Client Alert Archives

The developments follow mounting concerns in Delaware about “DExit”—the actual and potential departures of Delaware-incorporated corporations from the State for jurisdictions perceived to be more friendly to certain types of corporations.

On February 17, 2025, amendments were introduced in the Delaware legislature intended to both lower Delaware courts’ scrutiny of controlling stockholder transactions and moderate the scope of investors’ access to company books and records. Senate Bill 21 (SB21) proposes amendments to Sections 144 and 220 of the Delaware General Corporation Law (DGCL). The bill’s lead sponsor has stated publicly that the amendments would not apply retroactively.

These developments follow mounting concerns in Delaware about “DExit”—the actual and potential departures of Delaware-incorporated corporations from the State for jurisdictions perceived to be more friendly to certain types of corporations.[1]

Proposed Amendments to Section 144

SB21 proposes amendments to Section 144 of the DGCL that, if adopted, would significantly change how controlling stockholder transactions are reviewed by the court.[2] The amendments also would strengthen the presumption that a public company director is disinterested and independent.

Controller Transactions Other than Going Private Transactions. SB21 would legislatively reverse the Delaware Supreme Court’s recent decision in In re Match Group, Inc. Derivative Litigation, 315 A.3d 446 (Del. 2024). As Gibson Dunn discussed in its April 8, 2024 Client Alert, Match reaffirmed that entire fairness is the default standard of review for corporate acts or transactions involving a controlling stockholder unless procedures are in place satisfying the requirements of Kahn v. M&F Worldwide Corp.,88 A.3d 635, 645 (Del. 2014) (“MFW”), and related case law; Match also held that all members of a special committee must be disinterested and independent to shift the burden or standard of review at the pleading stage. SB21 also lowers the requirements of MFW.

SB21 proposes the following changes to the current common law, as articulated in Match, MFW, and related cases:

Current Common Law	Proposed Amendments
Entire fairness applies to controller acts or transactions approved by either a special committee of independent and disinterested directors or disinterested stockholders, unless the below elements are satisfied.	The business judgment rule applies to controller acts or transactions (other than going private transactions) approved by either a special committee of independent and disinterested directors or disinterested stockholders.
An act or transaction must be conditioned on special committee and disinterested stockholder approval from inception, i.e. before substantive economic negotiations begin.	For disinterested stockholder approval to be effective, the act or transaction must be conditioned on such approval at or prior to the time it is submitted to stockholders.
All members of the special committee are disinterested and independent.	A majority of the members of the special committee are disinterested and independent.
The special committee is empowered to select and retain its own advisors.	The special committee need not be empowered to select and retain its own advisors.
The special committee is empowered to reject the proposed act or transaction.	The special committee is empowered to reject the proposed act or transaction (no change).
The special committee satisfies its duty of care in negotiating the act or transaction.	The special committee approves the act or transaction in good faith.
The act or transaction must be approved by a majority of outstanding voting power of disinterested stockholders.	The act or transaction must be approved by a majority of votes cast by disinterested stockholders.
Disinterested stockholder approval must be uncoerced and fully informed.	Disinterested stockholder approval must be uncoerced and fully informed (no change).

Going Private Transactions. Under the amendments, for the business judgment rule to apply to going private transactions at the pleading stage, such transactions would require informed, uncoerced approval by both a special committee and disinterested stockholders, subject to the other changes to MFW discussed above.
- For public companies, SB21 would define “going private transaction” as a Rule 13e-3 transaction (as defined in 17 CFR § 240.13e-3(a)(3)).
- Otherwise, a “going private transaction” would be one in which all shares of capital stock held by disinterested stockholders are cancelled or acquired (other than those of the controlling stockholder).
Definition of Controlling Stockholder. The amendments propose to define who is a controlling stockholder to address uncertainty in Delaware law regarding who may be a “controlling stockholder.”
- A stockholder with majority voting power is and would be controlling.
- Otherwise, a stockholder with less than majority voting power would be controlling only if it has both (i) power functionally equivalent to majority voting power by virtue of one-third in voting power of the outstanding stock of the corporation entitled to vote (A) generally in the election of directors or (B) for the election of directors who have a majority in voting power of the votes of all directors on the board of directors, and (ii) power to exercise managerial authority over the business and affairs of the corporation.
Exculpation for Controlling Stockholders. The amendments would exculpate controlling stockholders and members of a control group from liability for duty of care violations. The exculpation would automatically apply without any option to opt out.
Disinterestedness and Independence of Public Company Directors. The amendments would define what it means to be “disinterested” for purposes of “disinterested” director or stockholder status. Among other things, for publicly listed companies, a director would be presumed to be a disinterested director with respect to an act or transaction to which he or she is not a party if the board determined that such director is an independent director or satisfies the relevant criteria for determining director independence under any applicable stock exchange rule. This presumption would be more difficult to rebut at the pleading stage, because rebuttal requires “substantial and particularized facts” of a “material interest” or a “material relationship,” as defined in the proposed amendments. Historically, Delaware took a facts-and-circumstances approach to director conflicts (for Delaware law purposes), which introduced uncertainty around which directors would qualify as disinterested and independent under what circumstances.
- Nomination or Election by Interested Person. Under the amendments, an interested person’s nomination or election of a director to the board would not, by itself, evidence that such director, if not a party to an act or transaction, is not a disinterested director. This means that directors designated to a board by a stockholder, for instance, would not automatically be disqualified from being considered independent for Delaware law purposes.

Proposed Amendments to Section 220

Following judicial expansion of stockholder inspection rights in recent years, corporations have increasingly been subjected to invasive demands for an ever-widening range of corporate records, including director, officer, or management communications that in some cases courts have permitted for inspection. SB21 proposes amendments to Section 220 of the DGCL that would narrow the scope of books and records available to stockholders and increase the burden on stockholders for obtaining such records.

Scope of Books and Records. The amendments would limit the definition of “books and records” to the certificate, bylaws, minutes and signed consents of stockholder meetings, formal communications to stockholders as a whole, minutes and resolutions of the board and committees, materials provided to the board and committees, annual financial statements, Section 122(18) (i.e., Moelis) agreements, and director independence questionnaires. Director, officer, and manager communications like emails and text messages are notably absent from this definition.
Relevant Period. The amendments would limit the period of time from which stockholders may inspect books and records to those within three years of the date of the demand.
Demand Requirement. Under the amendments, to obtain inspection, a stockholder demand would be required to describe its purpose and the records it seeks with “reasonable particularity.” At least for the purpose of investigating suspected mismanagement or wrongdoing, this would appear to heighten, if not outright replace, the low “credible basis” standard.
Protections. The amendments would codify the court’s current practice of permitting a company to impose reasonable restrictions on confidentiality, use, and distribution of books and records, and deeming produced materials to be incorporated by reference into any complaint. The latter is important because otherwise stockholders can mislead the court by cherry-picking facts from documents in a complaint without permitting the court to consider the whole document. A company also would be permitted to redact portions of documents that are not specifically related to the stockholder’s purpose.
Court’s Discretion to Expand “Books and Records.” The amendments would prohibit the court from compelling production of materials outside the defined term—e.g., director, officer, or management communications—with a few narrow exceptions. If the amendments are adopted and a company does not have minutes and consents of stockholder meetings, minutes and resolutions of the board and committees, or annual financial statements (and, for public companies, director questionnaires), then the court would be permitted to order production of additional records that are the “functional equivalent” of these materials and “only to the extent necessary and essential” to fulfill a proper purpose.
- Notably, under the amendments, in the event board or committee materials do not exist or are unavailable, the court would not be permitted to order production of additional materials.

More to Come

The legislature published a Press Release about SB21 and Senate Concurrent Resolution 17 (SCR17). SCR17 also directs the Corporation Law Council to report to the governor by March 31, 2025, with recommendations for legislative action that might help balance the fee awards so that they are not overly excessive. These proposed amendments will undoubtedly be subject to public debate in the coming weeks, as some academics and plaintiffs’ firms are objecting to not only the merits of the amendments, but also the process and timing of their consideration by the CLC and Delaware legislature.

Gibson Dunn will continue monitoring these developments as they progress.

[1] For example, following Tesla’s reincorporation in Texas, TradeDesk reincorporated in Nevada, Dropbox filed notice that it is in the process of reincorporating in Nevada, and other controller-led companies announced they are considering reincorporation.

[2] SB21 also would provide a safe harbor for an act or transaction for which a majority of directors are conflicted—for example, decisions regarding director compensation—if such act or transaction is approved by a majority of the disinterested, independent directors or approved or ratified by disinterested stockholders, in each case on a fully informed basis.

The following Gibson Dunn lawyers prepared this update: Ari Lanin, Monica K. Loseman, Brian M. Lutz, Mary Beth Maloney, Julia Lapitskaya, Colin B. Davis, Jonathan D. Fortney, and Mark H. Mixon, Jr.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following Securities Litigation, Mergers and Acquisitions, Private Equity, or Securities Regulation and Corporate Governance practice group leaders and members:

Securities Litigation:
Colin B. Davis – Orange County (+1 949.451.3993, cdavis@gibsondunn.com)
Jonathan D. Fortney – New York (+1 212.351.2386, jfortney@gibsondunn.com)
Monica K. Loseman – Denver (+1 303.298.5784, mloseman@gibsondunn.com)
Brian M. Lutz – San Francisco (+1 415.393.8379, blutz@gibsondunn.com)
Mary Beth Maloney – New York (+1 212.351.2315, mmaloney@gibsondunn.com)
Mark H. Mixon, Jr. – New York (+1 212.351.2394, mmixon@gibsondunn.com)
Craig Varnen – Los Angeles (+1 213.229.7922, cvarnen@gibsondunn.com)

Mergers and Acquisitions:
Robert B. Little – Dallas (+1 214.698.3260, rlittle@gibsondunn.com)
Saee Muzumdar – New York (+1 212.351.3966, smuzumdar@gibsondunn.com)
George Sampas – New York (+1 212.351.6300, gsampas@gibsondunn.com)

Private Equity:
Richard J. Birns – New York (+1 212.351.4032, rbirns@gibsondunn.com)
Wim De Vlieger – London (+44 20 7071 4279, wdevlieger@gibsondunn.com)
Federico Fruhbeck Jr. – London (+44 20 7071 4230, ffruhbeck@gibsondunn.com)
Ari Lanin – Los Angeles (+1 310.552.8581, alanin@gibsondunn.com)
Michael Piazza – Houston (+1 346.718.6670, mpiazza@gibsondunn.com)
John M. Pollack – New York (+1 212.351.3903, jpollack@gibsondunn.com)

Securities Regulation and Corporate Governance:
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, eising@gibsondunn.com)
Julia Lapitskaya – New York (+1 212.351.2354, jlapitskaya@gibsondunn.com)
James J. Moloney – Orange County (+1 949.451.4343, jmoloney@gibsondunn.com)
Lori Zyskowski – New York (+1 212.351.2309, lzyskowski@gibsondunn.com)

Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.

On February 18, 2025, the U.S. District Court for the Eastern District of Texas entered a stay of its January 7, 2025 order that had paused the “Reporting Rule” implementing the Corporate Transparency Act (CTA). On February 19, 2025, the Financial Crimes Enforcement Network (FinCEN) issued guidance that extends the reporting deadline for all reporting companies until at least March 21, 2025. In its guidance, FinCEN also noted that it may further modify this deadline.

Entities that may be subject to the CTA and its associated Reporting Rule that have not filed Beneficial Ownership Information (BOI) reports should consult with their CTA advisors as necessary to understand their obligations now that the CTA and the Reporting Rule are enforceable again, and BOI reports for the vast majority of entities will now be due by March 21, 2025.

On December 3, Judge Mazzant of the U.S. District Court for the Eastern District of Texas ruled that the CTA was likely unconstitutional, issued a nationwide preliminary injunction against enforcement of the law, and postponed the effective date of the Reporting Rule that set filing deadlines for compliance, in Texas Top Cop Shop, Inc. et al. v. Garland et al. (“Texas Top Cop Shop”).[1] After substantial litigation, that order was ultimately stayed by the Supreme Court on January 23, 2025.[2] The Court’s decision was 8–1.

In a separate case decided in early January, but prior to the Supreme Court’s decision to stay the Texas Top Cop Shop order, Judge Kernodle of the U.S. District Court for the Eastern District of Texas also ruled that the CTA was likely unconstitutional, in Smith v. U.S. Department of the Treasury (“Smith”).[3] Judge Kernodle enjoined enforcement of the CTA with respect to the plaintiffs in that case and stayed the effective date of the Reporting Rule nationwide.[4]

On February 5, 2025, the Department of the Treasury asked Judge Kernodle to stay the order in Smith and filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit.[5] Additionally, on February 7, 2025, the Department of Justice filed appellate briefs defending the constitutionality of the CTA in separate cases pending in the Fourth and Fifth Circuits.[6]

On February 18, 2025, Judge Kernodle issued a stay of his January decision in Smith.[7]

On February 19, 2025, FinCEN issued guidance regarding the applicable deadlines now that no court orders bar enforcement of the CTA nationwide.[8] In its guidance, FinCEN extended the reporting deadline for reporting companies to March 21, 2025, except for reporting entities previously granted extensions even beyond March 21, 2025 (for example, because of natural disasters).[9] FinCEN added that during the period between February 19 and March 21, 2025, FinCEN “will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.”[10] FinCEN also stated it intends to revise the Reporting Rule to reduce the burden for lower-risk entities, including many U.S. small businesses.[11]

The government’s request for a stay in Smith, its merits briefs in the Fourth and Fifth Circuits, and FinCEN’s recent guidance, all indicate that the Trump Administration’s Departments of Justice and the Treasury will likely continue defending the constitutionality of the CTA and Reporting Rule going forward. At the same time, FinCEN has indicated openness to revising the Reporting Rule to reduce the burden for some businesses.

While the Reporting Rule is enforceable again now that no judicial stays remain in effect, litigation remains ongoing, and it is still theoretically possible that another court could enjoin enforcement of the law against particular plaintiffs or nationwide. Moreover, Congress could intervene by enacting new legislation: the House of Representatives recently passed a bill seeking to extend the deadline to file BOI reports until January 1, 2026.[12] The Senate has yet to act on the bill.

Entities that believe they may be subject to the CTA and its associated Reporting Rule should closely monitor this matter, and consult with their CTA advisors as necessary, to understand their obligations now that the CTA is enforceable again and BOI reports for most entities are due by March 21, 2025.

For additional background information, please refer to our Client Alerts issued on December 5, December 9, December 16, December 24, and December 27, 2024, and January 24, 2025.

[1] Texas Top Cop Shop, Inc. et al. v. Garland et al., No. 4:24-CV-478, Dkt. 30 (E.D. Tex. Dec. 3, 2024).

[2] Order, McHenry v. Top Cop Shop, Inc., No. 24A653 (U.S. Supreme Court Jan. 23, 2025).

[3] Smith v. U.S. Dep’t of the Treasury, No. 6:24-cv-00336-JDK, Dkt. 30 at 33–34 (E.D. Tex. Jan. 7, 2025).

[4] Id.

[5] Smith v. U.S. Dep’t of the Treasury, No. 6:24-cv-00336-JDK, Dkts. 32, 33 (E.D. Tex. Feb. 5, 2025).

[6] See Community Assocs. Institute v. U.S. Dep’t of the Treasury, No. 24-2118, Dkt. 40 (4th Cir. Feb. 7, 2025); Texas Top Cop Shop, Inc. et al. v. Bondi et al., No. 24-40792, Dkt. 212 (5th Cir. Feb. 7, 2025). Additionally, we note that another district court has now held that the CTA is constitutional. Boyle v. Bessent, No. 2:23-cv-00081, Dkt. 51 (D. Me. Feb. 14, 2025).

[7] Smith v. U.S. Dep’t of the Treasury, No. 6:24-cv-00336-JDK, Dkt. 39 (E.D. Tex. Feb. 17, 2025).

[8] https://fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf. Additionally, nothing in FinCEN’s guidance disturbs the Reporting Rule’s requirements that companies created or registered in 2024 have 90 days to file their BOI reports and companies created or registered in 2025 have 30 days to file their BOI reports. Therefore, any entity created in 2024 whose reporting deadline had not yet passed should have until March 21, 2025 or 90 days after creation or registration to file their BOI reports, whichever is later. Companies created or registered on or after January 1, 2025 will have until March 21, 2025 or 30 days after creation or registration to file their BOI reports, whichever is later.

[9] Id.

[10] Id.

[11] Id.

[12] Protect Small Businesses from Excessive Paperwork Act, H.R. 736 (119th Cong. 2025).

The following Gibson Dunn lawyers assisted in preparing this update: Kevin Bettsteller, Stephanie Brooker, Matt Gregory, Justin Newman, Dave Ware, Shannon Errico, Sam Raymond, and Connor Mui.

Gibson Dunn has deep experience with issues relating to the Bank Secrecy Act, the Corporate Transparency Act, other AML and sanctions laws and regulations, and challenges to Congressional statutes and administrative regulations.

For assistance navigating white collar or regulatory enforcement issues, please contact the authors, the Gibson Dunn lawyer with whom you usually work, or any leader or member of the firm’s Anti-Money Laundering, Administrative Law & Regulatory, Investment Funds, Real Estate, or White Collar Defense & Investigations practice groups.

Please also feel free to contact any of the following practice group leaders and members and key CTA contacts:

Anti-Money Laundering:
Stephanie Brooker – Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)
M. Kendall Day – Washington, D.C. (+1 202.955.8220, kday@gibsondunn.com)
David Ware – Washington, D.C. (+1 202.887.3652, dware@gibsondunn.com)
Ella Capone – Washington, D.C. (+1 202.887.3511, ecapone@gibsondunn.com)
Sam Raymond – New York (+1 212.351.2499, sraymond@gibsondunn.com)

Administrative Law and Regulatory:
Stuart F. Delery – Washington, D.C. (+1 202.955.8515, sdelery@gibsondunn.com)
Eugene Scalia – Washington, D.C. (+1 202.955.8673, dforrester@gibsondunn.com)
Helgi C. Walker – Washington, D.C. (+1 202.887.3599, hwalker@gibsondunn.com)
Matt Gregory – Washington, D.C. (+1 202.887.3635, mgregory@gibsondunn.com)

Investment Funds:
Kevin Bettsteller – Los Angeles (+1 310.552.8566, kbettsteller@gibsondunn.com)
Shannon Errico – New York (+1 212.351.2448, serrico@gibsondunn.com)
Greg Merz – Washington, D.C. (+1 202.887.3637, gmerz@gibsondunn.com)

Real Estate:
Eric M. Feuerstein – New York (+1 212.351.2323, efeuerstein@gibsondunn.com)
Jesse Sharf – Los Angeles (+1 310.552.8512, jsharf@gibsondunn.com)
Lesley V. Davis – Orange County (+1 949.451.3848, ldavis@gibsondunn.com)
Anna Korbakis – Orange County (+1 949.451.3808, akorbakis@gibsondunn.com)

White Collar Defense and Investigations:
Stephanie Brooker – Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)
Winston Y. Chan – San Francisco (+1 415.393.8362, wchan@gibsondunn.com)
Nicola T. Hanna – Los Angeles (+1 213.229.7269, nhanna@gibsondunn.com)
F. Joseph Warin – Washington, D.C. (+1 202.887.3609, fwarin@gibsondunn.com)

Gibson Dunn’s Workplace DEI Task Force aims to help our clients develop creative, practical, and lawful approaches to accomplish their DEI objectives following the Supreme Court’s decision in SFFA v. Harvard. Prior issues of our DEI Task Force Update can be found in our DEI Resource Center. Should you have questions about developments in this space or about your own DEI programs, please do not hesitate to reach out to any member of our DEI Task Force or the authors of this Update (listed below).

Key Developments:

On February 5, the United States Office of Personnel Management (OPM) issued a memo to the heads and acting heads of federal departments and agencies entitled “Further Guidance Regarding Ending DEIA Offices, Programs and Initiatives.” The memo provides guidance related to the federal government’s implementation of President Trump’s recent DEI-related executive orders (EO 14151, EO 14168, and EO 14173). The memo directs agencies to “terminate all illegal DEIA initiatives” and eliminate DEIA “offices, policies, programs, and practices” that unlawfully discriminate in any employment action, including “recruiting, interviewing, hiring, training or other professional development, internships, fellowships, promotion, retention, discipline, and separation.” It also prohibits employee resource groups to the extent that they “promote unlawful DEIA initiatives,” though agency heads “retain discretion” to allow affinity group, cultural, mentoring, and social activities and programs that are not limited in any way based on protected characteristics. The memo further provides that agencies should retain “personnel, offices, and procedures required by statute or regulation to counsel employees allegedly subjected to discrimination, receive discrimination complaints, collect demographic data, and process accommodation requests.” For a more detailed analysis of the memo, see our February 12 client alert.

On February 14, the Attorneys General of 16 states issued joint guidance reaffirming their position on the continued legality of certain DEI initiatives. The guidance states, “diversity, equity, inclusion, and accessibility best practices are not illegal, and the federal government does not have the legal authority to issue an executive order that prohibits otherwise lawful activities in the private sector or mandates the wholesale removal of these policies and practices within private organizations, including those that receive federal contracts and grants.” The guidance also warns that failure to implement adequate non-discrimination and fair employment policies, procedures, and trainings may be used by those states to establish violation of those states’ anti-discrimination laws. Finally, the guidance provides a list of DEI best practices, which, in the AGs’ views, include (among other things): (1) prioritizing widescale recruitment efforts to attract a larger pool of applicants from a variety of backgrounds, (2) setting standardized criteria for evaluating candidates, (3) monitoring the success of policies and practices in attracting and retaining qualified talent, (4) conducting training on topics such as unconscious bias, inclusive leadership, and disability awareness, and (5) creating clear protocols for reporting discrimination or harassment.

