Compliance Hot Spots

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C. Ryan Barber

Apr 11, 2018

Welcome to Compliance Hot Spots, our weekly briefing on news and trends on compliance, enforcement and government affairs. Today we're spotlighting a Consumer Financial Protection Bureau attorney’s move to Wells Fargo, and a quick word about Mark Zuckerberg’s congressional hearing premiere. Also, we flag one cryptocurrency firm’s seeming embrace of regulation. Scroll down to see who got the work in some of the big disputes making headlines.

I'm C. Ryan Barber in Washington. As always, thanks for reading, and we value any feedback. Tips or other other observations? I’d love to hear what’s on your plate. Contact me at or 202-828-0315, or follow me on Twitter @cryanbarber.
Let’s get started.


Leaving the CFPB for Wells Fargo? Check.

Wells Fargo & Co. is adding a veteran Consumer Financial Protection Bureau enforcement attorney to its in-house legal team, according to three people familiar with the hire, a move that comes two years after the bank paid the largest fine in the regulatory agency’s history.

Edward Keefe, who joined the CFPB in July 2012 from the law firm Morgan, Lewis & Bockius, will become at least the third agency lawyer to leave for Wells Fargo since its September 2016 settlement over the sales practice scandal: the bank’s opening of more than 2 million potentially unauthorized accounts. Wells Fargo agreed to pay a $100 million fine as part of a settlement with the CFPB.

At Wells Fargo, Keefe will join two CFPB alumni: Yiris Cornwall, a former assistant U.S. attorney who served as a CFPB enforcement attorney from 2013 until last year, and Nina Frant, a former Kirkland & Ellis associate who worked in the bureau’s supervision office. Cornwall and Frant both started working at Wells Fargo in May 2017, according to their LinkedIn profiles.

Keefe will arrive at Wells Fargo at a time when the bank is facing the prospect of a blockbuster enforcement action from the CFPB, this time over auto insurance and mortgage lending abuses. The CFPB is seeking a new record fine against Wells Fargo that could exceed several hundred million dollars, Reuters reported this week. Wells Fargo isn't talking about any would-be enforcement action.

During his nearly six-year tenure at the CFPB, Keefe participated in the agency’s efforts to crack down in deceptive debt-relief schemes. In 2015, he was among the enforcement attorneys on the case against Nationwide Biweekly Administration in San Francisco federal court, alleging that it misrepresented the amount consumers would save on interest by enrolling in the company’s mortgage repayment program.

Last year, U.S. District Judge Richard Seeborg in San Francisco refused to award the $74 million in restitution the CFPB wanted from Nationwide Biweekly Administration and its founder, Daniel Lipsky. Instead, Seeborg ordered them to pay a statutory penalty of $7.3 million.

More recently, Keefe was involved in the CFPB’s case against All American Check Cashing, a check cashing and payday lending company the bureau accused in May 2016 of deceiving customers and failing to refund those who overpaid their loans.

A federal judge in the U.S. District Court for the Southern District of Mississippi has stayed the case while All American Check Cashing, represented by Gibson, Dunn & Crutcher partner Theodore Olson, challenges the constitutionality of the CFPB’s independent, single-director design in the U.S. Court of Appeals for the Fifth Circuit. Olson spearheaded a similar constitutional challenge in the U.S. Court of Appeals for the D.C. Circuit, which upheld the CFPB’s structure in a January ruling.

Keefe entered the All American Check Cashing case in late February, only to withdraw early this month, signaling his departure.


Who Got the Work

➤➤ A Jones Day team including partners Michael Carvin (above) and Christian Vergonis, along with associate Laura Jane Durfee, will challenge the CFPB’s payday loan rule in Austin federal district court. The complaint, filed April 9, argues that the CFPB’s rules for the payday loan industry would “virtually eliminate” a financial lifeline for millions of consumers. The legal challenge comes as the CFPB’s interim leader, Mick Mulvaney, and the rest of the bureau’s Trump-appointed leadership review the rule. But two trade groups, the Community Financial Services Association of America and Consumer Service Alliance of Texas, are apparently unwilling to put the rule’s fate in Mulvaney’s hands.

