Whistleblowing Developments: DOJ Corporate Pilot Program, FCA Qui Tam Provision, AMLA (Part 3)

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Nic Bourtin, Head of the Criminal Defense and Investigations Group, and Litigation Associate Sabrina Solow discuss whistleblowing developments, including the DOJ Criminal Division’s Corporate Pilot Program and its recent changes under the new administration.

In this episode of S&C’s Critical Insights, Kamil Shields, a partner in S&C’s Litigation Group, Kyle Mach, a partner in S&C’s Antitrust Group, and Litigation Associate Sabrina Solow discuss the new whistleblower program established by DOJ Antitrust Division. They start off with brief background on antitrust law and then discuss the new whistleblower program and how it reflects a change in the Antitrust Division’s approach.   A preview of the conversation can be found in the Q+A below. Sabrina: Kamil, can you speak to the genesis of the Antitrust Division’s new whistleblower program and how it fits into existing DOJ Antitrust policies?  Kamil: Since the 1990s, the Antitrust Division has had a “leniency policy.” Broadly speaking, when an organization or individual is the first to report that it engaged in a criminal conspiracy, it can receive non-prosecution protection. Under the statute known as “ACPERA,” the first to report these conspiracies can also receive a variety of benefits in related civil litigation as well. The leniency policy is an important enforcement tool for the Antitrust Division. It creates a powerful incentive for companies and individuals to self-report in order to avoid or mitigate criminal prosecution and penalties. Then, on July 8, the DOJ Antitrust Division announced a partnership with the U.S. Postal Service to create a Whistleblower Rewards Program for reporting criminal offenses on “antitrust crimes and related offenses.” Under this program, whistleblowers who voluntarily provide information about antitrust offenses that result in at least a $1 million recovery may be eligible to earn a reward, which is presumptively 15-30 percent of the amount of the fine or recovery.   Sabrina: Kyle, what are the eligibility requirements of this new program? Kyle: There are a few key eligibility requirements we should touch on: (1) the tip must relate to an eligible criminal violation; (2) the whistleblower must provide original information; and (3) there must be a nexus to the U.S. Postal Service. Taking the first requirement first. The whistleblower must provide information relating to an eligible violation under this Antitrust program. It can’t be a tip on just anything.

In this episode of S&C’s Critical Insights, S&C Tax Co-Heads Isaac Wheeler and Davis Wang, along with Tax Counsel Bella Schapiro and Special Counsel Aharon Friedman, continue their discussion on The One Big Beautiful Bill Act. They dive into the policy debates driving the OBBBA changes to green energy and international tax, highlighting opportunities and challenges for taxpayers. They also set out areas that will be a priority for guidance by the Treasury Department and the IRS.  A preview of the conversation can be found in the Q+A below. Isaac: Let’s talk a little bit about green energy and the IRA. I was hearing that some rollback of the IRA was happening, but that the more established technologies like wind and solar should be largely safe, but it’s almost like the opposite happened. Aharon, did something change as part of the negotiations of the bill? Aharon: I think there’s an underlying current amongst Republicans as to wind and solar subsidies needing to be done with. For decades, these industries told Republicans that they need temporary incentives in order to get them off the ground, but at some point in time they would be able to be sufficient on their own and compete in the marketplace. This conversation has been going on for 20 years and I think Republicans started asking more questions as well and just thought it was time to start cutting it off. I also think from a policy perspective, there have been more questions asked on the Republican side of the aisle with regard to how solar and wind, because they’re temporary, affect the grid. Isaac: Let’s move on to regulatory guidance because a big part of what now tax policy moves towards is what do the regulations look like that are interpreting the bills. Bella, do you want to discuss this?  Bella: There’s over 60 calls for regulations by the Treasury for this bill. Some of it is to explain and provide details or rules and some of it is to make the mechanics work. And even beyond those that are specifically authorized in the tax, there are other provisions that will require Treasury to provide guidance and explanations to taxpayers about. So I think it will be interesting to see what they prioritize, what comes out first of how various provisions are interpreted, particularly given the lack of legislative history.

In this episode of S&C’s Critical Insights, S&C Tax Co-Heads Isaac Wheeler and Davis Wang, along with Tax Counsel Bella Schapiro and Special Counsel Aharon Friedman, discuss the background, process and tax implications of The One Big Beautiful Bill Act.  A preview of the conversation can be found in the Q+A below. Isaac: Aharon, was there anything interesting about the timing of The One Big Beautiful Bill, maybe relative to other reconciliation bills? Aharon: I think a good comparison to this bill is the Tax Cuts and Jobs Act or TCJA, which wasn’t signed until December 22, 2017, and I think that relates to a lot of the fundamental differences between the TCJA and the OBBBA. I think a real difference in the process in 2017 was that the bill followed more of a “respecting congressional traditions” with regards to how markups are conducted and how legislation moves. Another key difference was that the Senate Finance Committee actually held the markup in 2017.  They didn’t hold the markup this time around. Also in 2017, there was a formal Conference Committee, which has become increasingly rare in recent decades. This time around the House passed the bill. Isaac: Davis, do you want to discuss “carried interest”? Davis: I don’t think that people thought that there was a need to have this in the legislation. On the other hand, on the campaign trail, President Trump had said that he was inclined to repeal the exception that carried interest had enjoyed.  So, there was always this question of whether carried interest should in fact come back into play. But again, to the surprise of many, not only did it not make it into the legislation, it never touched any of the iterations of the legislation. It was not in the House bill or the Senate bill.

