission (SEC).  The fourth post was about the Food & Drug Administration (FDA).  Last week’s post was about the U.S. Department of Agriculture (USDA).  Today’s post will be about the Environmental Protection Agency (EPA).  Finally, the seventh post, on Thursday February 1, will be about the Federal Communications Commission (FCC).

The U.S. Environmental Protection Agency (EPA) is the US regulator charged with supervising and enforcing federal laws concerning human health and the environment.  The USDA was created in 1970 by an order of President Richard Nixon in the course of an executive reorganization that consolidated a number of offices and councils that were created by the National Environmental Policy Act of 1969.  The EPA has never been formally elevated to executive cabinet status but is often accorded this rank operationally anyway. 

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Round-up on USDA compliance

This is the fifth in a series of seven posts about regulatory compliance priorities and enforcement trends.  The first post was about the Commodity Futures Trading Commission (CFTC).  The second post was about the Federal Trade Commission (FTC).  The third post was about the Securities & Exchange Commission (SEC).  Last week’s post was about the Food & Drug Administration (FDA).  Today’s post will be about the U.S. Department of Agriculture (USDA).  Next week’s post, on Thursday January 25, will be about the Environmental Protection Agency (EPA).  Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).

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Round-up on FDA compliance

This is the fourth in a series of seven posts about regulatory compliance priorities and enforcement trends.  The first post was about the Commodity Futures Trading Commission (CFTC).  The second post was about the Federal Trade Commission (FTC).  Last week’s post was about the Securities & Exchange Commission (SEC).  Today’s post will be about the Food & Drug Administration (FDA).  Next week, on Thursday January 18, the post will be about the U.S. Department of Agriculture (USDA).  On Thursday January 25, the post will be about the Environmental Protection Agency (EPA).  Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).

The Food & Drug Administration (FDA) is the US regulator charged with supervising and enforcing federal  laws concerning food, tobacco, dietary supplements, medications and medical treatments and devices, cosmetics, and animal and veterinary products, among other related products and devices related to public health and food safety concerns.  The FDA was created in 1938 by the Federal Food, Drug and Cosmetic Act, which gave the FDA oversight on food, drugs, and cosmetics and now constitutes of the major bodies of federal securities law it is responsible for enforcing.  Other significant statutes within the purview of the FDA – either wholly or partially, in collaboration with other federal supervisory and regulatory entities – include the Public Health Service Act (from 1944, concerning the prevention of foreign communicable diseases within the US) and the Controlled Substances Act (from 1971, creating federal US drug policy).

The food, medical, and veterinary products that fall under the regulatory purview of the FDA represent a significant proportion of the consumer goods imported into, purchased within and used in the United States, meaning that the FDA has broad reach into people’s everyday lives and therefore wide oversight duties to ensure adequate protections.  Food, drugs, cosmetics, and vitamin supplements are the largest categories of consumer products regulated by the FDA.  The FDA’s regulatory powers are broad in scope, including a huge array of business practices, from development, testing, and manufacturing to advertising, labeling, marketing, sales, and supply chain safety.  Enforcement of standards, oversight and monitoring of practices, approval of products, and handling of violations gives the FDA a heavy footprint in its covered industries.