➤➤ Former landlord for Scott Pruitt, the Environmental Protection Agency administrator. That’s the work the wife of energy lobbyist J. Steven Hart, chairman of the Washington lobbying firm Williams & Jensen, got last year when she leased a bedroom to Pruitt. (Vicki Hart, president and founder of the lobby group Hart Health Strategies Inc., charged Pruitt $50 a day for his periodic stays at the residence on Capitol Hill.) Steven Hart has said he didn’t personally lobby the EPA last year, but clients of his had matters pending before the agency. Bloomberg reports that the lease has handed “fodder to critics who are demanding that Pruitt be fired.”

➤➤ For the task of transforming Mark Zuckerberg into a Capitol Hill snake charmer, Facebook turned to Wilmer Cutler Pickering Hale and Dorr partner Reginald Brown, a seasoned adviser on congressional hearings and investigations. The New York Times reported ahead of this week’s hearings over Facebook’s privacy shortfalls that Brown is leading a Wilmer team prepping the social media giant’s cerebral CEO. On Tuesday, Zuckerberg was joined at the hearing by an entourage of Facebook’s top in-house lawyers and lobbyists, including general counsel Colin Stretch and Joel Kaplan, vice president of U.S. public policy.


Around the Web: Compliance Monitor Secrecy

--> The U.S. Justice Department must reveal the names of unselected corporate compliance monitors who didn't get the work in 15 FCPA cases. That's according to a ruling in a public-records lawsuit in Washington's federal trial court. The Justice Department fought disclosure of these would-be monitors, arguing they had an interest in maintaining privacy. U.S. District Judge Rudolph Contreras didn't buy it. Contreras said “the public interest in disclosure of the information outweighs the weak privacy interests at issue.” The NLJ has more here.

--> Coinbase, a leading cryptocurrency firm, appears to be embracing regulation. The company recently approached the Securities and Exchange Commission about registering as a licensed brokerage firm and electronic trading venue, a move that could pressure other cryptocurrency trading firms to submit to government oversight. “It’s an early phase where the industry leaders understand they have to live within a highly regulated environment,” Richard Levin, a partner at law firm Polsinelli PC, told the Wall Street Journal. “They have to deal with the SEC.”

--> Want to keep a self-styled executive “evangelist” from going public about their past frustrations about conduct that becomes a corporate scandal? Well, one step is to make sure you’re general counsel has a reputation as a steward of the company’s reputation—someone worth turning to with their concerns. “The more specific concern is with internal matters that could affect corporate reputation, and the public/regulatory perception of organizational culture. Without knowledge of an internal “C-Suite” outlet for their concerns, some more socially conscious officers may feel compelled to share their concerns in a public milieu,” writes Michael Peregrine, a Chicago-based partner at McDermott Will & Emery, in Corporate Counsel.

--> So, “your compliance training sucks, here’s how to fix it”: That’s the headline of this FastCompany piece, authored by University of Texas professor Art Markman, looking at how companies can spice up compliance training to make it less of a bore and, thus, more effective staving off violations of law and regulations. Some of the tips: split up the training into more digestible bits, and for god’s sake, stay out of the minutiae and emphasize what employees really need to know.

--> Facebook CEO Mark Zuckerberg got grilled in the Senate yesterday, and he’s in for more today. But that’s just the beginning of the problems for the social media giant. Three former FTC officials told The Washington Post that Facebook could face a record fine over the scraping of billions of users’ personal data on its platform.


Names in the News...

Emin Toro, a tax partner at Covington & Burling, has been nominated for a seat on the U.S. Tax Court. At Covington, Toro has counseled multinational companies through tax controversies. He clerked for D.C. Circuit Judge Karen LeCraft Henderson and later for Justice Clarence Thomas.

Stephen Ryan, a partner at McDermott Will & Emery, has been representing Trump’s personal lawyer, Michael Cohen, through the special counsel investigation into Russian meddling in the 2016 election. That representation is about to get much trickier: Based on a referral from Special Counsel Robert Mueller’s team, the FBI on Monday raided Cohen’s office and the hotel room where he has been staying. Also on Monday, Squire Patton Boggs said it had ended its “strategic relationship” with Cohen.

Which regulator is keeping Silicon Valley up at night? Probably not one in the United States. That distinction may instead go to the European Union’s antitrust chief, Margrethe Vestager, a Dane who has emerged as “the public face of Europe’s effort to rein in technology firms and the de facto global regulator for the U.S.’s tech giants,” the Wall Street Journal reports. Her aggressive moves, including a €2.4 billion fine against Google, has made the United States rethink its approach.

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