On February 13, 2025, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, the Restaurant Opportunities Centers United and the mayor and city council of Baltimore, Maryland moved for a temporary restraining order and a preliminary injunction to prevent the Trump Administration from enforcing two executive orders, EO 14151 and EO 14173. The plaintiffs contend that the executive orders exceed presidential authority, violate the separation of powers and the First Amendment, and are unconstitutionally vague. The plaintiffs contend that they are suffering irreparable harm from the termination of “equity-related grants” and the suppression of speech relating to DEI. The plaintiffs argue that preventing “constitutional, existential, and reputational harm” is in the public’s interest. The government’s response is due February 18, and a hearing is set for February 19.

On February 11, the State of Missouri filed a lawsuit against Starbucks in the Eastern District of Missouri, alleging that Starbucks is violating state and federal anti-discrimination laws. Specifically, the complaint alleges that Starbucks unlawfully ties executive compensation to diversity-and-inclusion-related quotas and metrics; provides discriminatory advancement opportunities through race- and gender-based mentoring programs, training programs, and employee “networks”; and discriminates on the basis of race and sex with respect to its board membership. The complaint raises four claims under Title VII, including (1) unlawful hiring and firing practices, (2) unlawful training programs, (3) unlawful segregation or classification of employees, and (4) unlawful printing or circulation of discriminatory employment and training materials. The complaint also alleges discriminatory contract impairment under Section 1981 and related state-law claims. Missouri argues that it has standing to sue Starbucks in relation to these practices because Starbucks’s practices harm some Missouri residents by discriminating against them, and Missouri could otherwise address this harm through its sovereign lawmaking power. Missouri seeks a declaratory judgment, monetary damages, and injunctive relief, including an injunction prohibiting Starbucks from “unlawfully misrepresenting to job applicants and customers that it does not engage in unlawful discrimination on the bases of race, color, sex, national origin, or ancestry.”

In a February 14 article, CNN’s Nathaniel Meyerson quotes Gibson Dunn’s Jason Schwartz, who described the lawsuit as “one of the first broadside attacks against the full menu of corporate DEI programs.” Meyerson reports that although legal experts agree that “[p]rograms that are not open to all employees because of race or other criteria, any numerical goals or targets, and executive compensation tied to diversity targets” are vulnerable to legal challenge, the lawsuit goes beyond that. Schwartz described some of Missouri’s claims as a “stretch,” noting that the lawsuit “bites off more than it can chew.” Schwartz explained that the suit “paints with a broad brush, arguing that virtually every diversity program is illegal even if open to all.  This is not the law.”

On February 14, 2025, Craig Trainor, Acting Assistant Secretary for Civil Rights in the Department of Education, issued a “Dear Colleague” letter “to clarify and reaffirm the nondiscrimination obligations of schools and other entities that receive federal financial assistance from the United States Department of Education (Department).” The letter explains “the Department’s existing interpretation of federal law,” including that the SFFA decision “applies more broadly” than in the context of admissions decisions, and that federal law “prohibits covered entities from using race in decisions pertaining to admissions, hiring, promotion, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies, and all other aspects of student, academic, and campus life.” The letter states that the Department will take “appropriate measures to assess compliance” and advises “all educational institutions” to ensure compliance with existing law, to “cease all efforts to circumvent prohibitions on the use of race by relying on proxies or other indirect means to accomplish such ends,” and to cease reliance on third-party contractors, clearinghouses, or aggregators used to “circumvent prohibited uses of race.” The letter threatens a “potential loss of federal funding” for noncompliant entities.

Media Coverage and Commentary:

Below is a selection of recent media coverage and commentary on these issues:

The New York Times, “Fearing Trump, Wall Street Sounds a Retreat on Diversity Efforts” (February 11): Rob Copeland of The New York Times reports that Wall Street firms are retreating from their diversity initiatives. Copeland also discusses last month’s letter from 11 Republican state attorneys general to BlackRock, Goldman Sachs, JPMorgan Chase, Bank of America, Citi, and Morgan Stanley.
Wall Street Journal, “Big Banks Are Scrubbing Their Public Mentions of DEI Efforts” (February 17): WSJ’s AnnaMaria Andriotis and Gina Heeb report that U.S. banks are reducing their public support for DEI, following a trend among other large corporations scaling back their DEI efforts. Andriotis and Heep note that among certain major banks, concerns regarding DEI initiatives have intensified after President Trump’s executive order directing federal departments and agencies to investigate these programs. They report that programs exclusively serving or giving preferential treatment to certain racial groups have faced increased scrutiny and are being modified to include broader audiences. For example, the authors predict that college scholarship and recruiting programs, previously for groups historically underrepresented in the financial services industry, will likely be modified to be tied more closely to economic need and other non-demographic factors. The authors report that major banks were slower to scale back DEI initiatives compared to other industries because they have long been criticized for lack of diversity at the executive level.
Reuters, “FCC To Open Probe Into NBC-Parent Comcast Over Promotion of DEI Programs” (February 12): Reuters’ David Shepardson reports that Federal Communications Commission (FCC) chair Brendan Carr sent a letter to Comcast stating that the FCC is opening an investigation into the company’s promotion of diversity, equity, and inclusion programs. According to Shepardson, the FCC’s letter states that it will “shut[] down any programs that promote invidious forms of DEI discrimination.” The letter asserts that there is “substantial evidence” that Comcast is “engaging in the promotion of DEI” and says that the FCC is focusing on Comcast because it covers numerous sectors regulated by the FCC including cable, high-speed internet, broadcast TV stations and wireless offerings. Shepardson reports that Comcast confirmed it had received an FCC inquiry and will cooperate and answer questions. “For decades, our company has been built on a foundation of integrity and respect for all of our employees and customers,” the company said in a statement.
Bloomberg, “Steer Clear of ‘Illegal DEI’ With Leveling—Not Lifting—Programs” (February 10): Writing for Bloomberg, Kenji Yoshino and David Glasgow—professors at NYU School of Law—propose a way to distinguish between illegal and legal DEI under EO 14173. Highlighting that the administration has not defined “illegal DEI,” the professors propose that a line exists between “lifting” DEI and “leveling” DEI. They define the former as programs and policies that provide a “bump” or benefit based on group membership while defining the latter as programs that emphasize merit. To illustrate the difference between the two, the professors give the example of a symphony that wishes to increase the number of women musicians in its ranks: “lifting” efforts involved actively preferencing women in the audition process, while “leveling” efforts included requiring that all musicians audition behind a screen to prevent consideration of gender in the first place. Yoshino and Glasgow characterize “[h]iring set-asides, tiebreaker practices, and tying manager compensation to meeting diversity goals” as “lifting” programs, and say that companies engaged in these kinds of practices “risk being targeted by the new administration.”
The New York Times, “Alarmed, Employers Ask: ‘What is Illegal D.E.I.?’” (February 10): Emma Goldberg of The New York Times reports on how companies are responding to changes in DEI-related law and policy. Goldberg writes that, at least for private companies that are not federal contractors, the law on DEI has not fundamentally changed, but the “spirit of how it is interpreted” and “expected to be enforced” has. She reports that employers are trying to balance in a “grey area” requiring them to retain sufficient diversity efforts to avoid discrimination lawsuits while also avoiding investigation and litigation from opponents of DEI. In another New York Times article also published on February 10, Goldberg buckets companies’ responses to the “multilayered pressure campaign” against DEI as (a) retreating, (b) holding steady, or (c) fighting for DEI programs. She writes that for companies retreating from DEI, the “retreat began before Trump took office” but “ballooned” in the days around President Trump’s inauguration.
Law.com, “With DEI Top of Mind, Black Judges Discuss Growing Up During Segregation, Efforts to Diversify the Profession” (February 10): Ross Todd of Law.com reports on remarks by Ninth Circuit Judge Johnnie Rawlinson and U.S. District Judge Richard Jones at a Black History Month event sponsored by the Ninth Circuit Judicial Historical Society and Federal Bar Association. Judge Rawlinson relayed her experiences growing up in a segregated town and attending segregated schools until high school, when, despite graduating fourth in her class, she was offered jobs as a maid or a sweeper. Judge Rawlinson described how these experiences motivated her to attend college and law school. At the event, she said she wanted to make clear that “DEI does not mean lack of merit. That’s a false narrative.” Judge Rawlinson stated that “DEI has been mischaracterized because all it is is making sure that opportunities are available to all qualified people, and not stemming the pool.” Judge Jones, who grew up in Chicago but moved to Seattle after his father experienced hiring discrimination, was rejected from a large law firm because “the senior partners in the firm [were not] sure how [their] white clients [were] going to react to having a Black lawyer represent them.” At the event, Judge Jones encouraged lawyers to think about “pipeline opportunities” that encourage young people to “inspire and create a dream.”
NPR, “Exclusive: GM, Pepsi, Disney, Others Scrub Some DEI References from Investor Reports” (February 7): NPR’s Maria Aspan reports that a least a dozen large U.S. companies eliminated references to “diversity” and “inclusion” in their most recent annual investor reports.

Case Updates:

Below is a list of updates in new and pending cases:

1. Contracting claims under Section 1981, the U.S. Constitution, and other statutes:

Landscape Consultants of Texas, Inc. v. Harris County, Texas et al., No. 4:25-cv-00479 (S.D. Tex.): On February 5, 2025, Landscape Consultants of Texas, Inc. sued Harris County, Texas and the Harris County Commissioners Court, challenging Harris County’s Minority and Woman-Owned Business Enterprise (MWBE) Program. The plaintiff, a non-MWBE landscaping company, claims it “has been at a significant disadvantage when bidding on landscaping contracts” with the County, because a Harris County ordinance requires that the government grant a certain percentage of contracts to MWBEs. The plaintiff alleges that the MWBE Program is racially discriminatory in violation of Section 1981 and the Fourteenth Amendment because it treats companies bidding for public contracts differently based on the race of the company’s owners.
- Latest update: Defendants’ answer is due on February 27, 2025.
Mid-America Milling Company v. U.S. Department of Transportation, No. 3:23-cv-00072-GFVT (E.D. Ky. 2023): On October 26, 2023, two plaintiff construction companies sued the Department of Transportation (DOT), asking the court to enjoin the DOT’s Disadvantaged Business Enterprise Program, an affirmative action program that awards contracts to minority- and women-owned small businesses in DOT-funded construction projects, with the statutory aim of granting 10% of certain DOT-funded contracts to these businesses nationally. The plaintiffs alleged that the program constitutes unconstitutional race discrimination in violation of the Fifth Amendment. On September 23, 2024, the court granted the plaintiffs’ motion for a preliminary injunction, holding that the plaintiffs were likely to succeed on the merits because the program is not sufficiently tailored to the government’s purported interest and lacks a “logical end point.” The court also held that the plaintiffs have standing based on their allegations that they are “able and ready” to bid on a government contract in the near future. The court denied the defendants’ motion to dismiss pending the resolution of any interlocutory appeal of the injunction order.
- Latest update: The parties filed a joint motion to stay the proceedings on February 10, 2025, due to the change in the presidential administration.
American Alliance for Equal Rights v. American Airlines, No. 25-125 (N.D. Tex. 2025): On February 11, 2025, the American Alliance for Equal Rights (AAER) sued American Airlines, alleging that the company’s suppler diversity program violates Section 1981. AAER alleges that eligibility for American’s supplier diversity program unlawfully depends on race, requiring that businesses “be at least 51% owned, operated and controlled by” minorities, women, veterans, service-disabled veterans, disabled individuals, or members of the LGBTQ community. AAER claims that it has members who are ready and able to apply to the program, but do not meet the diversity eligibility requirements.
- Latest update: On February 12, 2025, American Airlines waived service of summons.

American Alliance for Equal Rights v. Southwest Airlines Co.,No. 24-cv-01209 (N.D. Tex. 2024): On May 20, 2024, American Alliance for Equal Rights (AAER) filed a complaint against Southwest Airlines, alleging that the company’s ¡Latanzé! Travel Award Program, which awards free flights to students who “identify direct or parental ties to a specific country” of Hispanic origin, unlawfully discriminates based on race. AAER seeks a declaratory judgment that the program violates Section 1981 and Title VI, a temporary restraining order barring Southwest from closing the next application period (set to open in March 2025), and a permanent injunction barring enforcement of the program’s ethnic eligibility criteria. On August 22, 2024, Southwest moved to dismiss, arguing that the case was moot because the company had signed a covenant with AAER that eliminated the challenged provisions from future program application cycles. On December 6, 2024, the court granted in part and denied in part Southwest’s motion to dismiss. The court concluded that Southwest’s covenant to eliminate the program rendered moot any claims for declaratory or injunctive relief. However, the court held that it had jurisdiction over the plaintiff’s claims for one cent in nominal damages and allowed those claims to proceed. The court rejected Southwest’s argument that Southwest mooted those claims through an “unsuccessful tender of one cent to [AAER].”
- Latest update: On February 7, 2025, Southwest Airlines answered the complaint, denying allegations of discrimination.

Californians for Equal Rights Foundation v. City of San Diego, No. 3:24-cv-00484 (S.D. Cal. 2024): On March 12, 2024, the Californians for Equal Rights Foundation filed a complaint on behalf of members who are “ready, willing and able” to purchase a home in San Diego, but are ineligible for grants or loans under the City’s Black, Indigenous and other People of Color First-Time Homebuyer Program. Plaintiffs allege that the program discriminates on the basis of race in violation of the Fourteenth Amendment. On June 18, 2024, the City of San Diego and the Housing Authority of the City of San Diego filed a motion for judgment on the pleadings, arguing that the complaint does not include any allegations against it, and instead alleges a “fictitious [agency] relationship” with the other defendants, the Housing Authority of the City of San Diego and the San Diego Housing Commission.
- Latest update: On February 6, 2025, the parties filed a joint stipulation of dismissal, stating that the city had removed the race-based condition from the First-Time Homebuyer Program. On February 7, 2025, the court dismissed the case with prejudice.
American Alliance for Equal Rights v. McDonald’s Corporation et al., No. 3:25-cv-00050 (M.D. Tenn. 2025): On January 12, 2025, the American Alliance for Equal Rights (AAER) filed a complaint against McDonald’s and International Scholarship & Tuition Services, Inc. (ISTS), alleging that defendants operate a college scholarship program that “discriminates against high-schoolers based on their ethnicity” in violation of Section 1981. AAER alleged that the HACER scholarship program, which ISTS administers on McDonald’s behalf, “is open only to Hispanics.” AAER claimed that the program “flatly” bars non-Hispanic students from applying “based on their ethnic heritage” and is therefore unlawful. AAER sought declaratory and injunctive relief barring consideration of race, ethnicity, ancestry, or nationality in consideration of scholarship applications, as well as a preliminary injunction to stop the program from closing the application window for current applicants on February 6, 2025. Gibson Dunn represented McDonald’s in this action.
- Latest update: On January 31, 2025, the parties submitted a joint stipulation of dismissal, stating that McDonald’s will no longer consider applicants’ race and will extend the application deadline until at least March 6, 2025. On February 3, 2025, the court dismissed AAER’s claim with prejudice.

2. Employment discrimination and related claims:

Diemert v. City of Seattle, No. 2:22-cv-1640 (W.D. Wash. 2022): On November 16, 2022, Joshua Diemert, a white man and former employee of the City of Seattle, sued the City, challenging its Race and Social Justice Initiative (RSJI) under the Fourteenth Amendment, Section 1983, and Title VII. He contended that trainings and programs under the RSJI created a hostile work environment with a “pervasive” focus on race. He alleged that he was discriminated against and denied opportunities for advancement as a white man. On August 16, 2024, Seattle moved for summary judgment, arguing that the plaintiff experienced no “negative personnel actions” and that RSJI programing is nondiscriminatory. Seattle also argued that it investigated concerns raised by the plaintiff.
- Latest update: On February 10, 2025, the district court granted Seattle’s motion for summary judgment, holding that a “reasonable juror could not find that the RSJI created an objectively hostile work environment.”

Missouri v. Int’l Bus. Machs. Corp., No. 24SL-CC02837 (Cir. Ct. of St. Louis Cty. 2024): On June 20, 2024, the State of Missouri filed a complaint against IBM in Missouri state court, alleging that the company violated the Missouri Human Rights Act by using race and gender quotas in its hiring and by basing employee compensation on participation in allegedly discriminatory DEI practices. The complaint cited a leaked video in which IBM’s Chief Executive Officer and Board Chairman, Arvind Krishna, allegedly stated that all executives must increase representation of ethnic minorities in their teams by 1% each year to receive a “plus” on their bonus. The complaint also alleged that employees at IBM have been fired or otherwise suffered adverse employment actions because they failed to meet or exceed these targets. The Missouri Attorney General sought to permanently enjoin IBM and its officers from utilizing quotas in hiring and compensation decisions. On September 13, 2024, IBM moved to dismiss the suit, arguing that the “plus” bonus is not a “rigid racial quota,” but a lawful means of encouraging “permissible diversity goals.” IBM also argued that Missouri failed to assert sufficient facts to show that the “plus” bonus influenced any employment decisions in the state. On November 8, 2024, the State of Missouri filed “Suggestions in Opposition” to IBM’s motion to dismiss. Missouri first argued that IBM’s arguments are merits questions that cannot yet be addressed at the motion to dismiss stage. Missouri then argued that if the court considers the merits questions, it should hold that IBM’s racial quotas are unlawful in light of the Missouri Human Rights Act and the Supreme Court decision in Students for Fair Admissions.
- Latest update: On February 10, 2025, the court granted IBM’s motion to dismiss in a one-sentence order without any explanation or reasoning. The court gave Missouri thirty days to amend its complaint.

Grande v. Hartford Board of Education et al., 3:24-cv-00010-JAM (D. Ct. 2024): On January 3, 2024, John Grande, a white male physical education teacher in the Hartford school district, filed suit against the Hartford School Board after allegedly being forced to attend mandatory DEI trainings. He claimed that he objected to the content of a mandatory professional development session focused on race and privilege, stating that he felt “white-shamed” after expressing his political disagreement with the training’s purposes and goals, and that he was thereafter subjected to a retaliatory investigation and was wrongfully threatened with termination. He claimed the school’s actions constitute retaliation and compelled speech in violation of the First Amendment.
- Latest update: On February 5, 2025, the defendants filed a motion for summary judgment, arguing that the plaintiff’s objections to the trainings were made in the course of his official duties as a District employee and therefore were not protected by the First Amendment. They further argued that the District’s interest in effectively administering its professional development sessions outweighed the plaintiff’s speech interests.
Steffens v. Walt Disney Co., No. 25NNCV00944 (Cal. Super. Ct. Los Angeles Cnty. 2025): On February 11, 2025, a white former executive for Marvel Entertainment sued Disney, alleging the company discriminated against him on the basis of race, sex, and age. He alleged he was denied a promotion because of his race and age, and that the Company failed to promote him as retaliation for his objection to “effort[s] to promote presidents to senior vice presidents based on their race and a memorandum that would have referred to employees with the racial signifier ‘BIPOC.’” He brought claims under California state antidiscrimination and unfair business practices laws.
- Latest update: On February 13, the court issued an order to show cause for failure to file proof of service.

3. Actions against educational institutions:

Students Against Racial Discrimination v. Regents of the University of California et al., No. 8:25-cv-00192 (C.D. Cal 2025): On February 3, 2025, Students Against Racial Discrimination (SARD) sued the Regents of the University of California, alleging that University of California schools discriminate against Asian American and white applicants by using “racial preferences” in admissions at all campuses in the UC system in violation of Title VI and the Fourteenth Amendment. SARD alleged it has student members who are ready and able to apply to UC schools but “unable to compete on an equal basis” because of their race.
- Latest update: The docket does not yet reflect that the defendant has been served.
Hooley v. Regents of the University of California et al., No. 3:25-cv-01399 (N.D. Cal. 2025): On February 11, 2025, the mother of a minor high school student sued the Regents of the University of California, alleging that UC San Francisco Benioff Children’s Hospital Oakland discriminates against white students by offering its Community Health and Adolescent Mentoring Program for Success (CHAMPS) internship only to “underrepresented minority students.” The plaintiff alleges that her daughter applied for CHAMPS and was rejected based on her race. The plaintiff challenges the CHAMPS program as violating the Fourteenth Amendment, Title VI, Section 1981, and the California Constitution.
- Latest update: The docket does not yet reflect that the defendant has been served.

4. Challenges to statutes, agency rules, executive orders, and regulatory decisions:

American Alliance for Equal Rights v. City of Chicago, et al., No. 1:25-cv-01017 (N.D. Ill. 2025): On January 29, 2025, AAER and two white male individuals filed a complaint against the City of Chicago and the City’s new casino, Bally’s Chicago, alleging that the City precluded them from investing in the new casino based on their race, in violation of Sections 1981, 1982, 1983, and 1985. Under the Illinois Gambling Act, an application for a casino owner’s license must contain “evidence the applicant used its best efforts to reach a goal of 25% ownership representation by minority persons and 5% ownership representation by women.” Plaintiffs alleged that the casino precluded them from participating in the casino’s initial public offering by limiting certain shares to members of specified racial minority groups.
- Latest update: The defendants waived service on February 3, 2025. An answer is due on March 31, 2025.
Do No Harm v. Gianforte, No. 6:24-cv-00024-BMM-KLD (D. Mont. 2024): On March 12, 2024, Do No Harm filed a complaint on behalf of “Member A,” a white female dermatologist in Montana, alleging that a Montana law requiring the governor to “take positive action to attain gender balance and proportional representation of minorities resident in Montana to the greatest extent possible” when making appointments to the twelve-member Medical Board violates the Fourteenth Amendment. Do No Harm alleged that since ten seats are currently held by six women and four men, Montana law requires that the remaining two seats be filled by men, which would preclude Member A from holding the seat. Following Governor Gianforte’s motion to dismiss, Magistrate Judge De Soto recommended that the case be dismissed for lack of subject matter jurisdiction. Magistrate Judge De Soto found Do No Harm lacked standing because it did not allege “facts demonstrating that at least one Member is both ‘able and ready’ to apply for a Board seat in the reasonably foreseeable future.” For the same reasons, the Magistrate Judge found the case unripe.
- Latest update: On February 5, 2025, the court adopted the Magistrate Judge’s findings and recommendations and dismissed the complaint without prejudice.
National Association of Diversity Officers in Higher Education, et al., v. Donald J. Trump, et al., 25-cv-333 (D. Md. 2025): On February 3, the Mayor and City Council of Baltimore, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, and the Restaurant Opportunities Centers United filed a complaint in the District of Maryland challenging two recent anti-DEI executive orders. The complaint raises six constitutional claims, including claims alleging that the orders violate the First Amendment, Fourteenth Amendment, Spending Clause, and separation of powers. The complaint seeks a declaratory judgment that EO 14151 and EO 14173 are unconstitutional, as well as a preliminary injunction enjoining enforcement of these executive orders.
- Latest update: On February 13, plaintiffs filed a motion for a temporary restraining order (TRO) or, in the alternative, a preliminary injunction to prevent the administration from enforcing the two executive orders, as well as any other memoranda or policy implementing the executive orders. On February 18, the government filed its opposition, arguing: (1) plaintiffs lack standing to challenge the executive orders because they fail to identify any members of their organizations who have been injured and fail to allege a non-speculative injury, (2) plaintiffs’ claims are not ripe for review because they depend on a series of future Executive actions which may not occur as anticipated or at all, (3) plaintiffs are not likely to succeed on the merits of their claim because the executive orders do not violate separation of powers, the First Amendment, or the Fourteenth Amendment since courts have long recognized the President’s authority to regulate contracts and federal funds, and the challenged provisions are tied to federal antidiscrimination law, (4) plaintiffs failed to show irreparable injury attributable to the executive orders, and (5) the public interest weighs against granting plaintiffs’ relief because eradicating discrimination is in the interest of the public. On February 19, plaintiffs filed a reply brief, emphasizing that the President lacks authority to direct federal agencies to terminate grants and contracts simply because they are “equity-related” or to chill plaintiffs’ speech with threats of investigation.