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Litigation Partner Kamil Shields and Litigation Associate Sabrina Solow, discuss a range of whistleblowing developments. They touch on the recent downward trend in SEC whistleblowing enforcement and contrast that against the opposite trend under other programs, in part driven by a growing focus on whistleblowers as a potential means of pursuing investigative priorities. A preview of the conversation can be found in the Q+A below. Sabrina: Kamil, can you start us off with brief background? Kamil: In the U.S., there are a variety of avenues for a whistleblower to consider.  For example, the SEC, Federal Reserve, CFTC, and a provision of the False Claims Act have long provided an avenue for whistleblowers to come forward. More recently, DOJ Criminal and DOJ Antitrust have developed respective whistleblowing programs. Sabrina: We’ve been seeing an incredible amount of coverage on whistleblowing cases, regimes, and proposed legislation.  But against this background of heightened attention to whistleblower activities, we are seeing a downturn in SEC awards.  Annie, can you give some background? Annie: As reported in the past couple of weeks, the SEC has denied over 30 consecutive awards this year between late-April and mid-July. In fact, only about $20 million has been awarded this year.  Although we’re only a little more than halfway through the year, that is a drop in the bucket compared to last year, when the agency awarded over $255 million to 47 individual whistleblowers. This may reflect a change in approach and priorities at the SEC. For example, under the last administration we saw a significant uptick in SEC enforcement actions related to the SEC whistleblower protection rule, Rule 21F-17. Under the current administration, however, we have not seen any SEC whistleblower rule enforcement actions to date.

In this episode of S&C’s Critical Insights, Eric Kadel and Sharon Cohen Levin, Co-Heads of S&C’s National Security Practice, Tom White, Co-Head of the Firm’s International Arbitration and Global Dispute Resolution Practice, and Litigation Special Counsel Andrew DeFilippis, provide an overview on supply chain enforcement and compliance. They explore key enforcement risks stemming from recent tariffs and discuss the potential for civil litigation under the False Claims Act. A preview of the conversation can be found in the Q+A below. Andrew: Customs fraud and tariff evasion are now listed as the Department’s second-highest white-collar criminal enforcement priority. What does that signal about how the government is approaching these issues today? Sharon: It’s a fundamental shift. For years, customs-related violations were typically addressed as regulatory infractions, or occasionally, in egregious cases as criminal prosecutions involving false statements, conspiracy to defraud the government, or smuggling. Those violations didn’t even make the list of priorities. But the posture today is markedly different. DOJ has identified customs and tariffs fraud as a top corporate criminal enforcement priority, signaling a shift for companies with global supply chains. Andrew: What makes the FCA such a powerful statute in the trade context? Tom: The False Claims Act is fundamentally about ensuring the government receives what it's owed. One thing that makes it so potent, especially in the trade space, is the low standard for triggering liability. The FCA doesn’t require proof of specific intent to defraud. Instead, companies can be held liable if they submit false information “knowingly”—which includes acting in reckless disregard or deliberate ignorance of the truth. That’s a lower threshold than what’s required for criminal prosecution under criminal smuggling or IEEPA’s criminal provisions.

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, and Litigation Partner Kamil Shields, discuss recent developments in False Claims Act (FCA) cases, especially in light of the current Administration’s focus. Annie and Kamil provide background on the FCA and explain its role in investigations of and actions focused on alleged fraud in connection with government programs. They also cover recent notable settlements, with recoveries amounting to hundreds of millions of dollars. They also delve into Executive Order 14173, which has implications for the use of the FCA, focusing on antidiscrimination laws. The discussion includes recent court actions and the administration’s emphasis on investigating and penalizing illegal DEI practices in the private sector.  To learn more about risks and opportunities under the FCA in the new tariff environment, read Partner Thomas White and Special Counsel Andrew DeFilippis’ article in Bloomberg Law “New Tariff Environment Poses Big Risk and Opportunity Under FCA.”

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Alex Gross, a partner in the Firm’s Litigation Group, and associate Sabrina Solow explore strategic considerations for a company involved in a trade secrets case. Topics include the role of injunctive relief, the impact of mandatory disclosure regimes and related internal investigations

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Alex Gross, a partner in the Firm’s Litigation Group, and associate Sabrina Solow, discuss steps companies can take in the employment context to protect against disclosure of trade secrets. They explore protections that can mitigate risk when an employee leaves, including electronic measures to limit or disable access to information; policies, procedures, and contractual requirements, such as nondisclosure agreements; and monitoring activities of a competitor who has hired former employees.  They also discuss how to limit the risk of new employees bringing trade secrets from their former employer.  Annie, Alex and Sabrina also discuss the importance of training and culture, including reminding employees that they do not own trade secrets they are privy to or contribute to in their work. 

In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Employment Law Group, Alex Gross, a partner in the Firm’s Litigation Group, and associate Sabrina Solow, explore the interaction between trade secret litigation and non-compete agreements. They discuss how non-compete provisions in employment contracts can help mitigate the risk of employees taking confidential information to competitors and the challenges associated with enforcing non-competes. Annie, Alex and Sabrina also cover the concept of “inevitable disclosure” of confidential information, recent court cases related to non-competes and trade secrets, and the implications of the FTC's efforts to invalidate non-compete agreements on a federal level.