  • Homeopathic drugs: The mandate of the FDA to regulate a variety of medicines and related treatments extends to addressing homeopathic drugs.  These products are widely available to consumers but previously have been lightly regulated.  Given burgeoning consumer protection concerns due to public harm from products that do not have any value as medical treatment and can in fact injure people or make them sick, the FDA is planning to take a more active role in the homeopathic drugs market.  Since the 1980s, the FDA has had a policy of not using the full weight of its enforcement authority with homeopathic drugs because their impacts were thought to be so minor that they could not be dangerous.  However, as more people have started using these homeopathic remedies, the risks and need for protection, especially for infants, children, and elderly people, have grown.  Last year children were sickened and even died from using homeopathic teething remedies sold at CVS due to poisoning from belladonna, which the medicines contained in dangerous proportions.  Testing, approval, oversight practices, or some combination of the above are apparently necessary for ensuring that these products do not hurt people, contain the ingredients they are supposed to in the amounts they should, and can provide medical benefit to support the health-related claims made by the manufacturers to consumers:  FDA to target ‘potentially harmful, unproven’ homeopathic drugs under new proposal
  • Cryotherapy: On a similar note, cryotherapy – immersion in a chamber cooled to as low as -132 degrees Celsius to treat inflammation and all kinds of other ailments and discomforts – has been spreading in popularity and caught the attention of the FDA.  Cryotherapy is often billed as a kind of spa treatment and has won the endorsement of athletes and celebrities for its health benefits.  However, the FDA has reacted skeptically to these claims, especially as people have been injured by unprofessional service providers or attempts to administer cryotherapy “treatments” to themselves.  If people continue to view cryotherapy and other popular science type activities and procedures as giving them some medical or curative benefit, which seems likely, then the need for the FDA to intervene by setting standards and providing oversight will grow alongside the popularity:  The spread of cryotherapy
  • Opioid epidemic: The FDA is well-positioned to contribute to efforts in containing the public health emergency of opioid drug abuse.  The FDA is responsible for overseeing both the number of prescriptions issued and the introduction of drugs to curb and treat addiction.  Overhaul of the system in which opioids are prescribed, and the rationale behind the length of prescriptions, is in the reform jurisdiction of the FDA.  This system would likely be funded by the pharmaceutical companies that make opioids, similar to what is already done to pay for other similar programs covered by the FDA’s enforcement authority.  Prescription intervention as well as the expedition of new versions of drugs to treat addiction will be priorities of the FDA on its upcoming regulatory agenda:  FDA plans to curb prescriptions to fight opioid epidemic
  • Gene therapy: Apart from approval of drugs, the FDA is also tasked with approving medical treatments.  Gene therapy has been a hot topic in bioethics for years, with questions about the use of stem or other cells from humans having dogged the technology’s development for years, but having promising treatments for genetic diseases now finally in its pipeline.  The FDA recently approved the first genetic therapy for an inherited disease, a rare form of childhood blindness.  The price of the approved treatment is currently astronomical, at almost $1 million, but the hope is that the FDA approval will open the door for further development that could lead to lower prices and improved benefits over a lifetime.  FDA openness and speed in considering and approving these technologies will certainly have an encouraging impact on the innovation within the field and the introduction of further treatments using gene therapy and improving upon knowledge and practices around it:  FDA approves first gene therapy for an inherited disease  
  • Food safety and recalls: Finally, the FDA’s food safety and recall programs may be an active area for reform and extended consumer protections going forward.  The FDA’s broad authority for food safety inspections has been critiqued in the past for culminating in uneven enforcement efforts.  Most recently, the Office of the Inspector General at the Department of Health and Human Services and the Government Accountability Office have both exposed shortcomings in the FDA’s enforcement of food safety policies.  Inspections, follow-up on food safety violations, and supervision of and collaboration with state-level regulatory personnel have all been found lacking:  Watchdog audits fire warning shots at the FDA’s food safety program

Addressing these deficiencies in the oversight process, and following with substantive improvement in the food recall process, has major implications for consumer safety.  The recall process in particular is crucial for ensuring that any gaps from the production and distribution processes oversight that are not filled, are caught before contaminated and dangerous food and supplements are sold to consumers.  However, audits have found that the recall process is not up to muster, indicating that they take way too long to kick off and that the FDA does not do enough to compel companies to cooperate with their warning letters and issue recalls:  The FDA Is Still Scary Slow at Food Recalls

Be sure to check back next week for a round-up on USDA regulatory compliance.