The following Gibson Dunn attorneys assisted in preparing this client update: Jason Schwartz, Mylan Denerstein, Blaine Evanson, Zakiyyah Salim-Williams, Cynthia Chen McTernan, Zoë Klein, Cate McCaffrey, Jenna Voronov, Emma Eisendrath, Felicia Reyes, Allonna Nordhavn, Laura Wang, Maya Jeyendran, Kristen Durkan, Ashley Wilson, Lauren Meyer, Kameron Mitchell, Chelsea Clayton, Albert Le, Emma Wexler, Heather Skrabak, and Godard Solomon.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Labor and Employment practice group, or the following practice leaders and authors:

Jason C. Schwartz – Partner & Co-Chair, Labor & Employment Group
Washington, D.C. (+1 202-955-8242, jschwartz@gibsondunn.com)

Katherine V.A. Smith – Partner & Co-Chair, Labor & Employment Group
Los Angeles (+1 213-229-7107, ksmith@gibsondunn.com)

Mylan L. Denerstein – Partner & Co-Chair, Public Policy Group
New York (+1 212-351-3850, mdenerstein@gibsondunn.com)

Zakiyyah T. Salim-Williams – Partner & Chief Diversity Officer
Washington, D.C. (+1 202-955-8503, zswilliams@gibsondunn.com)

Molly T. Senger – Partner, Labor & Employment Group
Washington, D.C. (+1 202-955-8571, msenger@gibsondunn.com)

Blaine H. Evanson – Partner, Appellate & Constitutional Law Group
Orange County (+1 949-451-3805, bevanson@gibsondunn.com)

New Guidance Likely to Alter the Landscape for Shareholder Engagement

On February 11, 2025, the Staff in the Division of Corporation Finance (“Staff”) of the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) issued updated and new Compliance and Disclosure Interpretations (“C&DIs”)[1] that are likely to significantly impact how investors engage with public companies. These interpretations address beneficial ownership reporting on Schedule 13G vs. Schedule 13D (“13G” and “13D,” respectively), expand the nature and scope of activities the Staff views as “influencing control of the issuer” (which could deter otherwise passive investors who own more than 5% of a company’s voting securities from certain forms of engagement to avoid becoming ineligible to rely on 13G reporting), and could require groups of smaller social activist shareholders to become subject to 13D reporting. The Staff’s recent guidance underscores the agency’s increasing scrutiny of institutional investors’ corporate governance stewardship activities, particularly in the context of environmental, social, and governance (“ESG”) matters.

Key Changes to 13G Filing Eligibility Standards

Shareholders, including those acting as a group, that beneficially own more than 5% of a class of registered voting securities must report their ownership on either a 13G or a 13D. To maintain eligibility to report on 13G instead of 13D,[2] a shareholder must certify that the subject securities “were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer.” A 13D requires more detailed information on a shareholder’s beneficial ownership of and transactions in a subject company’s shares, as well as its plans and proposals with respect to the company and requires prompt amendments for any material changes in the reported information.

13G Filing Eligibility and Shareholder Engagement.

In revised C&DI 103.11, the Staff reaffirmed that a shareholder’s inability to rely on the Hart-Scott-Rodino Act’s exemption from notification and waiting period requirements for an acquisition made “solely for the purpose of investment” would not affect a shareholder’s ability to report on 13G. The Staff emphasized that a shareholder’s ability to report on 13G instead depends on whether its activities suggest an intent to influence control of the company. The guidance reminds investors that such determination necessarily entails a factual analysis of the shareholder’s actions and intentions in relation to “control” as defined under Exchange Act Rule 12b-2.[3] Notably, as shown by the redline that the Staff now provides when it revises its C&DIs, the Staff withdrew its prior guidance that engagement with a company on executive compensation, environmental, social, or other public interest issues, or on corporate governance topics unrelated to a specific change of control, without more, would generally not cause a loss of 13G eligibility.

Actions Constituting a “Purpose or Effect of Influencing Control”.

In new C&DI 103.12, the Staff addresses circumstances that in its view would preclude an investor from reporting on 13G because it held securities with a disqualifying “purpose or effect of changing or influencing control of the issuer.” The interpretation makes clear that a shareholder exerting “pressure” to adopt governance measures, particularly tied to ESG or political policy matters, may be viewed as an attempt to influence control over the company.

When Does Engagement with Management Cross the Line?

The new and revised C&DIs state that engaging with a company’s management on corporate governance or other policy matters could, depending on all the relevant facts and circumstances, result in a disqualification from reporting on 13G. This is particularly relevant for investors whose activities, though intended to push for governance changes or ESG-driven policies, may be interpreted as attempts to influence control. The Staff’s recent interpretation aligns with comments made by SEC Acting Chairman Mark Uyeda, who previously stated that asset managers’ voting policies on ESG matters may qualify as attempts to exert control over management.[4] According to the Staff, investors exerting pressure on management to implement specific measures or changes to a policy would be influencing control over the company. Such examples of exerting pressure over the company include the following:

Subject Matter Engagement: Shareholders engaging with management to specifically call for control-related actions – such as a sale of the company or a significant amount of assets, restructuring, or the election of director nominees other than the company’s nominees – would be disqualified from 13G eligibility solely due to the subject matter of the discussion or communications.
Context of Engagement: Under C&DI 103.12, a “shareholder who discusses with management its views on a particular topic and how its views may inform its voting decisions, without more, would not be disqualified from reporting on a Schedule 13G.” However, “pressuring” management to adopt specific measures or tying support for directors to the adoption of certain proposals (e.g., removal of staggered boards, changes to executive compensation practices, eliminating poison pill rights plans, undertaking specific actions relating to an environmental, social, or political policy, and stating or implying during any such discussions that it will not support one or more of the company’s director nominees at the next annual meeting as a means of “pressuring” a company to adopt a particular recommendation) may also risk the loss of 13G eligibility. “Pressure” can be direct or indirect, express or implied.

SEC Guidance on 13D Group Formation

The Staff’s guidance should be read in conjunction with the SEC’s October 2023 Release,[5] which described examples of activities and/or communications that would not give rise to formation of a Section 13(d) group. According to the Commission, the following scenarios would not give rise to group formation:

Discussions in private or public forums: Meetings between two parties or an independent, free exchange of ideas among shareholders at a conference, without the intent to engage in concerted actions or agreements related to securities acquisition, holding, or disposition, are not considered group activity.
Discussions with company management: Engaging with company management and other shareholders to jointly recommend board structure and composition, without discussing individual directors, expanding the board, or pressuring the board to take specific actions, does not form a group.
Non-binding shareholder proposals: Having conversations about or submitting a non-binding shareholder proposal jointly with others does not constitute group activity.
Conversations with activist investors: Conversations, emails, phone calls, or meetings between a shareholder and an activist investor seeking support for proposals, without further coordinated actions, are not considered group activity.
Announcement of voting intentions: Announcing an intention to vote in favor of an unaffiliated activist investor’s director nominees, without further coordinated activity, does not form a group.

In contrast, a substantial shareholder sharing information with the intent of inducing others to purchase the same stock, where those purchases directly result from the information shared, could raise the possibility of group formation.

These scenarios provided by the Commission offer useful guidance for investors that may communicate with a public company and its shareholders, but do not want to inadvertently become a member of a group.

Implications and Possible Impact of the Staff’s Interpretations

The Staff’s views expressed in the C&DIs foreshadow stricter scrutiny on passive investors’ 13G status and create new risks for investors (or groups of investors) when communicating with management and boards at public companies. The new C&DI introduces the concept of “pressure,” which will be difficult to administer in practice and is, ultimately, a subjective standard. Investors should be mindful of the risk that, if a company believes the investor has crossed the line to “pressure” the company, it may contact the Staff to question whether the investor should be filing on a 13D and provide more details on its beneficial ownership and related transactions, as well as its intentions, including any plans or proposals, with respect to the company. The only example of “pressure” that is provided in the C&DIs is conditioning support for the company’s director nominees at the next election of directors.

While these interpretations should rein in the minority of 13G filers who campaign on various ESG issues subject to a threat of voting against directors, they will likely influence the actions of large institutional investors who in recent years have sought to address ESG matters through their own “board accountability” voting policy standards (which those institutions have in recent years increasingly relied on in lieu of supporting shareholder proposals on such issues). The interpretations also raise the possibility that groups of investors that collectively own more than 5% of a company’s stock, including smaller social activist investors that individually hold less than 5% of a company’s stock, could be viewed as forming a 13D group if they coordinate to urge companies to adopt specific climate-change, diversity, equity and inclusion, or other ESG policies, particularly if backed by pressure through a “vote no” campaign.

The updated C&DIs should prompt investors who are reporting on 13G, as well as smaller activist investors who are not 13D or 13G filers but have signed on to various ESG letter-writing and other campaigns, to reassess their strategies. Passive investors who have traditionally filed on 13G despite pushing for governance or ESG-related changes should now assess whether their actions could be seen as attempts to exert “pressure” and may need to change their approach to protect their 13G eligibility. While it is theoretically possible for investors reporting on 13G to temporarily opt to report on 13D, many mutual funds and other investors face institutional or practical restrictions that make 13D reporting unrealistic. As a result, those investors may seek to avoid or minimize any communications that could be viewed as exerting “pressure” or attempts to exert control. Passive investors who chose to migrate from 13G to 13D in situations where communications relate to control-related issues or rise to the level of “pressure” may be able to revert back to 13G reporting once the shareholder engagement is completed and a vote taken on the matter at hand.

There are other notable collateral, and possibly unintended, consequences of the Staff’s revised interpretations. For example, companies engaged in a proxy contest may find it more difficult to engage with their largest institutional investors, as those investors may be concerned that expressing views on issues arising in the contest could be viewed as pressuring company management and, therefore, triggering 13D reporting. Ironically, if faced with less transparency from their large institutional shareholders, companies may become more reliant on engaging with and attempting to sway the major proxy advisory firms. Even outside of the context of an actual proxy contest, another unintended consequence may be a stifling of dialogue between large institutional investors and companies, a decrease in transparency on how these investors intend to vote, and possibly an increase in abstentions.

Practical Considerations for Investors and Companies

The Staff’s updated guidance on 13G eligibility risks chilling the type of routine engagement that many companies have sought to foster and believe better positions them with their investors to help ward off proxy contests and other forms of traditional activism. With respect to the upcoming proxy season, we understand that some investors have already begun canceling or delaying long-scheduled engagements with companies as they assess the implications of the Staff’s guidance. As a result, companies may need to consider enhancing their disclosures and considering alternative additional solicitation strategies to ensure they are effectively communicating their key messages to investors.

Nevertheless, while the determination of whether an investor is acting with a control purpose or intent will depend on all the relevant facts and circumstances, there are some guideposts that investors and companies should bear in mind:

The C&DI expressly states that a shareholder who discusses with management its views on a particular topic and how its views may inform its voting decisions, without more, generally would not be disqualified from reporting on a 13G.
Discussions around non-binding proposals, such as votes on management’s say-on-pay proposals and discussions with non-proponents regarding shareholder proposals, should present less risk of being viewed as applying pressure on management or attempting to influence control of the company.
Investor responses to company-initiated inquiries regarding the investor’s views on a particular issue, and investor references to other companies’ practices or disclosures that the investor views as favorable, without more, should present less risk of being viewed as applying pressure on management or attempting to influence control of the company. As a result, companies will need to be more proactive in requesting engagement with investors and asking questions about key topics during those engagements.
Companies and investors may explore additional steps to foster productive discussions that avoid creating a mis-impression that an investor is seeking to apply pressure when that is not the investor’s intent. For example, when applicable, some investors might seek to clarify with a company that voting decisions are made on a case-by-case basis, by a committee, or by individual portfolio managers, and therefore that the investor’s engagement team should not be viewed as representing how the investor will vote on a particular matter.
The C&DI notes the context in which an engagement occurs is highly relevant in determining whether a shareholder is holding securities with a disqualifying purpose or effect of “influencing” control of the company and, as such, off-season engagements may present less risk of losing 13G eligibility.

Ultimately, the latest C&DIs are likely to chill institutional investors’ willingness to engage with companies as candidly as in recent years and could lead to unexpected negative votes on director elections, say on pay, or other matters. As a result, companies and boards will need to stay highly attuned to investor sentiment as expressed through other means, such as voting policies and public statements, and seek to maintain open channels of communication year-round to avoid these risks and ensure alignment on key governance and ESG matters. Companies and boards are encouraged to review their shareholder engagement activities, and consult with outside counsel as needed, on specific situations considering the Staff’s new guidance.

Conclusion

The Staff’s latest guidance signals a more stringent approach to shareholder activism, with a new emphasis on engagement as a factor that may cause a shareholder to lose its 13G eligibility. Shareholders who have traditionally been viewed as passive should be more mindful of how their actions (overt or implicit) and communications with management and boards may be seen as constituting “pressure,” particularly with respect to governance, environmental, social, and political policy matters. In many instances, views as to what amounts to “pressure” may be in the eye of the beholder. As a result, we recommend training, clarifying ground rules between parties, and avoiding one-on-one communications between companies and shareholders.

[1] Specifically, the Staff revised Question 103.11 and issued a new Question 103.12 under “Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting.”

[2] Rule 13d-1(b) and Rule 13d-1(c) require the shareholder to certify that the securities were not acquired and are not held with a disqualifying purpose or effect. Any person who acquired beneficial ownership before a company’s voting securities were registered under the Exchange Act can report on 13G pursuant to Rule 13d-1(d) regardless of control over the company.

[3] Exchange Act Rule 12b-2 defines “control” (including the terms “controlling,” “controlled by” and “under common control with”) as “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.”

[4] U.S. Securities & Exchange Comm., Nov. 17, 2022, https://www.sec.gov/news/speech/uyeda-remarks-cato-summit-financial-regulation-111722 (remarks of Comm. Uyeda at Cato Summit on Financial Regulation).

[5] See SEC Release Nos. 33-11253; 34-98704 (Oct. 10, 2023).

The following Gibson Dunn lawyers prepared this update: Ron Mueller, Jim Moloney, Aaron Briggs, Beth Ising, Tom Kim, Brian Lane, Lori Zyskowski, Mickal Haile, and Matt Staugaard.

Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, or any of the following lawyers in the firm’s Securities Regulation and Corporate Governance, Capital Markets, Mergers and Acquisitions, or Private Equity practice groups:

Securities Regulation and Corporate Governance:
Aaron Briggs – San Francisco (+1 415.393.8297, abriggs@gibsondunn.com)
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, eising@gibsondunn.com)
Thomas J. Kim – Washington, D.C. (+1 202.887.3550, tkim@gibsondunn.com)
Brian J. Lane – Washington, D.C. (+1 202.887.3646, blane@gibsondunn.com)
Julia Lapitskaya – New York (+1 212.351.2354, jlapitskaya@gibsondunn.com)
James J. Moloney – Orange County (+1 949.451.4343, jmoloney@gibsondunn.com)
Ronald O. Mueller – Washington, D.C. (+1 202.955.8671, rmueller@gibsondunn.com)
Michael A. Titera – Orange County (+1 949.451.4365, mtitera@gibsondunn.com)
Geoffrey E. Walter – Washington, D.C. (+1 202.887.3749, gwalter@gibsondunn.com)
Lori Zyskowski – New York (+1 212.351.2309, lzyskowski@gibsondunn.com)

Capital Markets:
Andrew L. Fabens – New York (+1 212.351.4034, afabens@gibsondunn.com)
Hillary H. Holmes – Houston (+1 346.718.6602, hholmes@gibsondunn.com)
Stewart L. McDowell – San Francisco (+1 415.393.8322, smcdowell@gibsondunn.com)
Peter W. Wardle – Los Angeles (+1 213.229.7242, pwardle@gibsondunn.com)

Private Equity:
Richard J. Birns – New York (+1 212.351.4032, rbirns@gibsondunn.com)
Ari Lanin – Los Angeles (+1 310.552.8581, alanin@gibsondunn.com)
Michael Piazza – Houston (+1 346.718.6670, mpiazza@gibsondunn.com)
John M. Pollack – New York (+1 212.351.3903, jpollack@gibsondunn.com)

The Court of Appeal judgment means that States can be prevented by the doctrine of issue estoppel from relitigating state immunity issues before the English courts if those issues have already been decided in another forum. As such, the judgment provides a potential shortcut through otherwise lengthy and expensive proceedings on questions of state immunity.

Executive Summary

On 12 February 2025, the UK’s Court of Appeal issued an important ruling in the area of judgment and arbitral award enforcement: Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA 108 (the CA Judgment).

The CA Judgment affirms the High Court’s earlier decision (the HC Judgment)[1] that the doctrine of issue estoppel can apply to arguments on state immunity. The decision is especially important in the field of judgment and award enforcement because, according to the CA Judgment, those seeking to enforce against a State can rely upon prior decisions—including those of foreign courts—in deciding issues that underpin a claim for state immunity. That is subject to establishing (i) the standard common law requirements for an issue estoppel,[2] and (ii) the requirements for recognition of a foreign judgment issued against a foreign State set out in s. 31 of the Civil Jurisdiction and Judgments Act 1982 (the CJJA).[3]

The CA Judgment means States will be prevented from relitigating certain state immunity issues before the English courts so that an English court can base its decision as to the existence of state immunity on an issue estoppel arising from the decision of a foreign court. As such, it provides a potential shortcut through otherwise lengthy and expensive proceedings on questions of state immunity.

Relevant Background

The claimants in the case (the Hulley Claimants) obtained three materially identical arbitral awards (the Awards) against Russia in 2014. The Awards ordered Russia to pay damages exceeding USD 50 billion (plus interest) for Russia’s violations of the Energy Charter Treaty stemming from Russia’s unlawful expropriation of Yukos Oil Company in which the Hulley Claimants were majority shareholders. Following the issuance of the Awards, a sprawling set of set-aside and enforcement proceedings has unfolded across multiple jurisdictions.

As to the set-aside proceedings: in 2014, Russia applied to set the Awards aside in the courts of the arbitral seat, the Netherlands. The Awards were set aside at first instance by the Hague District Court in 2016 on jurisdictional grounds because it found that there was no binding arbitration agreement between the Hulley Claimants and Russia.[4] However, the Hulley Claimants successfully appealed that decision, and the Awards were re-instated by the Hague Court of Appeal in 2020.[5] Russia then appealed that decision to the Dutch Supreme Court,[6] which, in 2021, upheld most of the Hague Court of Appeal’s findings but remitted one issue to the Amsterdam Court of Appeal for further consideration.[7] According to the CA Judgment, while the Amsterdam Court of Appeal has ruled in the Hulley Claimants’ favour on the outstanding issue, a further appeal to the Dutch Supreme Court remained pending as of the date of the CA Judgment.[8]

Meanwhile, in 2015, before the Hague District Court had set the Awards aside, the Hulley Claimants had applied for recognition and enforcement of the Awards in the UK. Those proceedings were then stayed by consent following the set-aside decision of the Hague District Court in 2016.[9] After the Dutch Supreme Court judgment was handed down in 2021, the stay was lifted partially and solely for the purpose of resolving Russia’s state immunity defence (emanating from jurisdictional issues). Directions were given by Mr Justice Butcher for determination of certain preliminary issues centred around whether Russia was precluded, by reason of an issue estoppel arising out of the Dutch courts’ judgments, from arguing that the arbitral tribunal did not have jurisdiction.

The core of the Dutch courts’ jurisdictional finding was that, contrary to Russia’s submissions, there was a binding arbitration agreement between the Hulley Claimants and Russia. Consequently, in the English proceedings considering these preliminary jurisdictional issues, the Hulley Claimants argued that the Dutch courts’ determination on jurisdiction also resolved the question of whether the arbitration exception under s. 9 of the UK State Immunity Act 1978 (the SIA)[10] applied; Russia counterargued that that question had to be the subject of further consideration de novo by the English courts.[11]

The High Court Judgment

The preliminary jurisdictional issues were the subject of a two-day hearing before Mrs Justice Cockerill DBE on 4–5 October 2023, and the HC Judgment was handed down on 1 November 2023.

Cockerill J ruled in favour of the Hulley Claimants in reliance of the Dutch courts’ jurisdictional determinations. She held that the SIA is subject to procedural and substantive common law rules, including issue estoppel, and there was no principle of law that issue estoppel could not arise in the context of public international law (such as in relation to the interpretation of an international treaty).[12] She also held that, in order for an issue estoppel to arise from a foreign judgment issued against a foreign State, the requirements for recognition of such judgments, contained in s. 31 of the CJJA, must also be satisfied.[13]

Applying those principles, Cockerill J found that the Dutch Supreme Court’s 2021 decision—dismissing Russia’s challenge to the Awards and finding a binding agreement to arbitrate—created an issue estoppel. Russia was therefore estopped from re-arguing before the English courts the question of whether it had agreed to submit the dispute to arbitration. Consequently, Cockerill J dismissed Russia’s challenge to the jurisdiction of the English courts on the grounds of state immunity.

The Court of Appeal Judgment

Russia appealed the HC Judgment to the Court of Appeal on five grounds,[14] which were distilled down to a single primary issue: when a foreign court has decided that a State has agreed in writing to submit a dispute to arbitration, and the usual conditions for the application of issue estoppel are satisfied, can: (a) the English court treat that decision as giving rise to an issue estoppel, or (b) must it determine the issue for itself (i.e., de novo) without regard to the decision of the foreign court?

The appeal was heard on 15 January 2025 and the CA Judgment was handed down on 12 February 2025. Lord Males, Lord Lewison, and Lord Zacaroli unanimously dismissed Russia’s appeal, with Lord Males delivering the lead judgment.

The Court of Appeal noted that, while the SIA sets out comprehensively the exceptions to state immunity (in ss. 2 to 11 of the SIA), it does not prescribe how the English court should decide whether any of the exceptions applies in any given case.[15] That question must be decided by applying the ordinary principles of English law—both substantive and procedural—and those principles include the principle of issue estoppel.[16]

Thus, when Cockerill J had decided to give effect to an issue estoppel arising from the Dutch Supreme Court’s 2021 judgment, she had not (as Russia had maintained) declined to determine whether Russia had agreed to submit the underlying dispute to arbitration. Instead, the Judge had determined that Russia had so agreed, applying the substantive principle of issue estoppel. In short: the relevant question had been determined by the previous decision of a court of competent jurisdiction (i.e., the Dutch Supreme Court in 2021), which the Court of Appeal confirmed to be conclusive on the issue in question.[17]

The Court of Appeal also rejected Russia’s arguments that issues of state immunity and/or treaty interpretation constituted “special circumstances” militating against the application of issue estoppel in any event. In doing so, the Court of Appeal noted that to give effect to the issue estoppel arising from such a judgment would be in the interests of justice as it would: (i) avoid putting the Hulley Claimants to the trouble and expense of litigating the relevant issue again, and (ii) be in accordance with the important public policy that arbitral awards, even against sovereign States, “should be honoured without delay and without the kind of trench warfare seen in the present case”.[18]

Comment

The CA Judgment is significant. It confirms that determinations of foreign courts—in particular, of the courts of the arbitral seat—can give rise to an issue estoppel when English courts are deciding the same issues within the context of a sovereign immunity defence. In practice, it is often the case that the set-aside proceedings at the seat of the arbitration will settle the question of whether the tribunal in question had jurisdiction (i.e., effectively the very same question that arises under s. 9 of the SIA as to whether the arbitration exception applies). The CA Judgment, thus, paves the way for award creditors to rely upon such final determinations of foreign courts to cut short a State’s assertion of adjudicative immunity in enforcement proceedings before the English courts.

Accordingly, the CA Judgment means that: (i) the timeline for obtaining an enforceable recognition and enforcement order against a State (entitling the award creditor to start the execution process against the State’s assets) can be much shorter, and (ii) the additional costs and expenses of re-running complex and already-decided jurisdictional arguments before the English courts can be avoided.

On the whole, the CA Judgment is positive news for parties looking to enforce awards against foreign States in the UK and re-affirms the UK’s pro-enforcement stance in accordance with other recent decisions.[19]

We note that the CA Judgment may be subject to a further appeal to the UK Supreme Court.

[1] Hulley Enterprises Ltd & Ors v The Russian Federation [2023] EWHC 2704 (Comm).

[2] Being that (i) the judgment (which is alleged to form the basis of the issue estoppel) must have been given by a foreign court of competent jurisdiction; (ii) the judgment (which is alleged to form the basis of the issue estoppel) must be final and conclusive and on the merits; (iii) there must be identity of parties; (iv) there must be identity of subject matter (i.e., the issue decided by the foreign court must be the same as the one arising in the English proceedings); and (v) “special circumstances”, militating against the application of issue estoppel, must not exist (see CA Judgment, paras. 36, 41).

[3] Being that (i) the judgment (which is alleged to form the basis of the issue estoppel) would be recognised and enforced if it had not been given against a State; and (ii) that the foreign court would have had jurisdiction in the matter if it had applied rules corresponding to those applicable to such matters in the UK in accordance with ss. 2–11 of the State Immunity Act 1978 (see CA Judgment, paras. 23, 72–76).

[4] CA Judgment, para. 8.

[5] CA Judgment, para. 9.

[6] Raising challenges as to the conduct of the arbitration alongside its jurisdictional objections.

[7] CA Judgment, para. 11. The one issue that had been remitted to the Amsterdam Court of Appeal was whether the Awards were vitiated by fraud as a result of the Hulley Claimants having (allegedly) effectively bribed a witness to give evidence in their favour and failed to disclose key documents.

[8] CA Judgment, para. 15.

[9] CA Judgment, paras. 7–8.

[10] Section 9(1) of the SIA provides that “[w]here a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration”.

[11] CA Judgment, para. 12.

[12] HC Judgment, paras. 19–40, 53–55.

[13] HC Judgment, paras. 41–48.

[14] The five grounds of appeal advanced by Russia were: (1) issue estoppel is not applicable in respect of a foreign judgment against a state, not least on an issue of state immunity; (2) there is no scope for issue estoppel to apply when determining whether state immunity is available under the SIA; (3) s. 31 of the CJJA is not available as an “overlay” for a common law issue estoppel determination; (4) special circumstances militate against the application of issue estoppel in any event because of (i) the extant fraud challenge wherein the Awards are liable to be set aside; (ii) the existence of a potential reference to, and determination by, the Court of Justice of the European Union that there was no jurisdictional basis for the Awards; and (iii) the primacy which ought to be given to the exceptional nature of state immunity; and (5) the requirement for an English court to identify the true and proper construction of a treaty itself militates against the application of issue estoppel on such a matter (see CA Judgment, para. 49).

[15] CA Judgment, paras. 3, 57.

[16] CA Judgment, paras. 3, 57.

[17] CA Judgment, para. 56.

[18] CA Judgment, paras. 77–84.

[19] See further our client alerts on the decisions in Infrastructure Services Luxembourg SARL & Anor v Kingdom of Spain and Border Timbers Ltd & Anor v Republic of Zimbabwe [2024] EWCA Civ 1257 (here); Infrastructure Services Luxembourg SARL & Anor v Kingdom of Spain [2023] EWHC 1226 (Comm) (here); and Micula & Ors v Romania [2020] UKSC 5 (here).

The following Gibson Dunn lawyers prepared this update: Piers Plumptre, Ceyda Knoebel, Theo Tyrrell, and Dimitar Arabov.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s International Arbitration, Judgment and Arbitral Award Enforcement, or Transnational Litigation practice groups, or the authors in London:

Piers Plumptre (+44 20 7071 4271, pplumptre@gibsondunn.com)
Ceyda Knoebel (+44 20 7071 4243, cknoebel@gibsondunn.com)
Theo Tyrrell (+44 20 7071 4016, ttyrrell@gibsondunn.com)
Dimitar Arabov ( +44 20 7071 4063, darabov@gibsondunn.com)

From the Derivatives Practice Group: The CFTC under the Trump administration is taking shape, and ESMA launched consultations on (i) revising the disclosure framework for private securitizations (ii) settlement discipline and (iii) the European Market Infrastructure Regulation.

New Developments

Trump Plans to Pick Brian Quintenz to Lead CFTC. On February 11, several mainstream news sources began to report that U.S. President Donald Trump plans to nominate Brian Quintenz, the head of policy at Andreessen Horowitz’s a16z crypto arm, as Chairman of the CFTC. Quintenz previously served as a commissioner for the CFTC during the first Trump administration. [NEW]
Acting Chairman Pham Announces Brian Young as Director of Enforcement. On February 14, the CFTC Acting Chairman Caroline D. Pham today announced Brian Young will serve as the agency’s Director of Enforcement. Young has been serving in an acting capacity since January 22, and previously was the Director of the Whistleblower Office. He is a distinguished federal prosecutor with nearly 20 years of service at the Department of Justice, including Acting Director of Litigation for the Antitrust Division and Chief of the Litigation Unit for the Fraud Section of the Criminal Division, and has successfully tried some of the most high-profile criminal fraud and manipulation cases in the CFTC’s markets. [NEW]
CFTC Announces Crypto CEO Forum to Launch Digital Asset Markets Pilot. On February 7, the CFTC announced that it will hold a CEO Forum of industry-leading firms to discuss the launch of the CFTC’s digital asset markets pilot program for tokenized non-cash collateral such as stablecoins. Participants will include Circle, Coinbase, Crypto.com, MoonPay and Ripple.
CFTC Statement on Allegations Targeting Acting Chairman. On February 6, the CFTC released a statement regarding allegations targeting Acting Chairman Pham.
David Gillers to Step Down as Chief of Staff. On February 6, the CFTC announced that David Gillers will step down as Chief of Staff to Commissioner Behnam on February 7.
CFTC Announces Prediction Markets Roundtable. On February 5, the CFTC announced that it will hold a public roundtable in approximately 45 days at the conclusion of its requests for information on certain sports-related event contracts. The CFTC said that the goal of the roundtable is to develop a robust administrative record with studies, data, expert reports, and public input from a wide variety of stakeholder groups to inform the Commission’s approach to regulation and oversight of prediction markets, including sports-related event contracts. According to the CFTC, the roundtable will include discussion of key obstacles to the balanced regulation of prediction markets, retail binary options fraud and customer protection, potential revisions to Part 38 and Part 40 of CFTC regulations to address prediction markets, and other improvements to the regulation of event contracts to facilitate innovation. The roundtable will be held at the CFTC’s headquarters in Washington, D.C.
CFTC Division of Enforcement to Refocus on Fraud and Helping Victims, Stop Regulation by Enforcement. On February 4, CFTC Acting Chairman Caroline D. Pham announced a reorganization of the Division of Enforcement’s task forces to combat fraud and help victims while ending the practice of regulation by enforcement. According to the CFTC, previous task forces will be simplified into two new Division of Enforcement task forces: the Complex Fraud Task Force and the Retail Fraud and General Enforcement Task Force. The Complex Fraud Task Force will be responsible for all preliminary inquiries, investigations, and litigations relating to complex fraud and manipulation across all asset classes. The Acting Chief will be Deputy Director Paul Hayeck. The Retail Fraud and General Enforcement Task Force will focus on retail fraud and handle general enforcement matters involving other violations of the Commodity Exchange Act. The Acting Chief will be Deputy Director Charles Marvine.
CFTC Staff Issues No-Action Letter to Korea Exchange Concerning the Offer or Sale of KOSPI and Mini KOSPI 200 Futures Contracts. On February 4, the CFTC’s Division of Market Oversight issued a no-action letter stating it will not recommend the CFTC take enforcement action against Korea Exchange (“KRX”) for the offer or sale of Korea Composite Stock Price Index (“KOSPI”) 200 Futures Contracts and Mini KOSPI 200 Futures Contracts to persons located within the United State while the Commission’s review of KRX’s forthcoming request for certification of the contracts under CFTC Regulation 30.13 is pending. DMO issued similar letters when the KOSPI 200 became a broad-based security index in 2021 and 2022. See CFTC Press Release Nos. 8464-21 and 8610-22. The KOSPI 200 became a narrow-based security index in February 2024. The KOSPI 200 is set to become a broad-based security index on February 6, 2025, and the no-action position in DMO’s letter will be effective on that date.
CFTC Staff Issues Supplemental Letter Regarding No-Action Position on Reporting, Recordkeeping Requirements. On January 31, the CFTC’s Division of Market Oversight and the Division of Clearing and Risk announced they have taken a no-action position regarding swap data reporting and recordkeeping regulations. The CFTC said this position is in response to a request from KalshiEX LLC, a designated contract market, and Kalshi Klear LLC, a derivatives clearing organization, to modify CFTC Letter No. 24-15 to remove the condition prohibiting third-party clearing by participants and to cover fully-collateralized variable payout contracts. The Divisions indicated that they will not recommend the CFTC initiate an enforcement action against KalshiEX LLC, Kalshi Klear LLC, or their participants for failure to comply with certain swap-related recordkeeping requirements and for failure to report to swap data repositories data associated with binary option transactions and variable payout contract transactions executed on or subject to the rules of KalshiEX LLC and cleared through Kalshi Klear LLC, subject to the terms of the no-action letter. The supplemental letter also removes the condition in CFTC Letter No. 24-15 that prohibits Kalshi participants from clearing contracts through a third-party clearing member.

New Developments Outside the U.S.

ESMA Launches a Common Supervisory Action with NCAs on Compliance and Internal Audit Functions. On February 14, ESMA launched a Common Supervisory Action (“CSA”) with National Competent Authorities (“NCAs”) on compliance and internal audit functions of undertaking for collective investment in transferable securities (“UCITS”) management companies and Alternative Investment Fund Managers (“AIFMs”) across the EU. The CSA will be conducted throughout 2025 and aims to assess to what extent UCITS management companies and AIFMs have established effective compliance and internal audit functions with the adequate staffing, authority, knowledge, and expertise to perform their duties under the AIFM and UCITS Directives. [NEW]
ESMA Consults on Amendments to Settlement Discipline. On February 13, ESMA launched a consultation on settlement discipline, with the objective of improving settlement efficiency across various areas. ESMA is consulting on a set of proposals to amend the technical standards on settlement discipline that include: reduced timeframes for allocations and confirmations, the use of electronic, machine-readable allocations and confirmations according to international standards, and the implementation of hold & release and partial settlement by all central securities depositories. [NEW]
ESMA Consults on Revised Disclosure Requirements for Private Securitizations. On February 13, ESMA launched a consultation on revising the disclosure framework for private securitizations under the Securitization Regulation (“SECR”). The consultation proposes a simplified disclosure template for private securitizations designed to improve proportionality in information-sharing processes while ensuring that supervisory authorities retain access to the essential data for effective oversight. The new template introduces aggregate-level reporting and streamlined requirements for transaction-specific data, reflecting the operational realities of private securitizations. [NEW]
Geopolitical and Macroeconomic Developments Driving Market Uncertainty. On February 13, ESMA published its first risk monitoring report of 2025, setting out the key risk drivers currently facing EU financial markets. ESMA finds that overall risks in EU securities markets are high, and market participants should be wary of potential market corrections. [NEW]
ESMA Appoints Birgit Puck as new Chair of the Markets Standing Committee. On February 11, ESMA appointed Birgit Puck, Finanzmarktaufsicht, as a new Chair of the Markets Standing Committee.
ESMA consults on CCP Authorizations, Extensions and Validations. On February 7, ESMA launched two public consultations following the review of the European Market Infrastructure Regulation (“EMIR 3”). ESMA is encouraging stakeholders to share their views on: (i) the conditions for extensions of authorization and the list of required documents and information for applications by central counterparties (“CCPs”) for initial authorizations and extensions, and (ii) the conditions for validations of changes to CCP’s models and parameters and the list of required documents and information for applications for validations of such changes. EMIR 3 introduces several measures to make EU clearing services and EU CCPs more efficient and competitive, notably by streamlining and shortening supervisory procedures for initial authorizations, extensions of authorization and validations of changes to models and parameters. [NEW]
DPE Regime for Post-Trade Transparency Becomes Operational. On February 3, the public register listing designated publishing entities (“DPEs”) that now bear the reporting obligation for post-trade transparency under MIFIR went live, bringing the DPE regime into full operational effect. The public register can be found here. The post-trade reporting obligation for systematic internalizers (“SIs”) has been replaced by an analogous obligation on investment firms that have chosen to register as DPEs. As a further consequence of the DPE regime launch, ESMA has decided to discontinue the voluntary publication of quarterly SI calculations data early, ahead of the scheduled removal of the obligation on ESMA to perform SI calculations from September 2025. As of February 1, the mandatory SI regime will no longer apply and investment firms will not need to perform the SI test. However, investment firms can continue to opt into the SI regime. ESMA’s press release on these measures can be found here.
ECB Publishes Guidance on Initial Margin Model Approval Under EMIR 3. On January 31, the European Central Bank (“ECB”) published guidance on the initial margin validation process for entities under its supervision under the European Market Infrastructure Regulation (EMIR 3). Following the European Banking Authority’s (“EBA”) no-action letter on December 17, the guidance addresses implementation issues such as what the ECB approach will be until the EBA’s relevant regulatory technical standards and guidelines are applicable, the initial application process and model changes.
Equivalence Extension for UK CCPs Published in EU Official Journal. On January 31, the European Commission’s (“EC’s”) implementing decision extending the equivalence decision for UK CCPs until June 30, 2028 was published in the Official Journal of the EU. ESMA will now need to formally extend the temporary recognition decisions and tiering determinations for UK CCPs.
ESMA Provides Guidance on MiCA Best Practices. On January 31, ESMA published a new supervisory briefing aiming to align practices across the EU member states. The briefing, developed in close cooperation with NCAs, promotes convergence and prevents regulatory arbitrage, providing concrete guidance about the expectations on applicant Crypto Asset Service Providers, and on NCAs when they are processing the authorization requests.

New Industry-Led Developments

ISDA and IIF Respond on Counterparty Credit Risk Hedging. On January 31, ISDA and the Institute of International Finance (“IIF”) submitted a joint response to the Basel Committee on Banking Supervision’s proposed technical amendment on counterparty credit risk (“CCR”) hedging exposures. In the response, the associations explain that they believe the proposed changes to the treatment of CCR hedges are unnecessary, as the current substitution method is already very conservative and the new calculation would be complex and burdensome. [NEW]

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, and Karin Thrasher.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Derivatives practice group, or the following practice leaders and authors:

Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)

Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)

Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)

Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)

Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)

Adam Lapidus – New York (212.351.3869, alapidus@gibsondunn.com )

Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)

William R. Hallatt , Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )

David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)

Marc Aaron Takagaki , New York (212.351.4028, mtakagaki@gibsondunn.com )

Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@gibsondunn.com)

Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)

Gibson Dunn is available to help clients understand what these and other expected regulatory reforms will mean for them and how to navigate the shifting regulatory environment.

Gibson Dunn previously highlighted the executive and congressional tools that President Trump may use to halt or reverse Biden administration policies and implement his own agenda. During his first four weeks in office, Trump has employed several of these tools to advance his agenda. Here, we discuss three of them: (1) a regulatory moratorium and postponement; (2) recission of Biden Administration executive orders; and (3) new procedures for regulatory and funding review.

For additional insights, please visit our resource center, Presidential Transition: Legal Perspectives and Industry Trends.

1. Regulatory Moratorium and Postponement

On January 20, 2025, consistent with the start of prior administrations,[1] Trump issued a memorandum directing executive branch agencies to (1) refrain from proposing, issuing, or publishing any rules, regulations, or guidance documents until a department or agency head appointed by Trump reviews and approves it; (2) immediately withdraw any rules that have been sent to the Office of the Federal Register but not yet published pending review and approval; and (3) consider postponing for 60 days from January 20 the effective date for rules that have been published in the Federal Register or rules that have been issued but not taken effect.

Similar to the directive Trump and other presidents previously issued at the beginning of their terms, this memorandum authorizes the director or acting director of the Office of Management and Budget (OMB) to oversee the implementation of the memorandum and to exempt any rules the director deems necessary to address “emergency situations or other urgent circumstances,” including statutory and judicial deadlines.

The memorandum does not expressly address whether independent agencies are expected to comply with the freeze pending Trump’s designation of a new chair or appointment of new members, but independent agencies generally appear to be complying thus far and in the past have complied with similar memoranda. The President’s recent decisions to fire agency officials at three independent agencies—the Equal Employment Opportunity Commission, National Labor Relations Board, and the Merit Systems Protection Board—and Acting Solicitor General Harris’s statements that the Department of Justice will not defend the constitutionality of for-cause removal protections at certain independent agencies, strongly suggest that the Trump administration is prepared to take aggressive action to bring independent agencies under White House control.

2. Initial Rescissions of Executive Orders

It is standard practice for new administrations to rapidly rescind a number of the prior administration’s executive orders. Consistent with prior administrations, on January 20, 2025, Trump issued an executive order titled Initial Rescissions of Harmful Executive Orders and Actions, which rescinded dozens of Biden administration executive orders and memoranda regarding a variety of topics.[2] On Biden’s first day in office, he similarly issued executive orders rescinding multiple of Trump’s first-term executive orders.[3] Trump’s initial rescissions cover a variety of topics such as climate, clean energy, and the environment; gender; diversity, equity, and inclusion (DEI); worker health and safety; immigration; and healthcare. A list of noteworthy rescissions by category is below:

Climate, Energy, and Environment
- Executive Order 13990 of January 20, 2021 (Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis)
- Executive Order 14008 of January 27, 2021 (Tackling the Climate Crisis at Home and Abroad)
- Executive Order 14030 of May 20, 2021 (Climate-Related Financial Risk)
- Executive Order 14037 of August 5, 2021 (Strengthening American Leadership in Clean Cars and Trucks)
- Executive Order 14057 of December 8, 2021 (Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability)
Gender
- Executive Order 13988 of January 20, 2021 (Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation)
- Executive Order 14020 of March 8, 2021 (Establishment of the White House Gender Policy Council)
- Executive Order 14021 of March 8, 2021 (Guaranteeing an Educational Environment Free From Discrimination on the Basis of Sex, Including Sexual Orientation or Gender Identity)
Diversity, Equity & Inclusion
- Executive Order 14035 of June 25, 2021 (Diversity, Equity, Inclusion, and Accessibility in the Federal Workforce)
- Executive Order 14091 of February 16, 2023 (Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government)
Federal Contracting
- Executive Order 14069 of March 15, 2022 (Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency)
Labor and Employment
- Executive Order 13999 of January 21, 2021 (Protecting Worker Health and Safety)

3. Regulatory Reviews and Funding Freezes

In addition to freezing new regulations and rescinding dozens of executive orders, Trump has taken steps to ensure that agencies follow his new policies.