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Round-up on SEC compliance

This is the third in a series of seven posts about regulatory compliance priorities and enforcement trends.  The first post was about the Commodity Futures Trading Commission (CFTC).  Last week’s post was about the Federal Trade Commission (FTC).  Today’s post will be about the Securities & Exchange Commission (SEC).  On Thursday January 11, the post will be about the Food & Drug Administration (FDA).  On Thursday January 18, the post will be about the U.S. Department of Agriculture (USDA).  On Thursday January 25, the post will be about the Environmental Protection Agency (EPA).  Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).

The Securities & Exchange Commission (SEC) is the US regulator charged with enforcing federal securities laws and supervising the securities industry, including the market exchanges.  The SEC was created in 1934 by the Securities Exchange Act, which is one of the bodies of federal securities law it is now responsible for enforcing.  Other significant statutes within the purview of the SEC include the Investment Company Act of 1940 (regulating registration and conduct of investment companies), the Investment Advisers Act of 1940 (regulating registration and conduct of investment advisory organizations), and the Sarbanes-Oxley Act of 2002 (regulating accounting practices of public companies and ensuring investor protection).

As indicated by this last piece of legislation, which was introduced into law in the aftermath of a series of corporate scandals such as the Enron bankruptcy, the regulatory scope of the SEC has grown in both breadth and depth as a reaction to financial frauds and crises of the last two decades.  This increased emphasis on the role of the SEC in reaction to these events aligns with the SEC’s mandate, which is three-pronged: investor protection, maintenance of fair, orderly, and efficient markets, and facilitation of capital formation. Ensuring that investors can retrieve and rely on information provided by public companies and in the markets in order to make their investment decisions is a major priority for the SEC.  Maintaining a level playing field in the markets is therefore the SEC’s objective, and preventing or eliminating market abuse and unfair corporate practices contributes to achieving this goal.

From both its Washington, D.C. headquarters and its regional office, the SEC offers education programs, promulgates rules and guidelines, conducts investigations, supervises self-regulatory organizations in the trading and markets industries, oversees disclosures by public companies, and brings enforcement actions in light of suspected violations of federal securities laws and regulations.  Based on this diverse range of activities, the SEC is responsible for exacting competent authority over a wide variety of issues and interests that comprise its regulatory agenda and rule-enforcement practices.

  • Cryptocurrencies: The hot topic of 2017, digital currencies derived from blockchain technology such as bitcoin and Ethereum will likely endure in the public attention in 2018 as well.  Regulators worldwide have sounded a cautious note about the potential risks of the cryptocurrency markets, and widespread legitimate use of the payment service technology as a disruptor to the banking sector is still in its infancy.  There is no unitary approach to protection of users who transact in cryptocurrencies on platforms that do not treat them as customers and supervision of markets where companies use initial coin offerings (ICOs) to offer their tokens without the rigors of securities registration to the public.   Innovation has been prioritized over strict supervision; some balance between the two, rather than supremacy of one over the other, needs to be struck.  The SEC has issued a concise and clear statement on its preliminary opinion of cryptocurrencies, stopping short of bringing them all into their regulatory scope as securities but providing definitive guidance on its views and a clear indication of the direction its future treatment could take:  The SEC Chair’s Cryptocurrency Warning: 5 Things to Know
  • Whistleblowers in Silicon Valley: As discussed in this previous post about the CFTC, the SEC has a powerhouse whistleblower program.  This has enabled the SEC to encourage individuals to step forward to anonymously report misconduct, corruption, and fraud in exchange for employment protections and compensation.  Due to the concentration of the SEC on the securities industry, traditionally these whistleblowers have come from the financial services industry (for an overview of some significant whistleblowers in recent history from this sector, check out this post).  However, there’s a new proving ground for whistleblowers who may stand to take advantage of the SEC’s program: Silicon Valley.  Venture capital firms and huge private companies which take funds from investment companies or individuals – including Uber, Airbnb, and many other digital giants – are all subject to the rule-making and enforcement authority of the SEC:  Silicon Valley could be the next hotspot for SEC whistleblowers
  • Cybersecurity as facilitation of market abuse: 2017 was the year of several very public and damaging scandals involving cybersecurity lapses and data breaches.  It remains to be seen in 2018 how the disclosure and reporting expectations and requirements for companies suffering hacks and intrusions may be refined or expanded in the wake of public outrage.  One concerning theme which emerged in a number of the cases was the perception of or possibility for insider dealing.  This was either due to material knowledge of company executives about the breaches before they were publicized or the theft of financial data by hackers.  The SEC’s Market Abuse Unit’s Analysis and Detection Center will probably keep busy identifying and analysing patterns in trades that could be suspicious due to their connection or temporal proximity to cyberattacks:  SEC, DOJ charge seven with insider trading off stolen bank data
  • Prioritizing investor protection amid regulatory rollback: Ponzi schemes, misrepresentations to investors, and fraudulent corporate practices are not going to vanish from the markets any time soon.  In fact, as business becomes increasingly global and complex in nature, the risks of these events only grows.  At the same time, the overall trend in the United States is toward a regulatory ebb.  The emphasis is on leaner and more targeted regulatory action rather than an expanded or wide-ranging supervisory framework.  The question remains how major cases such as the SEC’s recent suit against Woodbridge Group over a massive Ponzi scheme will be handled amid this regulatory relaxation:  SEC sues bankrupt Woodbridge Group over $1.2 billion Ponzi scheme
  • Enforcement decline: Finally, and on a related note, many recent commentators have pointed to a decline in SEC enforcement actions as evidence that the agency’s regulatory touch will be diminished in the near term.  However, these numbers may be deceptive; indeed, it could be true instead that this perceived decline is not due to regulatory inaction but quite the contrary.  Instead, it could be because of pipeline efficiency in clearing investigation and enforcement actions in the recent period:  Has The SEC Gone Soft Under Trump? Enforcement Actions Are Down, But That’s Deceptive