A. Regulatory Reviews

Trump’s initial rescissions include a rescission of Biden’s Executive Order 14094, which modified the way agencies analyze regulatory actions. Under Executive Order 12866—which was not rescinded—administrations of both parties have sent significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA), a division of OMB, for pre-issuance review and cost-benefit analysis. Executive Order 14094 required OIRA review for those rules with an economic impact of $200 million, adjusted for GDP. It appears that Trump’s revocation will revert the threshold for OIRA review to economic impacts of $100 million not pegged to GDP, which will result in greater centralization of regulatory review. Executive Order 14094 also imposed equity-related obligations on agencies, such as requiring agencies to affirmatively seek input from affected and underserved communities and to “recognize distributive impacts and equity” in all rulemakings. Now, agencies will be required only to engage in such practices to the extent required by law.

Trump also expanded a deregulatory executive order from his first administration. The new order imposes two key requirements. First, agencies must identify at least ten existing regulations to repeal for every new regulation they promulgate. Trump’s first administration required agencies to identify two existing regulations to repeal for every new regulation (although agencies ultimately eliminated over five regulations for every new one). The order counts “rules, regulations, or guidance documents” similarly, meaning that agencies might promulgate expansive rules while rescinding several smaller rules and guidance documents. Second, the total incremental cost of new regulations in fiscal year 2025 must “be significantly less than zero”—which is less than the net zero requirement during Trump’s first administration. The order also directs the OMB director to revoke a 2023 version of OMB Circular A-4 and associated regulations and reinstate the prior 2003 version. The 2023 version had lowered the discount rates for calculating the value of a regulation’s future benefit, making it easier to justify new regulations under cost-benefit analyses. The 2023 version also encouraged agencies to weigh regulations’ benefits to lower income individuals more heavily and sometimes consider effects on noncitizens living outside the United States. To satisfy a cost-benefit analysis under the 2003 guidance document, regulations must provide more near-term benefits across a narrower geographic scope and with less weighting for distributional benefits.

In addition, several of Trump’s executive orders require agency heads to review and rescind all regulations, guidelines, and policy documents that are inconsistent with new policies relating to energy, national security, immigration, gender identity, and other topics. Those executive orders require that:

The Directors of the Domestic Policy Council and National Economic Council “submit to the President an additional list of orders, memoranda, and proclamations issued by the prior administration that should be rescinded, as well as a list of replacement orders, memoranda, or proclamations, to increase American prosperity.” The National Security Advisor must also review National Security Memoranda issued during the Biden Administration “for harm to national security, domestic resilience, and American values.”
Agency heads identify and take steps toward rescinding any agency actions “that impose an undue burden on the identification, development, or use of domestic energy resources” or are inconsistent with Trump’s energy policies.
All agencies identify and rescind or revise actions inconsistent with an executive order to promote energy projects in Alaska.
The Attorney General “investigate the activities of the Federal Government over the last 4 years that are inconsistent with the purposes and policies” of an executive order regarding free speech.
Agencies update their documents to reflect an executive order on biological sex.
The Secretary of Homeland Security “[a]lign all policies and operations at the southern border of the United States to be consistent with” executive order policies of securing the border.
Agencies “identify all regulations, guidance documents, orders, or other items that affect the digital asset sector” and recommend whether they should be rescinded or modified.
The Assistant to the President for Science and Technology, the Special Advisor for AI and Crypto, and the Assistant to the President for National Security Affairs, and relevant agencies review any policies inconsistent with an executive order on artificial intelligence.

B. Freezing Federal Grants and Funds

President Trump also issued executive orders pausing various disbursements of funds and requiring reviews of federal grants and funds for foreign aid, certain sustainability-related infrastructure projects, and NGOs providing services to removable or illegal aliens, among others. Several days later, OMB issued, clarified, and two days later, rescinded, a memorandum that many had read as ordering a freeze on a broad swath or even all federal grants and funds.

In OMB’s memorandum regarding a potential freeze of federal funds, Acting OMB Director Matthew Vaeth instructed agencies to “complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders.” The memorandum also provided that “to the extent permissible under applicable law, [f]ederal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The memorandum clarified that “[n]othing in this memo should be construed to impact Medicare or Social Security benefits.”

The memorandum quickly sparked responses from federal fund recipients and lawmakers who struggled to determine its breadth and to identify affected programs. Nonprofit groups sued to enjoin the measure in the U.S. District Court for the District of Columbia, arguing that it was arbitrary and capricious, violated the First Amendment, and exceeded OMB’s statutory authority. A group of 22 States and the District of Columbia also challenged the freeze in the U.S. District Court for the District of Rhode Island, arguing that it violated the Spending and Appropriations Clauses and other separation of powers principles. The administration clarified that the pause did not apply across the board, but only to the programs “implicated by the President’s Executive Orders, such as ending DEI, the green new deal, and funding nongovernmental organizations that undermine the national interest.”[4]

The District of Columbia district court temporarily stayed the freeze shortly before it went into effect. The next day, OMB withdrew the memorandum, but the White House reiterated Trump’s commitment to “end the egregious waste of federal funding” and the White House Press Secretary asserted that “[t]he President’s EO’s on federal funding remain in full force and effect, and will be rigorously implemented.” This appears to include the pauses required directly by the executive orders. Referencing “the Press Secretary’s unequivocal statement and the continued actions of Executive agencies,” the Rhode Island district court granted and later extended a temporary restraining order blocking the freeze. The order does not appear to apply to separate freezes that the General Services Administration and other agencies have imposed on federal contracting. The nonprofit groups also received a temporary restraining order on February 3. The District of Columbia district court further instructed OMB to notify affected agencies that “they may not take any steps to implement, give effect to, or reinstate under a different name the directives in OMB Memorandum M-25-13 with respect to the disbursement of Federal Funds under all open awards.”

On February 10, 2025, the Rhode Island district court granted the States’ emergency motion to enforce their temporary restraining order after they “presented evidence . . . that the Trump Administration continued to improperly freeze federal funds and refused to resume disbursement of appropriated federal funds.” Trump has appealed that decision and the prior order extending the temporary restraining order, but the First Circuit declined an immediate stay pending the district court’s further clarification of its orders.

The challenging States and the nonprofit groups have moved for preliminary injunctions in their respective lawsuits.

A handful of suits, motions, and orders are also being made on an agency-by-agency basis, such as a suit seeking broad relief for employees and contractors at the Consumer Financial Protection Bureau and a recent order requiring the resumption of payments to USAID contractors and grant recipients. Notably, the USAID order ruled that the administration’s “blanket suspension of foreign aid funding” is unlawful, but the court allowed the administration to “enforce the terms of particular contracts [or grants], including with respect to expirations, modifications, or terminations pursuant to contractual provisions.” For over a century, courts have read into government contracts an implicit provision allowing the government to cancel a contract for “convenience” when the government concludes it is no longer in the public’s best interest.[5] It is unclear whether the order allows for such terminations on a case-by-case basis.

4. Conclusion

Gibson Dunn is monitoring regulatory developments and executive orders closely. Our attorneys are available to assist clients as they navigate the challenges and opportunities posed by the current, evolving legal landscape.

[1] See, e.g., Memorandum from Ronald A. Klain to the Heads and Acting Heads of Executive Departments and Agencies, 86 Fed. Reg. 7424 (Jan. 20, 2021, published Jan. 28, 2021); Memorandum from Reince Preibus to the Heads and Acting Heads of Executive Departments and Agencies, 82 Fed. Reg. 8346 (Jan. 20, 2017, published Jan. 24, 2017).

[2] A number of President Trump’s other executive orders also revoked prior orders on a topic-by-topic basis. These revocations partially overlap with the revocations in the Initial Rescissions order. E.g., Executive Order 14154, 90 Fed. Reg. 8353 (Jan. 20, 2025) (entitled “Unleashing American Energy” and revoking 12 Biden-era Executive Orders related to climate change, air pollution, and environmental justice, 11 of which were also revoked by the Initial Rescissions order).

[3] E.g., Executive Order No. 13992, 86 Fed. Reg. 7049 (Jan. 25, 2021) (Revocation of Certain Executive Order Concerning Federal Regulation); Executive Order No. 13985, 86 Fed. Reg. 7009 (Jan. 20, 2021) (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government); Executive Order No. 13990, 86 Fed. Reg. 7037 (Jan. 20, 2021) (Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis).

[4] Fact Sheet, OMB Q&A Regarding Memorandum M-25-13 (Jan. 28, 2025), available at https://www.presidency.ucsb.edu/documents/white-house-fact-sheet-omb-qa-regarding-memorandum-m-25-13.

[5] United States v. Corliss Steam Engine Co., 91 U.S. 321 (1876); White Buffalo Constr., Inc. v. United States, 2013 WL 5859688 (Fed. Cir. Nov. 1, 2023).

The following Gibson Dunn lawyers prepared this update: Michael Bopp, Stuart Delery, Matt Gregory, Andrew Kilberg, Tory Lauterbach, Amanda Neely, Noah Delwiche, Maya Jeyendran, and Aaron Gyde.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Public Policy, Administrative Law & Regulatory, Energy Regulation & Litigation, Labor & Employment, or Government Contracts practice groups, or the following in Washington, D.C.:

Michael D. Bopp – Co-Chair, Public Policy Practice Group,
(+1 202.955.8256, mbopp@gibsondunn.com)

Stuart F. Delery – Co-Chair, Administrative Law & Regulatory Practice Group,
(+1 202.955.8515, sdelery@gibsondunn.com)

Matt Gregory – Partner, Administrative Law & Regulatory Practice Group,
(+1 202.887.3635, mgregory@gibsondunn.com)

Andrew G.I. Kilberg – Partner, Administrative Law & Regulatory Practice Group,
(+1 202.887.3759, akilberg@gibsondunn.com)

Tory Lauterbach – Partner, Energy Regulation & Litigation Practice Group,
(+1 202.955.8519, tlauterbach@gibsondunn.com)

Amanda H. Neely – Of Counsel, Public Policy Practice Group,
Washington, D.C. (+1 202.777.9566, aneely@gibsondunn.com)

New Guidance Rescinds SLB 14L

On February 12, 2025, the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) published Staff Legal Bulletin No. 14M (“SLB 14M”), which sets forth Staff guidance on shareholder proposals submitted to publicly traded companies under Exchange Act Rule 14a-8. SLB 14M rescinds Staff Legal Bulletin No. 14L (“SLB 14L”) (which was issued in November 2021) and addresses a number of interpretive issues in a manner that draws heavily from prior statements by the Commission interpreting Rule 14a-8.

SLB 14L was widely viewed as creating an “open season” for shareholder proposals.[1] During the 2022 proxy season following the issuance of SLB 14L, the number of shareholder proposals submitted to companies surged, with those addressing environmental topics up over 50% and proposals addressing social policy issues increasing by 20%. At the same time, the overall success rate for no-action requests plummeted to an all-time low of 38%, a drastic decline from success rates of 71% in 2021 and 70% in 2020. As a result, many institutional shareholders, who typically do not submit Rule 14a-8 proposals but must devote time and resources to review and vote on shareholder proposals submitted by others to companies in which they have invested, have commented that the quality and utility of shareholder proposals have declined.

SLB 14M heralds a return to a more traditional administration of the shareholder proposal rule, particularly as it relates to interpreting the “ordinary business” exception under Rule 14a-8(i)(7), reinvigorates the economic relevance exclusion under Rule 14a-8(i)(5), and reinstates in part interpretive positions discussed in Staff Legal Bulletins issued by the Staff during the tenure of Commission Chair Jay Clayton. SLB 14M states that companies may supplement previously filed no-action requests to exclude shareholder proposals, or submit new no-action requests, based on the standards set forth in SLB 14M, and that the Staff will apply the standards outlined in SLB 14M when responding to pending or subsequently filed no-action requests.

Summary of the New Staff Guidance

As discussed in greater detail below, SLB 14M:

Applies a company-specific approach to evaluating whether the subject matter of a proposal is “not otherwise significantly related to the company” under the economic relevance standard under Rule 14a-8(i)(5) and when determining the significance of a policy issue raised by a shareholder proposal for purposes of the ordinary business exclusion under Rule 14a-8(i)(7) (thereby moving away from SLB 14L’s approach of considering only whether a proposal raised significant social policy issues, and reinstating the “nexus” standard under the ordinary business standard);
Reinvigorates the economic relevance exclusion under Rule 14a-8(i)(5) by stating that the Staff will base its administration of the rule on the objectives announced by the Commission when it adopted the current rule’s language, thereby opening the possibility to exclude proposals that may relate to a company’s operations but that are not economically or otherwise significant to the company;
Reaffirms that the Staff will continue to apply the micromanagement standard of exclusion under Rule 14a-8(i)(7) in line with past Commission statements and prior Staff Legal Bulletins that SLB 14L had rescinded (specifically, the interpretive positions summarized in Staff Legal Bulletin No. 14I (Nov. 1, 2017) (“SLB 14I”), Staff Legal Bulletin No. 14J (Oct. 23, 2018), and Staff Legal Bulletin 14K No. (Oct. 16, 2019) (“SLB 14K”) (collectively, the “Prior SLBs”));
Advises that company no-action requests under Rules 14a-8(i)(5) and 14a-8(i)(7) need not include a discussion reflecting the board of directors’ analysis of whether and how the particular policy issue raised in a shareholder proposal is not significant to the company, although a company may submit a board analysis if it believes the analysis will be helpful.
Confirms that the Staff will apply its traditional interpretive standards for purposes of assessing no-action requests under Rules 14a-8(i)(10) (the “substantial implementation standard”), 14a-8(i)(11) (the “duplication standard”), and 14a-8(i)(12) (the “resubmission standard”) and not the standards in the rule amendments proposed by the Commission in 2022, which have not been adopted;
Eliminates the novel position set forth in SLB 14L under which companies were at times expected to provide a second deficiency letter to specifically identify proof of ownership defects that had already been addressed in an initial deficiency letter;
Restates prior Staff guidance on the use of email for submission of proposals, delivery of deficiency notices, and responses (encouraging a bilateral use of email confirmation receipts by companies and shareholder proponents alike); and
Advises that the interpretive positions set forth in SLB 14M will apply to pending no-action requests that are decided after SLB 14M’s issuance, and that companies may timely supplement previously filed no-action requests, and submit new no-action requests, based on the positions set forth in SLB 14M.

Key Takeaways from SLB 14M

In light of the guidance set forth in SLB 14M, we urge public companies to keep the following in mind.

Companies Should Re-evaluate Proposals Received for Possible Exclusion. Companies should review the Rule 14a-8 shareholder proposals they have received and consider whether any of the interpretive positions reaffirmed in SLB 14M provide a basis for excluding the proposals that should be asserted in a new or supplemental no-action request, particularly under the economic relevance exclusion in Rule 14a-8(i)(5). At the same time, as noted above, we do not believe that companies should feel compelled to supplement pending no-action requests that have already addressed exclusion under Rule 14a-8(i)(7), Rule 14a-8(i)(10), or one of the other provisions addressed in SLB 14M, or to merely to cite SLB 14M or some of the Commission statements it relies on. In this regard, as noted above, SLB 14M confirms that the Staff will apply SLB 14M when reviewing pending no-action requests.
Companies Should Consider Re-engaging with Shareholder Proponents. As we have previously noted, the number of shareholder proposals withdrawn has declined in recent years, representing 15% of all proposals submitted in 2024 and 16% in 2023, compared to over 29% in the 2021 proxy season. In light of the standards that will be applied under SLB 14M, shareholder proponents may be more willing to engage and agree on a basis to withdraw their proposals. Companies as well may find a negotiated withdrawal to be a more favorable approach than waiting for a no-action letter response that may not be issued until the time of, or after, their proxy print deadline.
Think Strategically under Rule 14a-8(i)(12). Rule 14a-8(i)(12) provides a basis for excluding a proposal if it addresses substantially the same subject matter as a proposal, or proposals, included in the company’s proxy materials within the preceding five calendar years and the most recent vote on the proposal was below a specified threshold. In recent years, companies have been concerned that the Staff would narrowly interpret whether a proposal “addresses substantially the same subject matter” as a prior proposal, due to the proposed amendments in 2022, which set forth a narrower and more restrictive analysis. SLB 14M confirms that the Staff will apply traditional standards in assessing whether proposals address substantially the same subject matter as a prior proposal. Accordingly, companies may determine not to seek to exclude a proposal that is expected to obtain a low vote, so that substantially similar proposals can be excluded in future years.
Focus on Legal Arguments Based on Past Commission Statements. Notwithstanding expressions by some that SLB 14M is politically motivated, SLB 14M reiterates that when a company believes that it is entitled to exclude a proposal, the company must make a legal argument that clearly lays out the basis for the exclusion, consistent with the text of the rule itself and language from Commission releases. The Staff has long been policy- and politically-neutral when administering the shareholder proposal rule, and SLB 14M suggests that approach will prevail this year. As now-Acting Chair Mark Uyeda said in 2023, “[s]hareholder meetings were not intended under state corporate laws to be political battlegrounds or debating societies.”[2] Put differently, SLB 14M makes clear that SLB 14L was the outlier.

Detailed Review of SLB 14M

Reinvigorating the Economic Relevance Exclusion in Rule 14a-8(i)(5).

Rule 14a-8(i)(5), the “economic relevance” exception, permits a company to exclude a proposal that “relates to operations which account for less than 5 percent of the company’s total assets at the end of its most recent fiscal year, and for less than 5 percent of its net earnings and gross sales for its most recent fiscal year, and is not otherwise significantly related to the company’s business.” SLB 14M reintroduces an approach to applying the “economic relevance” standard under Rule 14a-8(i)(5) that was described in SLB 14I, which should provide a strong basis to challenge shareholder proposals that raise significant social policy issues that are not economically relevant to a company.

The Commission stated in 1982 that it was adopting the economic tests that now appear in Rule 14-8(i)(5) because previously the Staff would not agree with the exclusion of a proposal “where the proposal has reflected social or ethical issues, rather than economic concerns, raised by the issuer’s business, and the issuer conducts any such business, no matter how small.”[3] However, after the Commission adopted the economic tests, a U.S. District Court interpreted the rule as continuing not to allow exclusion when a proposal reflected social or ethical issues raised by a company’s business, even when those issues related to an economically insignificant part of a company’s operations. The Staff subsequently followed the court’s interpretation and, as a result, Rule 14a-8(i)(5) rarely served as a basis for exclusion of a proposal, notwithstanding the Commission’s stated intention in adopting the 1982 amendment. In 2017, the Staff issued SLB 14I to align the Staff’s interpretation with the intention of the 1982 amendment, but in 2021, SLB 14L repealed SLB 14I.

SLB 14M largely repeats the interpretive position set forth in SLB 14I, realigning Rule 14a-8(i)(5) with the Commission’s statements when it adopted the rule. SLB 14M states that, under this framework, proposals that raise issues of social or ethical significance may be excludable, notwithstanding their importance in the abstract, based on the application and analysis of each of the economic factors of Rule 14a-8(i)(5) in determining the proposal’s relevance to the company’s business. While corporate governance proposals will be “otherwise significant” for most companies, the mere possibility of reputational or economic harm alone will not demonstrate that a proposal is “otherwise significantly related to the company’s business.” In addition, SLB 14M clarifies that whether a proposal is “otherwise significantly related” to a company’s business under Rule 14a-8(i)(5) will be a separate analysis from whether a proposal raises a significant social policy issue that transcends a company’s ordinary business under Rule 14a-8(i)(7), which means that proposals may be excluded under Rule 14a-8(i)(5) even when the ordinary business exclusion is not available.

Changes to the Application of the Ordinary Business Exclusion in Rule 14a-8(i)(7).

As SLB 14M notes, the Commission has repeatedly stated that the ordinary business exclusion in Rule 14a-8(i)(7) is based on the concept that “[c]ertain tasks are so fundamental to management’s ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight . . . . However, proposals relating to such matters but focusing on sufficiently significant social policy issues . . . generally would not be considered to be excludable, because the proposals would transcend the day-to-day business matters and raise policy issues so significant that it would be appropriate for a shareholder vote.” SLB 14L disregarded the first part of the standard approved by the Commission in 1976, 1997, and 1998 (i.e., whether a proposal related to a company’s ordinary business), and stated that the Staff would decline to concur with the exclusion of proposals that “raise[] issues with a broad societal impact, such that they transcend the ordinary business,” without regard to whether a proposal was relevant to or implicated management’s ability to run the company on a day-to-day basis. SLB 14L singled out proposals “squarely raising human capital management issues with a broad societal impact” as an example of proposals that would not be excludable under its new interpretation. In doing so, SLB 14L rejected the company-specific approach to assessing ordinary business that had been developed through several decades of precedent and allowed the express language of Rule 14a-8(i)(7) to be supplanted by what had traditionally been a narrow interpretive exception to the ordinary business standard.

SLB 14M reverts to the company-specific approach of applying the ordinary business standard, “rather than focusing solely on whether a proposal raises a policy issue with broad societal impact or whether particular issues or categories of issues are universally ‘significant.’” As such, the Staff has indicated it will focus on the “nexus” between a proposal’s subject matter and the company’s business.[4] As a result, proposals addressing particular social policy issues may be excludable at some companies but not at others. For example, a proposal relating to firearm regulation might not be excludable at a company in the business of manufacturing firearms, but has been found to be excludable when submitted to a retail company that sells firearms.[5] Similarly, a proposal asking a company to report on a particular issue is excludable under the “nexus” standard if a company is facing litigation over the same or similar subject matter such that the proposal would interfere with the company’s litigation strategy, since in that context the proposal implicates the company’s day-to-day management of litigation strategy.[6]

Many companies have already submitted no-action requests for 2025 annual meetings in which they set forth an ordinary business argument under SLB 14L’s framework, addressing specifically why a proposal should not be viewed as transcending a company’s ordinary business. Based on SLB 14M’s transition guidance, as addressed below, we do not believe that companies need to supplement these no-action requests, as those arguments asserting that a proposal does not transcend the company’s ordinary business largely focus on how the proposal implicates ordinary business activities. To the extent those arguments are relevant at all under SLB 14M, they may now carry greater weight with the Staff.

Reaffirming Commission-Based Interpretations for Micromanagement Arguments under Rule 14a-8(i)(7).

A second central policy consideration underlying Rule 14a-8(i)(7) relates to the degree to which the proposal “micromanages” the company “by probing too deeply into matters of a complex nature.”[7] This prong of the Rule 14a-8(i)(7) analysis rests on an evaluation of the manner in which a proposal seeks to address the subject matter raised, rather than the subject matter itself, and therefore can support exclusion of a proposal regardless of whether the proposal focuses on a significant social policy.

SLB 14M reinstates interpretive guidance from the Prior SLBs addressing the micromanagement prong of Rule 14a-8(i)(7). SLB 14L took the position that proposals seeking detail or seeking to promote timeframes or methods do not necessarily constitute micromanagement, and in particular that proposals requesting that companies adopt timeframes or targets to address climate change would not be excludable on the basis of micromanagement if they address targets or timelines, so long as the proposals afford discretion to management as to how to achieve such goals. SLB 14M and the Prior SLBs apply a stricter approach in this context, taking the view that some such proposals effectively require the company to adopt a specific method for implementing a complex policy and are therefore excludable because of micromanagement. Importantly, SLB 14M also confirms that the micromanagement standard can apply to proposals addressing executive compensation or corporate governance topics.

Over the past 18 months, the Staff has already increasingly concurred with exclusion of proposals on the grounds of micromanagement, perhaps recognizing that (as many institutional investors have noted)[8] an increasing number of proposals have sought to intrude into or impose specific approaches for addressing complex operational issues. We expect these recent precedents to remain viable, as they align with past Commission statements that are relied on in SLB 14M and the Prior SLBs. As such, we expect pending no-action requests arguing that proposals are excludable due to micromanagement will in many, if not most, cases not need to be supplemented as a result of SLB 14M.

No Requirement for a “Board Analysis.”

The Prior SLBs had encouraged companies seeking to exclude proposals under Rule 14a-8(i)(5) or Rule 14a-8(i)(7) to include a discussion in their no-action requests setting forth an analysis by the company’s board of directors as to whether or not the particular issue raised by a shareholder proposal was significant to the company’s business. Many of these board analyses included in no-action requests took the form of a “gap” analysis, explaining why a proposal was not significant in light of actions the company had already taken. In practice, the board analyses did not contribute significantly to the no-action process; in 2019 (the first year of the board analysis guidance), 25 companies made a board analysis argument and only one succeeded; in 2020, 19 companies made a board analysis argument and only four succeeded; and in 2021, 16 companies made a board analysis argument (representing only 18% of all of the 14a-8(i)(7) and (i)(5) no-action requests submitted that year) of which only five succeeded.

SLB 14M acknowledges that board analyses did not generally have a dispositive effect and states that the Staff will not expect a company’s no-action request to include a discussion that reflects the board’s analysis of the particular policy issue raised by a shareholder and its significance to the company. While a company is permitted to submit such an analysis if it believes the analysis will help the Staff’s review of the no-action request, we do not expect companies to do so.

Reaffirming traditional interpretive standards for purposes of assessing no-action requests under Rules 14a-8(i)(10), 14a-8(i)(11) and 14a-8(i)(12).

In 2022, the Commission proposed amendments to revise the standards applicable pursuant to the substantive bases for exclusion of shareholder proposals provided under Rules 14a-8(i)(10) (the “substantial implementation standard”), 14a-8(i)(11) (the “duplication standard”), and 14a-8(i)(12) (the “resubmission standard”). However, even before these amendments were proposed, the Staff appeared to be applying a non-traditional approach under these rules, a point that now-Acting Chair Uyeda noted in 2023, stating, “[w]hile the amendments have not yet been adopted, some practitioners have noted that . . . Commission staff had already begun to reverse prior no-action positions and narrow the scope of these exclusions.”[9] For example, in the 2022 proxy season, the success rate for excluding proposals under the substantial implementation standard of Rule 14a-8(i)(10) dropped to 13%, compared with 55% in the 2021 proxy season.

In SLB 14M, the Staff confirms that pre-2022 precedents applying these rules remain applicable, noting that the Commission has not adopted the proposed rule amendments and that, accordingly, the Staff will consider no-action requests and supplemental correspondence in accordance with operative Commission rules and prior Staff guidance.

No Second Deficiency Letters under Rule 14a-8(b).

Rule 14a-8(b) provides that a shareholder must prove eligibility to submit a proposal by offering proof that it has satisfied one of the ownership eligibility criteria set forth in Rule 14a-8 (i.e., that the shareholder has “continuously held” a required amount of securities for a required amount of time).[10] If a shareholder fails to provide satisfactory proof of ownership, the company must notify the shareholder within 14 days, and the shareholder must correct the deficiency within 14 days of such notice (if the shareholder does not correct the deficiency, the company may exclude the proposal from its proxy statement). In SLB 14L, the Staff stated that companies should send a second deficiency notice identifying the specific defects in a proof of ownership if those defects had not already been identified in a prior deficiency notice.

Rule 14a-8 does not require a company to send a second deficiency letter, and the Staff’s position in SLB 14L proved problematic for administration of the shareholder proposal process within the timeframes set forth in the rule. Consistent with decades of precedents, SLB 14M affirms that the Staff no longer interprets Rule 14a-8 as requiring a company to send a second deficiency notice to a proponent if the company previously sent an adequate deficiency notice prior to receiving the proponent’s proof of ownership. At the same time, SLB 14M reminds companies that an overly technical reading of proof of ownership letters provided by a shareholder or its broker may not be persuasive.

Frequently Asked Questions on the Transition to SLB 14M.

Recognizing that SLB 14M has been issued during the peak of the shareholder proposal season, SLB 14M addresses a number of questions relevant to evaluating shareholder proposals in the current proxy season. Specifically, SLB 14M states:

The Staff will consider the guidance set forth under SLB 14M when evaluating pending no-action requests that were submitted before, but will be decided after, the issuance of SLB 14M. Previously submitted no-action requests do not need to be resubmitted.
If, after considering the views expressed in SLB 14M, a company believes that it is entitled to exclude a proposal on a basis that the company has not already addressed in a no-action request, it must submit a no-action request, or supplement any pending no-action request, making a legal argument that clearly lays out the basis for the exclusion.
If the deadline prescribed in Rule 14a-8(j) for a company to submit a no-action request has already passed, the company may nevertheless submit a no-action request or supplement an existing no-action request based on the guidance set forth in SLB 14M, and the Staff will consider the publication of SLB 14M to be “good cause” that excuses the Rule 14a-8(j) deadline. SLB 14M states that companies should endeavor to submit any new requests as soon as possible, with consideration for the opportunity for proponents to provide supplemental correspondence in response to the new request.

SLB 14M also acknowledges that the Staff may face a significant number of new or supplemental no-action requests and, therefore, may not be able to respond by a company’s proxy print deadline. Accordingly, SLB 14M encourages companies and proponents to work together to resolve submitted proposals prior to print deadlines.

Other Guidance.

SLB 14M restates guidance from SLB 14K and SLB 14L on the use of email for submission of proposals, delivery of deficiency notices, and responses. The Staff encourages both companies and shareholder proponents to acknowledge receipt of emails when requested, and for companies and proponents to reach out using another method of communication (or emailing another contact, if available) if a requested confirmation of receipt is not provided. Consistent with prior no-action interpretations, SLB 14M confirms that the Staff does not consider screenshots or photos of emails on the sender’s device to be proof of delivery to the recipient. Finally, SLB 14M repeats prior Staff interpretations regarding the use of graphics or images in shareholder proposal submissions.

Continued Divisions within the Commission over Shareholder Proposals.

When SLB 14L was issued, Chair Gary Gensler publicly endorsed the Staff’s new guidance,[11] while Republican Commissioners Hester M. Pierce and Elad L. Roisman released a joint statement expressing a number of concerns, including that SLB 14L created significantly less clarity for companies, would dramatically slow down the Rule 14a-8 no-action request process, and wasted taxpayer dollars on shareholder proposals that “involve issues that are, at best, only tangential to our securities laws.”[12] This time around, Democratic Commissioner Caroline A. Crenshaw issued a statement on SLB 14M,[13] referring to it as “political policy shifting” and lamenting the timing of its issuance. Commissioner Crenshaw also repeats the frequent refrain that shareholder proposals are “merely advisory,” a defense that is undermined by the significance ascribed to them by advocacy groups and by the voting policy of major proxy advisory firms, which penalize boards that are not responsive to “merely advisory” votes, in some cases even if the proposal is supported by less than a majority of the shares voting. Ironically, Commissioner Crenshaw claims that SLB 14M “forsake[s] all consistency” and acknowledges that the Rule 14a-8 no-action process “is fact-intensive, and exactly how a proposal is crafted is often determinative of its exclusion or inclusion”—two points that SLB 14L eschewed. As a result, companies and shareholders—including the relatively few who submit proposals and the many more institutional holders who must devote time and resources evaluating and voting on such proposals—can expect Rule 14a-8 to continue to be a focus of policymakers at the Commission and in Congress.

[1] See Gibson, Dunn & Crutcher LLP, Shareholder Proposal Developments During the 2022 Proxy Season (July 11, 2022), https://www.gibsondunn.com/wp-content/uploads/2022/07/shareholder-proposal-developments-during-the-2022-proxy-season.pdf.

[2] See Comm’r. Mark T. Uyeda, Remarks at the Society for Corporate Governance 2023 National Conference (June 21, 2023), https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-society-corporate-governance-conference-062123.

[3] Exchange Act Release No. 34-19135 (Oct. 14, 1982).

[4] The “nexus” standard was described by the Staff in Staff Legal Bulletin No. 14E (Oct. 27, 2009) (“[i]n those cases in which a proposal’s underlying subject matter transcends the day-to-day business matters of the company and raises policy issues so significant that it would be appropriate for a shareholder vote, the proposal generally will not be excludable under Rule 14a-8(i)(7) as long as a sufficient nexus exists between the nature of the proposal and the company”).

[5] See, e.g., Staff Legal Bulletin No. 14H (Oct. 22, 2015), in which the Staff’s view was that such a proposal was excludable under Rule 14a-8(i)(7) because it related to the company’s ordinary business operations and did not focus on a significant policy issue.

[6] See Chevron Corp. (Sisters of St. Francis of Philadelphia) (avail. Mar. 30, 2021), in which the company argued that the proposal related to the company’s litigation strategy and the conduct of ongoing litigation to which the company was a party.

[7] Exchange Act Release No. 34-40018 (May 21, 1998).

[8] See Blackrock’s Investment Stewardship Annual Report 2023 (April 30, 2024) at 2 (stating that Blackrock Investment Stewardship’s votes on shareholder proposals during the 2023 proxy season reflected that it “did not support shareholder proposals that were overly prescriptive or unduly constraining on management, that lacked economic merit, or made asks that the company already fulfills”), at https://www.blackrock.com/corporate/literature/publication/annual-stewardship-report-2023-summary.pdf; T. Rowe Price’s 2023 Stewardship Report, (last visited Feb. 13, 2024) at 159 (“we observed a marked increase in the level of prescriptive requests . . . . Our view on these prescriptive proposals is that they usurp management’s responsibility to make operational decisions and the board’s responsibility to guide and oversee such decisions”), at https://www.troweprice.com/content/dam/trowecorp/Pdfs/esg/stewardship-report.pdf.

[9] See Comm’r. Mark T. Uyeda, Remarks at the Society for Corporate Governance 2023 National Conference (June 21, 2023), https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-society-corporate-governance-conference-062123.

[10] Rule 14a-8(b) requires proponents to have continuously held at least $2,000, $15,000, or $25,000 in market value of the company’s securities entitled to vote on the proposal for at least three years, two years, or one year, respectively.

[11] See Chair Gary Gensler, Statement regarding Shareholder Proposals: Staff Legal Bulletin No. 14L (Nov. 3, 2021), https://www.sec.gov/newsroom/speeches-statements/gensler-statement-shareholder-proposals-14l?.

[12] See Statement on Shareholder Proposals: Staff Legal Bulletin No. 14L (Nov. 3, 2021), https://www.sec.gov/newsroom/speeches-statements/peirce-roisman-statement-shareholder-proposals-staff-legal-bulletin-14l?.

[13] Statement on Staff Legal Bulletin 14M (Feb. 12, 2025), https://www.sec.gov/newsroom/speeches-statements/crenshaw-statement-staff-legal-bulletin-14m-021225

The following Gibson Dunn lawyers prepared this update: Elizabeth Ising, Thomas Kim, Ronald Mueller, Geoffrey Walter, and Lori Zyskowski.

Aaron Briggs – San Francisco (+1 415.393.8297, abriggs@gibsondunn.com)
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, eising@gibsondunn.com)
Thomas J. Kim – Washington, D.C. (+1 202.887.3550, tkim@gibsondunn.com)
Brian J. Lane – Washington, D.C. (+1 202.887.3646, blane@gibsondunn.com)
Julia Lapitskaya – New York (+1 212.351.2354, jlapitskaya@gibsondunn.com)
James J. Moloney – Orange County (+1 949.451.4343, jmoloney@gibsondunn.com)
Ronald O. Mueller – Washington, D.C. (+1 202.955.8671, rmueller@gibsondunn.com)
Michael A. Titera – Orange County (+1 949.451.4365, mtitera@gibsondunn.com)
Geoffrey E. Walter – Washington, D.C. (+1 202.887.3749, gwalter@gibsondunn.com)
Lori Zyskowski – New York (+1 212.351.2309, lzyskowski@gibsondunn.com)

Activities at the Consumer Financial Protection Bureau are frozen amidst a leadership transition, while the agency’s future looks increasingly uncertain.

After a flurry of activity in December and January, the CFPB’s interim directors have halted staff’s work on rulemaking, investigations, enforcement, litigation, and supervision while the new administration evaluates its priorities for the agency. In this update, we recap the directives issued to agency staff over the past two weeks, assess the potential effects on the agency’s regulatory activity, and consider possible responses to any perceived enforcement or supervisory gaps from other regulators and enforcers.

New Directives

On January 31, President Trump removed Rohit Chopra as CFPB Director, kicking off two weeks of rapid change for agency staff. Treasury Secretary Scott Bessent was named the Acting Director on X,[1] who promptly ordered a halt to most agency activity. Specifically, CFPB staff were instructed that, unless expressly approved by the Acting Director, they were not to issue any proposed or final rules or guidance; commence, investigate, or settle enforcement actions; issue public communications; approve or enter material agreements; or make filings or appearances in litigation, other than to seek a stay.[2] Bessent also suspended the effective date of all final rules that had yet to take effect.[3]

The next week, on February 7, Russell Vought, the newly confirmed head of the Office of Management and Budget, succeeded Bessent as Acting Director.[4] Vought expanded the freeze to cover supervision and examination activities, closed the CFPB’s headquarters in Washington, D.C., and ordered all employees to work remotely and “stand down from performing any work task” without express approval.[5] Enforcement staff are restricted from communicating with current or prospective enforcement targets or their counsel without the express authorization of Mark Paoletta, general counsel at the Office of Management and Budget, who is anticipated to be serving as the new Chief Legal Officer at the CFPB.[6] Vought also cut the agency’s next funding request to the Federal Reserve, the source of the CFPB’s budget, to zero.[7] Vought’s orders came as staff with the Department of Government Efficiency (DOGE) were reported at the CFPB headquarters.[8]

On February 11, President Trump announced Jonathan McKernan, formerly a board member of the Federal Deposit Insurance Corporation, as his nominee for CFPB Director.[9] Industry players have hailed McKernan “as a sober, tried-and-tested pick[] in line with the mainstream financial regulators who staffed Trump’s first administration.”[10]

Potential Effects on Regulatory Activity

In the near term, regulated parties can expect radio silence from the CFPB. After Vought’s “stand-down” directive, few staff are working at all, some probationary employees have been laid off, and those staff who are working, with minimal exceptions, are not engaging in investigative, supervisory, or enforcement activities. Top supervision and enforcement officials have resigned, citing the Trump administration’s broad suspension of key financial industry oversight activities at the agency.[11] Litigation will be stayed, so long as courts accept the CFPB’s requests. And significant rules finalized in the waning days of Chopra’s directorship, such as the overdraft fee cap and the exclusion of medical debt from credit reports,[12] will remain on pause.

In the longer term, the agency’s future is uncertain. President Trump recently defended the stop-work order and confirmed his intention to “get rid of” the CFPB, which he called “a woke and weaponized agency against disfavored industries and individuals.”[13] Elon Musk, who is leading DOGE, has posted “Delete CFPB” and “CFPB RIP” on X.[14] And Republicans in the House and Senate have introduced legislation to defund the CFPB by cutting its statutory funding cap to zero.[15] However, Democrats, like Elizabeth Warren, have pledged to defend the CFPB.[16]

Courts might step in to limit an administrative shutdown of the agency. The National Treasury Employees Union, which represents unionized CFPB employees, has sued to block Vought’s “stand-down” directive, arguing that separation-of-powers principles prevent the administration from winding down a congressionally authorized agency.[17]

At a minimum, regulated parties can expect the new administration will critically examine each active initiative—likely withdrawing some rules, settling some litigation, and dropping some enforcement actions. For example, the CFPB recently told a federal court that it “could take action to withdraw or modify” the agency’s supervision order over Google Pay.[18] More rollbacks are very likely to follow.

Other Enforcers

If the CFPB substantially curtails its activities, other regulators could step up their regulatory activity in the same space.

The Federal Trade Commission in particular has concurrent enforcement authority over some statutes, such as the Fair Credit Reporting Act, 15 U.S.C. § 1681, and can police “unfair practices” under the FTC Act, 15 U.S.C. § 45. Since the FTC has insight into the CFPB’s investigations and enforcement under the agencies’ memorandum of understanding,[19] it could pick up some of the CFPB’s initiatives.

State Attorneys General also have broad authority to enforce state consumer protection laws[20] and, under 12 U.S.C. § 5552, may enforce the (federal) Consumer Financial Protection Act against defendants in their respective jurisdictions. State Attorneys General in some states are expected to become more active if federal enforcement wanes. In fact, prior to the leadership transition, the CFPB published a report with a compendium of guidance aimed at states that contained specific recommendations and could serve as the blueprint moving forward.[21] Further, state banking departments have independent supervisory authority over many of the non-bank financial institutions that have been historically subject to additional supervision by the CFPB. These state banking departments may enhance supervisory oversight over non-bank financial institutions in light of any perceived supervisory gap at the federal level.

[1] CFPB, Statement on Designation of Treasury Secretary Scott Bessent as Acting Director of the Consumer Financial Protection Bureau (Feb. 3, 2025), https://www.consumerfinance.gov/about-us/newsroom/statement-on-designation-of-treasury-secretary-scott-bessent-as-acting-director-of-the-consumer-financial-protection-bureau.

[2] Jon Hill, “Treasury’s Bessent Takes CFPB Reins, Halts Agency Actions,” Law360 (Feb. 3, 2025), https://www.law360.com/consumerprotection/articles/2292253.

[3] Id.

[4] Jon Hill & Courtney Bublé, “‘Stand Down’: CFPB’s Acting Chief Pulls Employees Off Job,” Law360 (Feb. 10, 2025), https://www.law360.com/consumerprotection/articles/2295798.

[5] Id.

[6] Id.

[7] Id.

[8] Evan Weinberger, “Musk’s DOGE Descends on CFPB With Eyes on Shutting It Down,” Bloomberg Law (Feb. 7, 2025), https://news.bloomberglaw.com/banking-law/musks-doge-descends-on-consumer-financial-protection-bureau.

[9] Michael Stratford, Declan Harty, & Katy O’Donnell, “Trump steps up overhaul of bank oversight with key picks,” Politico (Feb. 11, 2025), https://www.politico.com/news/2025/02/11/trump-bank-wall-street-regulators-top-posts-00203745.

[10] Jon Hill, “Trump’s Picks For CFPB, OCC Chiefs Hailed By Industry,” Law360 (Feb. 12, 2025), https://www.law360.com/corporate/articles/2297154/trump-s-picks-for-cfpb-occ-chiefs-hailed-by-industry-.

[11] Jon Hill, “CFPB’s Top Supervisor, Enforcer Call It Quits Amid Closure,” Law360 (Feb. 11, 2025), https://www.law360.com/corporate/articles/2296518/cfpb-s-top-supervisor-enforcer-call-it-quits-amid-closure.

[12] See CFPB, Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V) (Jan. 7, 2025), https://www.consumerfinance.gov/rules-policy/final-rules/prohibition-on-creditors-and-consumer-reporting-agencies-concerning-medical-information-regulation-v; CFPB, Overdraft Lending: Very Large Financial Institutions Final Rule (Dec. 12, 2024), https://www.consumerfinance.gov/rules-policy/final-rules/overdraft-lending-very-large-financial-institutions-final-rule.

[13] “Trump confirms goal to shutter CFPB,” ABA Banking Journal (Feb. 11, 2025), https://bankingjournal.aba.com/2025/02/trump-confirms-goal-to-shutter-cfpb.

[14] Weinberger, supra.

[15] Press Release, “Congressman Keith Self Introduces Bill to Eliminate CFPB Funding” (Jan. 30, 2025), https://keithself.house.gov/media/press-releases/congressman-keith-self-introduces-bill-eliminate-cfpb-funding; Press Release, “Sen. Cruz Introduces Legislation to Defund the CFPB and Restore Congressional Oversight” (Jan. 29, 2025), https://www.cruz.senate.gov/newsroom/press-releases/sen-cruz-introduces-legislation-to-defund-the-cfpb-and-restore-congressional-oversight.