Be sure to check back next week for a round-up on FDA regulatory compliance.

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Round-up on FTC compliance

This is the second in a series of seven posts about regulatory compliance priorities and enforcement trends.  Last week’s post was about the Commodity Futures Trading Commission (CFTC).  Today’s post will be about the Federal Trade Commission (FTC).  On Thursday January 4, the post will be about the Securities & Exchange Commission (SEC).  On Thursday January 11, the post will be about the Food & Drug Administration (FDA).  On Thursday January 18, the post will be about the U.S. Department of Agriculture (USDA).  On Thursday January 25, the post will be about the Environmental Protection Agency (EPA).  Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).

The Federal Trade Commission (FTC) is the US regulator charged with supervisory authority to protect consumers as well as enforce antitrust laws to avoid monopolies and ensure competitive business practices. Created in 1914 by the Federal Trade Commission Act, the FTC is an independent regulatory agency with the purpose to monitor the markets for anticompetitive developments and investigate and eliminate those where they emerge. Avoiding monopolies, known as trust, was a major political focus at the time the FTC was created and eliminating these large, anti-competitive business entities, known as “trust busting,” was an important priority for President Woodrow Wilson. The creation of the FTC was intended to bring an administrative efficiency to regulating interstate trade so that these trust and antitrust matters could be determined more expediently by the regulatory agency instead of working their way slowly through the courts.

In its current state, the FTC has broad supervisory authority over business practices where consumer protection or competitive processes are involved. The mandates of its various bureaus include protecting consumers against unfair or fraudulent acts or practices, enforcing existing antitrust laws, and reviewing pending mergers. These issues come from consumer and business reports, pre-merger notice filings, press reports, and congressional inquiries.

The FTC’s enforcement actions extend to individual companies, groups of companies, or industries with the main objective of addressing series consumer fraud or harm and preventing anti-competition business developments. With such a far-reaching set of interests, the issues and focuses that characterize the FTC’s regulatory agenda and enforcement priorities are equally diverse.