[16] Claire Williams, “Warren, Democrats promise to fight for CFPB at rally,” American Banker (Feb. 10, 2025), https://www.americanbanker.com/news/warren-democrats-promise-to-fight-for-cfpb-at-rally.

[17] National Treasury Employees Union v. Vought, No. 1:25-cv-00381 (D.D.C.).

[18] Jon Hill, “CFPB Will Mull Axing Google Payment Oversight Order,” Law360 (Feb. 7, 2025), https://www.law360.com/technology/articles/2294631.

[19] Memorandum of Understanding Between the Consumer Financial Protection Bureau and the Federal Trade Commission (Feb. 25, 2019), https://files.consumerfinance.gov/f/documents/cfpb_ftc_memo-of-understanding_2019-02.pdf.

[20] See Consumer Protection Laws: 50-State Survey, Justia, https://www.justia.com/consumer/consumer-protection-laws-50-state-survey; National Association of Attorneys General, Consumer Protection 101, https://www.naag.org/issues/consumer-protection/consumer-protection-101.

[21] Jon Hill, “CFPB Serves Up Consumer Protection Roadmap For States,” Law360 (Jan. 15, 2025), https://www.law360.com/articles/2284260/cfpb-serves-up-consumer-protection-roadmap-for-states.

The following Gibson Dunn lawyers prepared this update: Gus Eyler, Natalie Hausknecht, Sara Weed, Ashley Rogers, Karin Thrasher, and Sam Whipple.

Gibson Dunn lawyers are closely monitoring developments at the CFPB and are available to discuss these issues as applied to your particular business. If you have questions about CFPB regulation and how best to prepare, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Consumer Protection or Fintech and Digital Assets practice groups, or the following:

Consumer Protection:

Gustav W. Eyler – Washington, D.C. (+1 202.955.8610, geyler@gibsondunn.com)

Natalie J. Hausknecht – Denver (+1 303.298.5783, nhausknecht@gibsondunn.com)

Ashley Rogers – Dallas (+1 214.698.3316, arogers@gibsondunn.com)

Fintech and Digital Assets:

M. Kendall Day – Washington, D.C. (+1 202.955.8220, kday@gibsondunn.com)

Jeffrey L. Steiner – Washington, D.C. (+1 202.887.3632, jsteiner@gibsondunn.com)

Sara K. Weed – Washington, D.C. (+1 202.955.8507, sweed@gibsondunn.com)

Gibson Dunn’s DEI Task Force is available to help clients understand what these and other expected policy changes will mean for them and how to comply with new requirements.

On February 5, 2025, the United States Office of Personnel Management (OPM) issued a memo to the heads and acting heads of federal departments and agencies entitled Further Guidance Regarding Ending DEIA Offices, Programs and Initiatives. The memo provides additional guidance on how federal agencies should implement President Trump’s executive orders, including Executive Order 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”), Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”), and Executive Order 14148 (“Initial Rescissions of Harmful Executive Orders and Actions”). While the memo is directed at implementation of the executive orders within the federal government, it provides insight into how the administration is likely to view certain types of DEI programs and how it will interpret similar programs in the private sector.

In alignment with the President’s executive orders, the OPM memo directs agencies to “terminate all illegal DEIA initiatives,” including by eliminating any DEIA “offices, policies, programs, and practices” that unlawfully discriminate in any employment action, including “recruiting, interviewing, hiring, training or other professional development, internships, fellowships, promotion, retention, discipline, and separation.” According to OPM, unlawful discrimination includes “taking action motivated, in whole or in part” by protected characteristics. The memo specifically identifies “diverse slate” policies—which it describes as “unlawful diversity requirements for the composition of hiring panels, as well as for the composition of candidate pools”—as an example of “[u]nlawful discrimination related to DEI.”

OPM does not require elimination of “personnel, offices, and procedures” that receive complaints of discrimination, counsel employees who have allegedly been subject to discrimination, collect demographic data, or process employee accommodation requests. To the extent these functions were previously handled by DEIA personnel, the memo instructs agencies to redistribute these functions among remaining agency personnel and offices. However, the memo warns that agencies must ensure that these functions are “strictly limited to the duties within [the agency’s] statutory authority[.]”

The memo also addresses Employee Resource Groups (ERGs), instructing agencies to prohibit ERGs that “promote unlawful DEIA initiatives.” Although the memo expressly states that agency heads “retain discretion” to “host affinity group lunches, engage in mentorship programs, and otherwise gather for social and cultural events,” it directs that these activities or programs must be consistent with President Trump’s executive orders and the “broader goal of creating a federal workplace focused on individual merit.” Specifically, the memo emphasizes that no affinity group or cultural or social gathering may be restricted, either “explicitly or functionally,” on the basis of a protected characteristic, and that agency heads may not “draw distinctions” based on protected characteristics. For example, OPM says that an agency may not permit the formation of ERGs for certain racial groups but not for others and may not limit attendance to an affinity group event to only members of that ethnic group.

The memo also addresses disability accessibility and accommodations, stating that the Biden Administration “conflated” DEI initiatives with legal obligations related to disability and accessibility. While the memo says that President Trump’s executive orders “require the elimination of discriminatory practices” and calls on agencies to rescind policies that are “contrary” to the Civil Rights Act of 1964 and the Rehabilitation Act of 1973, it states that agencies should not “terminate or prohibit accessibility or disability-related accommodations, assistance, or other programs that are required by” law.

OPM also says that agencies should eliminate Special Emphasis Programs that “promote DEIA based on protected characteristics in any employment action or other term, condition, or privilege of employment, including but not limited to recruiting, interviewing, hiring, training or other professional development, internships, fellowships, promotion, retention, discipline, and separation.” Special Emphasis Programs are employment-related programs in federal agencies that focus special attention on certain groups that are underrepresented in specific occupational categories or grade levels within the agency’s workforce. In lieu of these programs, the memo directs agencies to work to “restore merit-based equal employment opportunity” and “reward[] individual excellence.”

Finally, OPM states the President’s authority to promulgate these policies comes from the Constitution and, therefore, agencies should “adhere to the President’s orders” to “eliminate all unlawful discrimination in the federal workforce,” rather than heeding “non-binding opinions and guidance promoting DEIA” and similar policy efforts. The President’s authority over the federal workforce differs from the legal authority the Administration has over private sector employers and other non-federal workplaces. As noted, however, the OPM Memo is indicative of programs and practices the Administration may view as violating Title VII and other laws that apply outside the federal sector.

The following Gibson Dunn lawyers assisted in preparing this update: Jason Schwartz, Katherine Smith, Stuart Delery, Mylan Denerstein, Zakiyyah Salim-Williams, Zoe Klein, Anna McKenzie, Cate McCaffrey, Claire Piepenburg, and Lauren Meyer.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s DEI Task Force, Labor and Employment practice groups, or the following authors and practice leaders:

Jason C. Schwartz – Partner & Co-Chair, Labor & Employment Group,
Washington, D.C. (+1 202.955.8242, jschwartz@gibsondunn.com)

Katherine V.A. Smith – Partner & Co-Chair, Labor & Employment Group,
Los Angeles (+1 213.229.7107, ksmith@gibsondunn.com)

Stuart F. Delery – Partner & Co-Chair, Administrative Law & Regulatory Practice Group,
Washington, D.C. (+1 202.955.8515, sdelery@gibsondunn.com)

Mylan L. Denerstein – Partner & Co-Chair, Public Policy Group,
New York (+1 212.351.3850, mdenerstein@gibsondunn.com)

Zakiyyah T. Salim-Williams – Partner & Chief Diversity Officer,
Washington, D.C. (+1 202.955.8503, zswilliams@gibsondunn.com)

Molly T. Senger – Partner, Labor & Employment Group,
Washington, D.C. (+1 202.955.8571, msenger@gibsondunn.com)

I. Introduction

With Republicans controlling both chambers of Congress, the majority is planning to use a budget process called reconciliation to implement significant policy measures. Reconciliation allows Congress to pass certain legislation through expedited procedures, including by a simple majority vote in the House and Senate. As their majorities in both chambers are slim, Republicans see reconciliation as their best opportunity for advancing legislative priorities. That opportunity is not unlimited: an arcane Senate requirement known as the Byrd Rule creates a point of order against any “extraneous material” in reconciliation bills. Legislation passed through reconciliation must be budget-related and cannot include provisions without a fiscal impact or with a “merely incidental” fiscal impact. Additionally, committees are asked to adhere strictly to instructions provided by the Budget Committee.

Members of Congress and outside organizations hoping to include policy measures in the upcoming reconciliation bills must ensure that those measures comport with the Byrd Rule, which can be a challenge. If they do not, a senator opposing the provision can object to it on the Senate floor and the provision will be stricken absent a supermajority vote to waive the point of order. Senate Majority Leader John Thune has urged Republicans to retain the supermajority requirement because overturning it would have the same effect as overturning the Senate filibuster.[1]

Current priorities for the reconciliation bills include energy deregulation, border security, defense spending, federal funding cuts, and tax cuts. Congress can pass one reconciliation bill each fiscal year. Usually, this equates to one opportunity per calendar year, but the 118th Congress failed to adopt a budget resolution for fiscal year 2025. As a result, the 119th Congress could pass two reconciliation packages in 2025: one before the fiscal year ends in September, and another once the 2026 fiscal year begins in October. Republicans are currently divided on whether to pass a single reconciliation bill covering all their priorities or to pass one bill in early 2025 and a subsequent bill later in the year.

To date, Congressional Republicans have struggled to align on a single strategy for budget reconciliation. Senator Lindsay Graham (R-SC) has been pushing Congress to pass two reconciliation bills over the course of the year while House Speaker Mike Johnson (R-LA-4) has been a vocal advocate for a single bill.[2] The Senate released a budget reconciliation blueprint on February 7 that would instruct nine committees to make a $11.5 trillion net spending reduction over the next ten years,[3] and Chairman Graham has announced plans to mark up his resolution shortly.[4] The blueprint does not include an extension of the 2017 tax cuts, which will decrease the total savings.[5] House Republican leaders have privately signaled they are looking to cut federal spending by a smaller amount, $2 trillion to $2.5 trillion, though their single bill would include an extension of the tax cuts.[6]

Regardless of how many packages Congress ultimately passes, reconciliation presents clients an opportunity to propose and champion helpful legislation. In addition, reconciliation could change programs that affect clients, including major subsidies in the Inflation Reduction Act.

Below, we explain the reconciliation process and targeted areas for reconciliation in the 119th Congress.

II. Process

a. Statutory Reconciliation Process

Budget reconciliation is an optional procedural tool authorized by the Congressional Budget Act that supplements the annual budget process. To begin, the House and Senate Budget committees draft a concurrent budget resolution.[7] The committees then report the resolution to their respective chambers and provide reconciliation instructions that direct certain committees to develop legislation that will advance the required budgetary outcomes.

When the Budget committees consider the budget resolution, they each determine which committees in their chamber to instruct to develop legislations to meet the determined budgetary outcome. Not all committees receive instructions in each reconciliation package and which committees receive instructions depends on the legislative goals the majority wishes to advance in the reconciliation bill. Notably, the House and Senate do not have the same committees and similar committees do not always have the same jurisdiction, so the same provision may end up in different committees in each chamber. For example, the House Energy and Commerce Committee may have five provisions under its jurisdiction, but those provisions may be divided between the Senate Commerce Committee and Senate Energy and Natural Resources Committee.

The instructions frequently tell the committees how much money they are allowed to spend or how much they must save. The provisions assigned to each committee must comport with those limits. For example, the 117th Congress passed a reconciliation measure with the following instructions:

(a) Committee on Agriculture, Nutrition, and Forestry. — The Committee on Agriculture, Nutrition, and Forestry of the Senate shall report changes in laws within its jurisdiction that increase the deficit by not more than $135,000,000,000 for the period of fiscal years 2022 through 2031.[8]

In this example, the budget resolution instructed the Senate Committee on Agriculture, Nutrition, and Forestry to increase the deficit by not more than $135 billion. In other words, provisions under the committee’s jurisdiction cannot increase the deficit by more than $135 billion.

Armed with instructions, the committees draft legislative proposals and return them to the Budget committees by the deadline specified in the budget resolution. The Budget committees then incorporate those reports into an omnibus reconciliation bill.

The House and Senate consider the resulting reconciliation legislation under expedited procedures. In the House, the Rules Committee typically sets limits on debate and amendments for reconciliation procedures. In the Senate, debate on reconciliation legislation is limited to 20 hours, and any proposed amendments must be germane.[9] The Senate’s 20-hour limit on debate prevents members from filibustering and allows the Senate to pass reconciliation legislation with a simple majority rather than the usual 60 votes required to invoke cloture. Unsurprisingly, these limitations make reconciliation bills attractive vehicles for the majority to advance its legislative priorities.

In the 1980s, to address concerns that Congress had increasingly larded reconciliation bills with policies unrelated to the budget, the Senate implemented, and later codified, the Byrd Rule to focus reconciliation on its budgetary purpose.

b. The Byrd Rule

The Byrd Rule allows a senator to raise a point of order to strike “extraneous material” contained in a reconciliation bill or reconciliation resolution. When a reconciliation measure is considered, the Senate Budget Committee is required to submit for the record a list of potentially extraneous material included therein. The Byrd Rule is not self-executing, meaning a member must affirmatively raise the point of order. If the Senate chair sustains the point of order, the extraneous material is struck from the bill and may not be offered as an amendment. A vote of three-fifths of the Senate (typically 60 senators) is required to waive the rule or to overturn a ruling of the Chair. A provision is extraneous if it falls under one or more of the following six definitions:

it does not produce a change in outlays or revenues or a change in the terms and conditions under which outlays are made or revenues are collected;
it produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
it is outside of the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
it produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision;
it would increase the deficit for a fiscal year beyond the “budget window” covered by the reconciliation measure; and
it recommends changes in Social Security.[10]

When interpreting the Byrd Rule, the Senate Parliamentarian refers to precedents established by prior decisions. Some precedents are located in the Congressional Record, but many are not publicly available. Although the Byrd Rule allows members to make formal points of order during debate, the Parliamentarian works with instructed committees’ staff prior to the floor debate to determine what provisions would be subject to the Byrd provisions—a process known as a “Byrd bath.” In that process, the minority staff typically scour the reconciliation legislation for potential Byrd Rule violations and raise them with the Senate Parliamentarian. Frequently, minority staff will submit memoranda arguing their points and majority staff will respond with their own memoranda. For more complicated questions, the Parliamentarian may ask the staff to present oral arguments making their case. These discussions happen behind closed doors, so there is no public record of the arguments or outcomes. As a result, it can be “difficult to divine the standard that the Parliamentarian applies to make determinations under the Byrd Rule, and in particular, the ‘merely incidental’ test.”[11]

Two interrelated provisions under the Byrd Rule that are subject to frequent debate are the requirements that reconciliation legislation (1) must “produce a change in outlays or revenues or a change in the terms and conditions under which outlays are made or revenues are collected” and (2) must not produce a budgetary change which is “merely incidental to the non-budgetary components.” These requirements are discussed in turn.

First, each provision of a reconciliation bill must produce a budgetary effect or change the terms of a law that makes outlays or collects revenues. Reconciliation measures often satisfy this requirement by changing eligibility definitions or formulas used to determine federal benefits.[12] A spending-related provision will survive a challenge under this provision if it allocates money for various programs and an amendment will withstand a challenge if it modifies funding allocations in the underlying legislation.[13]

Second, the Byrd Rule creates a point of order against any provision with a budgetary effect that is “merely incidental” to its non-budgetary components. This judgment requires a balancing analysis: whether the provision creates a policy change that would substantially outweigh its budgetary impact.[14] This element does not stand on its own and must be read in conjunction with the requirement that a provision must create a budgetary effect.

Whether a provision increases or decreases the deficit is not dispositive. “[A] Senator can find it easy to defend as budgetary a provision that does nothing but spend a great deal of money. On the other hand, a provision that actually reduces the deficit but does so through the device of an extensive policy change will receive strict scrutiny.”[15]

The outcome of this prong of the analysis can depend on the score a bill receives from the Congressional Budget Office (CBO). The greater the budgetary impact of a provision, the more difficult it will be for opponents to contend that its budgetary effects are “merely incidental.” Reputable tax economics firms can provide cost estimates for proposed legislation.

Although the size of the budgetary impact from a provision is relevant to the Byrd Rule analysis, it is not dispositive. During consideration of the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, the Parliamentarian considered a provision to repeal the Affordable Care Act’s individual mandate.[16] She advised that “while the dollars associated with repeal are large (a net savings of approximately 147 billion dollars over 10 years if combined with the employer mandate repeal), they are dwarfed by the scope and impact of this mandate on the 270 million Americans who are covered by it.”[17] As the “law constitutes a massive, national policy change[,] the primary purpose of which is not budgetary” it was found to violate the Byrd Rule.[18]

This provision frequently gives rise to staff arguments to the Parliamentarian and Senate floor points of order. There is little public precedent defining the “merely incidental” test, which means it is often difficult to predict how the Parliamentarian will rule on a particular question. Hence, careful thought needs to be given as to whether a provision can pass the “merely incidental” test as well as how to present the provision to the Parliamentarian.

The four remaining Byrd Rule provisions are more straightforward:

Where a Senate Committee is directed to increase or decrease the deficit by a certain amount, it must comply with those instructions in its legislative recommendations to the Budget Committee. If a House-passed reconciliation bill does not align with a Senate Committee reconciliation instruction, the House may offer an amendment to address the disparity.
A committee may only make recommendations to the Budget Committee—in response to reconciliation directions—on matters under the committee’s jurisdiction. If a committee makes recommendations on matters outside of its jurisdiction, those may be stricken as extraneous.
A provision must not increase the deficit for a fiscal year beyond the “budget window” covered by the reconciliation measure. The budget window will be ten years. In some cases, Congress can save a provision that would run afoul of this rule by adding a sunset provision.
No provision may recommend changes in Social Security.

III. Targeted Areas for Reconciliation

As Republicans in Congress prepare to implement President Trump’s legislative agenda, priorities for reconciliation include energy deregulation, border security, defense spending, and tax cuts.[19] A top reconciliation priority is extending the tax cuts enacted through reconciliation during the first Trump administration in the 2017 Tax Cuts and Jobs Act.[20] Those tax cuts are set to expire in December 2025.[21] In order to meet their targeted deficit reduction goals while cutting extending tax cuts, Republicans are reportedly considering slashing Medicaid, which may prove politically challenging.[22]

Of the energy policies being considered for reconciliation, the most significant would be repealing parts of the Inflation Reduction Act (IRA),[23] which provides funding for clean energy.[24] The law includes an array of green subsidies—including consumer tax credits, grants, and loans—in exchange for using clean energy.[25] Republicans have not publicly announced specific IRA provisions they will target through reconciliation, although Speaker Johnson mentioned wanting to take a “scalpel” rather than a “sledgehammer” to the green subsidies.[26] Republicans are also reportedly considering using reconciliation to address energy permitting reform and opening the Artic Wildlife Refuge for drilling.[27]

Republicans are also expected to attempt to use reconciliation to increase border security, namely by providing funding for completion of a wall along the country’s southern border and increasing funding for Customs and Border Protection and Immigration and Customs Enforcement.[28] And they are expected to convert a portion of discretionary defense spending into mandatory spending.[29]

Beyond those priorities, members have mentioned using reconciliation to expand child tax credits,[30] require site neutrality for Medicare,[31] reform welfare, and provide for greater scrutiny of “mandatory” spending.[32] The bill also may address the debt ceiling.[33]

IV. Conclusion

Gibson Dunn is monitoring the reconciliation process closely. Our lawyers include former key Capitol Hill staff members, including those who worked on instructed committees during reconciliation processes in the Senate. These lawyers can help clients interested in understanding how reconciliation could help them or assess provisions for compliance with the Byrd Rule. Clients with policy interests related to these bills should be aware that the situation is evolving rapidly and should reach out to the firm with any questions.

[1] Andrew Desiderio, Thune to Senate GOP: Don’t Overrule Parliamentarian on Reconciliation, Punchbowl News (Jan. 6, 2025), https://punchbowl.news/article/senate/thune-tells-gop-not-to-overrule-parliamentarian/.

[2] Jake Sherman, John Bresnahan, The race for reconciliation, Punchbowl News (Feb. 10, 2025), https://punchbowl.news/article/house/republican-leaders-house-look-to-cut-federal-spending-big/.

[3] Paul Krawzak, Graham unveils budget blueprint ahead of markup next week, Roll Call (Feb. 7, 2023), https://rollcall.com/2025/02/07/graham-unveils-budget-blueprint-ahead-of-markup-next-week/.

[4] Melanie Zanona, John Bresnahan & Samantha Handler, AM: The reconciliation race: Can the House get its act together?, Punchbowl News (Feb. 10, 2025).

[5] Id.

[6] Jake Sherman, John Bresnahan, The race for reconciliation, Punchbowl News (Feb. 10, 2025), https://punchbowl.news/article/house/republican-leaders-house-look-to-cut-federal-spending-big/.

[7] Floyd M. Riddick & Alan S. Frumin, Riddick’s Senate Procedure 502 (1992) [hereinafter “Riddick’s”].

[8] S. Cong. Res 14, 117th Cong (2021) (adopted).

[9] See Congressional Budget Act of 1974 § 310(e)(2) (codified as amended at 2 U.S.C. § 641(e)(2)); Congressional Budget Act of 1974 § 305(b)(2) (codified as amended at 2 U.S.C. § 636(b)(2)); Congressional Budget Act of 1974 § 305(c)(4) (codified as amended at 2 U.S.C. § 636(c)(4)).

[10] Congressional Budget Act of 1974 § 313 (codified as amended at 2 U.S.C. § 644).