  • Consumer DNA testing services and privacy: Companies offering DNA testing services for everything from ancestry to genetic diseases to potential allergies to nutritional needs have become very popular in recent years. Most of these services involve consumers using a kit at home to collect samples of hair, skin, or saliva, which they then send to the company. The company then tests the samples itself or sends them to a third-party lab service for testing and then compiles results and analytical data into a slick, branded presentation that is sent back to the customer to study. If these services were performed in the traditional setting of a doctor’s office, the customer would be treated as a patient and would therefore be afforded commensurate protections and have expectations of privacy and informed consent for the collection, use, and storage of their genetic material. In the retail DNA testing service business, however, the duty owed to consumers is more dubious and the practices of companies less closely supervised or disclosed. As the popularity and prevalence of these tests continues, the FTC will likely look to standardize and investigate business practices of these companies:  Senator Calls on FTC to Investigate DNA Ancestry Companies
  • Use of consent decrees: The public and courts are taking a closer look at the often widespread use of settlement agreements by regulatory entities. The FTC typically uses these in enforcement actions in the data-privacy arena when companies experience breaches that puts consumer information security at risk. Consumers having their data stolen in cybersecurity compromises of payment systems or other retail financial data records. Settlement agreements and consent decrees are meant to apply to individual companies in federal-level, case-specific circumstances only, but the legal precedent has evolved for this common law practice to be potentially applied to establish liability under state law as well. In the continued use of consent decrees, the FTC needs to elucidate clearly what standards apply to constitute a violation and when and where liability may exist:  Federal Court’s Embrace Of FTC Data-Breach Settlements As ‘Common Law’ Treads On Due Process
  • Venue shopping for overlapping antitrust review: As noted in this post, major merger and acquisition activity is at a high pitch in the markets right now. Many large companies are seeking to merge with or acquire another and in lots of cases, regulatory review is exhaustive and detailed. Regulators seek concessions, order sales or exclusions to assets, delay transactions, and influence deals in both the press and Congress. In this intense environment, companies looking to merge with or acquire another approach these transactions hoping for the lightest regulatory touch possible. As there are overlapping supervisory schemes, companies can attempt to shop for the friendliest regulator who might green-light the planned transaction. The FTC and the Department of Justice (DOJ) both conduct antitrust reviews. The perception in the marketplace is that the FTC review may be easier to pass or less burdensome in terms of settlement requirements than that of the DOJ. Therefore some large companies – such as CVS in its planned deal with Aetna – would prefer to be subject to the FTC to improve their odds of passing muster:  CVS likely wants FTC antitrust review, not Justice Department, of Aetna deal
  • Occupational licensing reform: Portability of occupational licenses – such as those required for nurses and accountants – has long-been a challenging political and business issue. States have wildly varying educational and experiential standards for achieving and maintaining these licenses, often making it very hard for professionals who need them to work to move between states that have differing licensure requirements. Military spouses in particular often find themselves shut out of work due to family relocations. On the other end, consumers could be potentially harmed due to unmet expectations for professional service standards in states where the licensing schemes are more lax or supervisory enforcement is inadequate compared to others. Short of a concerted effort by multiple individual states, there is an authority vacuum in the task of making a coherent and coordinated system out of this patchwork of rules, tests, and qualifications. The FTC could be the appropriate regulator to intercede in these circumstances and create a reformed federal unifying system that would function to provide access to work as well as protect consumers’ interests:  The Onerous, Arbitrary, Unaccountable World of Occupational Licensing
  • Net neutrality: Finally, nearly any discussion of US federal regulatory compliance hot topics at the end of 2017 is incomplete without mention of one of the biggest themes of the time, net neutrality. As the Federal Communications Commission (FCC) is pulling back from rule enforcement on net neutrality, both the FCC and the public expect the FTC to take up a more prominent role. The obvious areas where the FTC would have jurisdiction would be those concerning information security, principally data privacy, as well as competitive practices of service providers as well as other digital companies. Time will tell what approach the FTC intends to take in filling this enforcement void:  After Net Neutrality: The FTC Is The Sheriff Of Tech Again. Is It Up To The Task?

Be sure to check back next week for a round-up on SEC regulatory compliance.

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