[11] Budget Process Law Annotated—2022 Edition, by William G. Dauster, 117th Cong., 2d sess., S. Prt. 117–23, December 2022, notes on pp. 622.

[12] Id. at 669.

[13] Id. at 671.

[14] Id. at 690.

[15] Id. at 693.

[16] Id. at 703.

[17] Id. at 704.

[18] Id.

[19] Sahil Kapur, Republicans eye tax breaks, border funds and clean energy cuts when Trump returns, NBC (Dec. 1, 2024), https://www.nbcnews.com/politics/congress/republicans-eye-tax-breaks-border-funds-clean-energy-cuts-trump-return-rcna181927.

[20] Pub. L. 115–97, 131 Stat. 2054.

[21] See Pub. L. 115–97, § 11001(a), 131 Stat. 2054, 2054 (codified at 26 U.S.C. § 1).

[22] Jake Sherman, John Bresnahan, The race for reconciliation, Punchbowl News (Feb. 10, 2025), https://punchbowl.news/article/house/republican-leaders-house-look-to-cut-federal-spending-big/.

[23] Pub. L. 117–169, 136 Stat. 1818 (2022).

[24] Emma Dumain et al., Republicans plot energy-focused reconciliation package, Politico (Dec. 4, 2024), https://www.eenews.net/articles/republicans-plot-energy-focused-reconciliation-package/.

[25] See Sahil Kapur, Republicans eye tax breaks, border funds and clean energy cuts when Trump returns, NBC (Dec. 1, 2024), https://www.nbcnews.com/politics/congress/republicans-eye-tax-breaks-border-funds-clean-energy-cuts-trump-return-rcna181927.

[26] See Emma Dumain et al., Republicans plot energy-focused reconciliation package, Politico (Dec. 4, 2024), https://www.eenews.net/articles/republicans-plot-energy-focused-reconciliation-package/.

[27] Id.; Kelsey Brugger, Republicans cooking up 2025 permitting plan if lame-duck push fails, PoliticoPro (Nov. 20, 2024), https://subscriber.politicopro.com/article/eenews/2024/11/20/republicans-cooking-up-2025-permitting-plan-if-lame-duck-push-fails-00190527.

[28] Alexander Bolton, Thune lays out plan for separate border and tax reconciliation bills, Hill (Dec. 3, 2024), https://thehill.com/homenews/senate/5020333-senate-republicans-reconciliation-tax-cuts-border-security/.

[29] Id.

[30] Sahil Kapur, Republicans eye tax breaks, border funds and clean energy cuts when Trump returns, NBC (Dec. 1, 2024), https://www.nbcnews.com/politics/congress/republicans-eye-tax-breaks-border-funds-clean-energy-cuts-trump-return-rcna181927.

[31] Ben Leonard & Robert King, Cassidy: ‘Premature’ to say if site-neutral is a reconciliation target, PoliticoPro (Dec. 11, 2024), https://subscriber.politicopro.com/article/2024/12/cassidy-premature-to-say-if-site-neutral-is-a-reconciliation-target-00193735?site=pro&prod=alert&prodname=alertmail&linktype=headline&source=email.

[32] Sahil Kapur, Republicans eye tax breaks, border funds and clean energy cuts when Trump returns, NBC (Dec. 1, 2024), https://www.nbcnews.com/politics/congress/republicans-eye-tax-breaks-border-funds-clean-energy-cuts-trump-return-rcna181927.

[33] Gregory Svirnovskiy, Johnson wants budget reconciliation bill on Trump’s desk by end of April, Politico (Jan. 5, 2015), https://www.politico.com/news/2025/01/05/johnson-budget-reconciliation-trump-april-00196504.

The following Gibson Dunn lawyers assisted in preparing this update: Michael Bopp, Amanda Neely, and Alexandria Murphy.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Congressional Investigations or Public Policy practice groups, or the following authors:

Michael D. Bopp – Chair, Congressional Investigations Practice Group,
Washington, D.C. (+1 202.955.8256, mbopp@gibsondunn.com)

Barry H. Berke – Co-Chair, Litigation Practice Group,
New York (+1 212.351.3860, bberke@gibsondunn.com)

Stuart F. Delery – Co-Chair, Administrative Law & Regulatory Practice Group,
Washington, D.C. (+1 202.955.8515, sdelery@gibsondunn.com)

Thomas G. Hungar – Partner, Appellate & Constitutional Law Practice Group,
Washington, D.C. (+1 202-887-3784, thungar@gibsondunn.com)

Amanda H. Neely – Of Counsel, Public Policy Practice Group,
Washington, D.C. (+1 202.777.9566, aneely@gibsondunn.com)

The executive order is among the most significant political developments related to the FCPA in years. Gibson Dunn will continue monitoring these developments and reporting to our trusted friends and clients in the days, weeks, and months ahead.

Yesterday evening, President Trump signed an executive order titled Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security (Feb. 10, 2025), directing the Department of Justice (DOJ) to pause new investigations and enforcement actions under the Foreign Corrupt Practices Act of 1977 (FCPA), conduct a review, and issue revised enforcement guidelines for the statute. In its opening lines, the order asserts that the FCPA has been “systematically, and to a steadily increasing degree, stretched beyond proper bounds and abused” such that its “overexpansive and unpredictable” enforcement “against American citizens and businesses . . . for routine practices in other nations” now impedes U.S. foreign policy objectives. The order requires that the newly appointed Attorney General Pamela Bondi, during a 180-day period that may be extended another 180 days at her discretion, cease initiation of new FCPA investigations or enforcement actions, unless she grants an individual exception.

The order mandates that any FCPA investigations or enforcement actions initiated or allowed to continue afterward must be governed by the revised guidelines and be “specifically authorized by the Attorney General.” Finally, the order directs the Attorney General to “determine whether additional actions, including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions” should be taken by DOJ or, if Presidential action is required, recommended to the President.

This development comes on the heels of last week’s memorandum by Attorney General Bondi—discussed further in our recent analysis—instructing DOJ’s FCPA Unit to prioritize cases that relate to cartels and transnational criminal organizations (TCOs) and shift focus away from cases that lack such a connection, to facilitate aggressive prosecutions in service of the total elimination of cartels and TCOs. In keeping with President Trump’s stated priority of “keeping America safe,” that memorandum and others reflected a clear shift in the Administration’s enforcement priorities to human trafficking and smuggling; TCOs, cartels, and gangs; and protecting law enforcement.

Impetus and Context

The executive order and an accompanying “fact sheet” state that “FCPA overenforcement” has “harmed” U.S. companies doing business in international markets by prohibiting them from engaging in practices that are “common among international competitors,” putting them at a disadvantage against their international peers. The order cites “excessive, unpredictable FCPA enforcement” as impeding the President’s constitutional authority to conduct foreign affairs, which is “inextricably linked with the global economic competitiveness of American companies.” By stopping “overenforcement,” President Trump seeks to “level [the] playing field” and provide U.S. companies with “the tools to succeed globally.” This line of rhetoric resonates with comments President Trump made in a 2012 interview with CNBC, wherein he called the FCPA a “horrible law and it should be changed” because it puts U.S. businesses at a “huge disadvantage.”

Yet, as discussed in our 2020 Year-End FCPA Update, despite predictions to the contrary, sweeping changes did not come to pass during President Trump’s first term. Rather, FCPA enforcement actions increased, with 164 total enforcement actions (including non-prosecution agreements and “declinations with disgorgement”) announced by the DOJ or Securities and Exchange Commission (SEC) during President Trump’s first term (2017-2020)—compared to only 126 during President Obama’s second term (2012-2016) and 96 under President Biden (2021-2024). The current Trump administration’s pronouncements resurrect earlier predictions of the FCPA’s demise—and questions around what an appropriate level of FCPA enforcement should be.

Prior administrations used similar rhetoric around ensuring a level playing field and promoting the rule of law in the fight against TCOs and terrorism as rationales for continued or increased FCPA enforcement. Indeed, corruption has been a continuous focal point in national security strategies of administrations since the 1998 amendments to the statute, if not earlier. The George W. Bush administration pronounced in 2002 that “corruption can make weak states vulnerable to terrorist networks and drug cartels within their borders.” In 2010, the Obama administration similarly recognized corruption as a “severe impediment to development and global security” and as one of the primary vehicles through which TCOs and terrorist organizations had been able to accumulate wealth and power. The first Trump administration’s national security strategy noted in 2017 that “[t]errorists and criminals thrive where governments are weak, corruption is rampant, and faith in government institutions is low” and established a priority action to counter foreign corruption by “[u]sing our economic and diplomatic tools . . . to target corrupt foreign officials and work with countries to improve their ability to fight corruption so U.S. companies can compete fairly in transparent business climates.” And in 2022, the Biden administration referred to the fight against corruption as a “core national security interest.”

Metrics relating to FCPA enforcement do not suggest that U.S. companies are being disproportionately punished, although “overenforcement” is a subjective concept. The “fact sheet” cites only limited statistics in support of its premise that U.S. companies are disadvantaged, including that DOJ and SEC filed “26 FCPA-related enforcement actions” last year with 31 companies under investigation and that an average of 36 FCPA-related enforcement actions per year over the last decade “drain[ed] resources from both American businesses and law enforcement.” Although the totals of FCPA-related enforcement actions, as we have tracked them, are actually greater (40 announced in calendar year 2024 and 46 annually on average over the last decade, as discussed in our 2024 Year-End FCPA Update), focusing on those discrepancies misses the forest for the trees.

Beyond the policy point discussed above, it is important to note that the majority of defendants in FCPA enforcement actions over the past decade have been non-U.S. companies and individuals. Specifically, between 2015 and 2024, according to our data, 50% of all corporate defendants and 62% of all individual defendants in FCPA enforcement actions by DOJ or SEC were foreign. And of the top ten largest monetary recoveries by U.S. authorities resulting from corporate FCPA enforcement actions, foreign companies account for eight, with monetary recoveries amounting to $6.1 billion of the $8.3 billion aggregate total from the “FCPA Top 10” enforcement actions.

Finally, in terms of tying up law enforcement resources, DOJ’s 24 corporate FCPA enforcement actions over the past three years (2022-2024) represented less than 10% of DOJ’s at least 244 negotiated corporate criminal resolutions (i.e., guilty pleas, deferred prosecution agreements, non-prosecution agreements, and declinations with disgorgement) during that period. (And that small fraction has not appeared to require a disproportionate outlay of DOJ resources, insofar as FCPA cases have historically—by design—involved a greater degree of cooperation, voluntary disclosure, and non-trial resolutions than other types of criminal prosecution.) FCPA enforcement actions compose an even smaller fraction of overall enforcement when considering the full range of DOJ criminal investigations and prosecutions against individuals. Although the data do not correspond neatly to our other statistics, to provide a sense of magnitude, during President Trump’s first administration between government fiscal years 2017 and 2020, U.S. Attorneys’ Offices investigated a total of 678,949 suspects, and DOJ charged 326,726 defendants in federal courts according to DOJ’s Bureau of Justice Statistics.

The “fact sheet” and the executive order’s call to enhance national security (citing specifically the need for strategic advantages in critical minerals, deepwater ports, and other key infrastructure or assets around the world) is also not novel. We note that the FCPA provides a limited statutory exemption for matters implicating national security. Specifically, the FCPA exempts issuers from liability under the accounting provisions in matters related to national security when acting under the directive of the “the head of any Federal department or agency . . . pursuant to Presidential authority,” who must report such matters on an annual basis to the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate. 15 U.S.C. § 78m(b)(3). The executive order does not address this exemption; whether the omission was intentional, perhaps signaling a desire to circumvent or reduce congressional oversight of such executive directives, or an effort to expand the exemption in practice to the antibribery provisions, remains an open question.

Open Questions

While the executive order gives a clear statement of President Trump’s priorities with respect to the FCPA, its impact remains to be seen. It is possible that the executive order could herald only a brief pause in new FCPA actions while DOJ brings its enforcement efforts in line with the Administration’s priorities and the directives Attorney General Bondi has already issued. For example, the Attorney General’s February 5, 2025 memorandum authorizing U.S. Attorneys’ Offices to initiate FCPA cases connected to cartels or TCOs without approval by DOJ’s Criminal Division requires some reconciliation with the executive order’s mandate that FCPA actions henceforth be specifically authorized by the Attorney General. Alternatively, the order could mark a material shift in FCPA enforcement, significantly impacting the United States’s historical global leadership in anti-corruption efforts.

Operationally, some immediate questions include the following:

How, if at all, does the executive order apply to the FCPA’s other enforcer, the SEC? The SEC shares joint authority with DOJ for enforcing the FCPA against issuers, and while the fact sheet references combined DOJ and SEC statistics, the executive order is addressed solely to the Attorney General and gives no direction to the SEC regarding FCPA enforcement. (Nor does the order address the CFTC, which issued an advisory during the first Trump administration announcing its own foreign corruption-related enforcement program.) It is possible that the FCPA may continue to be enforced civilly by the SEC, even as criminal enforcement declines, though this would seem to be at odds with the executive order’s premise that FCPA enforcement interferes with U.S. companies’ ability to do business abroad.
How will non-U.S. companies fare under the new FCPA enforcement regime? The rhetoric behind the executive order and fact sheet is uniquely protectionist as to U.S. companies. Although FCPA practitioners have long questioned the wisdom of and legal basis for pursuing foreign companies for bribing foreign officials on foreign soil, if the Trump Administration wishes to wield U.S. law as a tool to advantage U.S. companies, one way to do so could be to enhance aggressive prosecutions against foreign companies. This could then lead to serious “selective prosecution” challenges in the U.S. courts, as befell the “China Initiative” in Trump I.
Four Years, or Forever? Even under the broadest projection of deprioritizing FCPA enforcement, Americans will choose a new leader in just under four years. White collar criminal enforcement has long been a stated priority of Democratic regimes and other Republican regimes alike, and if there is an overcorrection to “FCPA overenforcement” under Trump, there very possibly could be an overcorrection in the opposite direction in the next administration. The challenges of rebuilding a dismantled enforcement apparatus would be real and take time, but the statute of limitations for FCPA cases is five years and can be paused for up to an additional three years as DOJ seeks foreign-located evidence—among other scenarios that toll the limitations period. Whether DOJ will continue to pursue tolling orders and tolling agreements during the enforcement review period remains to be seen.
Remedial Measures for Past FCPA Enforcement Actions? If the overall executive order is curious, more curious still is a suggestion that part of DOJ’s review will include the pursuit of “remedial measures” associated with past FCPA enforcement actions that may have crossed the FCPA’s “proper bounds” or were somehow abusive. What this will mean in practice remains to be seen, but one prime target could be ongoing compliance obligations associated with recent resolutions, including monitorships and self-reporting. For resolutions announced in coordination with foreign enforcement authorities, revisiting a U.S. resolution may have collateral effects vis-à-vis parallel resolutions announced by foreign enforcement authorities, such as if monetary penalties or forfeiture to U.S. authorities that were originally credited by foreign authorities are reduced.
How Does this Relate to FCPA-Related Cases? As we frequently note in our enforcement updates, a significant portion of foreign anti-corruption enforcement is actually brought under a myriad of adjacent criminal laws, including money laundering, wire fraud, securities fraud, and other statutes. These actions are not literally covered by the executive order, which is limited to the FCPA, and whether the pause will extend more broadly to “FCPA-related” enforcement remains to be seen. Indeed, one possibility is that international corruption cases initially investigated by DOJ’s FCPA Unit could be redirected to U.S. Attorney’s Offices to charge materially the same conduct under different statutes.
What About Already-Indicted Cases? DOJ has unilateral authority to “pause” ongoing FCPA investigations that have not yet been charged, but cases that already have been indicted and before the courts will involve an Article III decision-maker. Whether DOJ intends to move to dismiss or stay ongoing cases in the courts remains to be seen. We are aware of one case with an upcoming trial where a judge already has ordered DOJ to state its position in response to the executive order.

Whatever the answers to these questions, the perspective reflected in the order represents a shift from the long-held view that international anti-corruption efforts benefit U.S. businesses by creating a level playing field and strengthening the rule of law—including in countries with a strong presence of TCOs and cartels. One of the original purposes of the statute was to address bribery by U.S. companies that undermined American foreign policy in the 1970s and restore public confidence in the integrity of American businesses following evidence of substantial corruption and international bribery uncovered during investigations following the Watergate Scandal under President Nixon. President Clinton’s signing statement to the 1998 amendments to the FCPA also underscored an intent to level the playing field for U.S. companies that were losing international business opportunities to foreign competitors paying bribes and then deducting them from their taxes in their home countries.

As noted above, the order also marks a fundamental break with a longstanding bipartisan consensus on the role of the United States in combatting international corruption. That consensus was not only domestic but international, with the United States advancing multilateral efforts to bring other countries into the fold as partners in anti-corruption efforts. Indeed, in still-available public online materials, the U.S. Mission to the Organization for Economic Cooperation & Development (OECD) declared that “the United States has led the fight against international bribery” and credits the United States in creating a global “race to the top” by encouraging adoption of the 1997 OECD Anti-Bribery Convention, to which the U.S. also acceded in 1999. It is not yet clear whether the Administration’s executive order and stance on FCPA enforcement will be in line with U.S. obligations under the OECD Anti-Bribery Convention and other international treaties such as the United Nations Convention Against Corruption.

Whatever its ultimate implementation, the executive order is among the most significant political developments related to the FCPA in years. We will continue monitoring these developments and reporting to our trusted friends and clients in the days, weeks, and months ahead.

The following Gibson Dunn lawyers prepared this update: F. Joseph Warin, Patrick Stokes, Benno Schwarz, Stephanie Brooker, John Chesley, Michael Diamant, Melissa Farrar, Oleh Vretsona, David Ware, Bryan Parr, Kio Bell, Michael Jaskiw, and Ellie Schwietering.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. We have more than 110 attorneys with FCPA experience, including a number of former federal prosecutors and SEC officials, spread throughout the firm’s domestic and international offices. Please contact the Gibson Dunn attorney with whom you work, or any of the following leaders and members of the firm’s Anti-Corruption & FCPA practice group:

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Jordan Estes (+1 212.351.3906, jestes@gibsondunn.com)
Dani James (+1 212.351.3880, djames@gibsondunn.com)
Darren LaVerne (+1 212.351.3936, dlaverne@gibsondunn.com)
Michael Martinez (+1 212.351.4076, mmartinez2@gibsondunn.com)
Karin Portlock (+1 212.351.2666, kportlock@gibsondunn.com)
Jaclyn Neely (+1 212.351.2692, jneely@gibsondunn.com)
M. Jonathan Seibald (+1 212.351.6216, mseibald@gibsondunn.com)

Denver
Ryan T. Bergsieker (+1 303.298.5774, rbergsieker@gibsondunn.com)
Robert C. Blume (+1 303.298.5758, rblume@gibsondunn.com)
John D.W. Partridge (+1 303.298.5931, jpartridge@gibsondunn.com)
Laura M. Sturges (+1 303.298.5929, lsturges@gibsondunn.com)

Los Angeles
Michael M. Farhang (+1 213.229.7005, mfarhang@gibsondunn.com)
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Nicola T. Hanna (+1 213.229.7269, nhanna@gibsondunn.com)
Poonam G. Kumar (+1 213.229.7554, pkumar@gibsondunn.com)
Marcellus McRae (+1 213.229.7675, mmcrae@gibsondunn.com)
Debra Wong Yang (+1 213.229.7472, dwongyang@gibsondunn.com)
Rommy Flores (+1 213.229.7966, rflores@gibsondunn.com)

San Francisco
Winston Y. Chan (+1 415.393.8362, wchan@gibsondunn.com)
Thad A. Davis (+1 415.393.8251, tadavis@gibsondunn.com)
Charles J. Stevens (+1 415.393.8391, cstevens@gibsondunn.com)
Zachariah J. Lloyd (+1 415.393.8319, zlloyd@gibsondunn.com)

Palo Alto
Benjamin Wagner (+1 650.849.5395, bwagner@gibsondunn.com)

London
Patrick Doris (+44 20 7071 4276, pdoris@gibsondunn.com)
Charlie Falconer (+44 20 7071 4270, cfalconer@gibsondunn.com)
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Michelle Kirschner (+44 20 7071 4212, mkirschner@gibsondunn.com)
Allan Neil (+44 20 7071 4296, aneil@gibsondunn.com)
Philip Rocher (+44 20 7071 4202, procher@gibsondunn.com)

Paris
Benoît Fleury (+33 1 56 43 13 00, bfleury@gibsondunn.com)
Bernard Grinspan (+33 1 56 43 13 00, bgrinspan@gibsondunn.com

Munich
Katharina Humphrey (+49 89 189 33 155, khumphrey@gibsondunn.com)
Benno Schwarz (+49 89 189 33 110, bschwarz@gibsondunn.com)
Mariam Pathan (+49 89 189 33 228, mpathan@gibsondunn.com)

Hong Kong
Oliver D. Welch (+852 2214 3716, owelch@gibsondunn.com)
Becky Chung (+ +852 2214 3837, bchung@gibsondunn.com)
Ning Ning (+852 2214 3763, nning@gibsondunn.com)

Singapore
Oliver D. Welch (+852 2214 3716, owelch@gibsondunn.com)
Karthik Ashwin Thiagarajan (+65 6507 3636, kthiagarajan@gibsondunn.com)

Gibson Dunn is available to help Taiwanese clients understand what this and other possible policy changes will mean for them and how to navigate the shifting regulatory environment.

Navigate to the English version here

美國總統川普簽署行政令對中國商品加徵關稅－台灣跨境企業面臨加劇執法風險

吉布森律師事務所可以幫助台灣跨境企業評估政策變化帶來的合規風險，以因應變化莫測的監管環境。

政策背景

2025 年 2 月 1 日，美國總統川普發布總統行政令，對中華人民共和國的合成鴉片類藥物供應鏈增收從價關稅。該行政令涵蓋“中華人民共和國生產的所有物品 ”，其具體定義將公佈在即將發行的《聯邦公報》中。在川普總統依據《國際緊急經濟權力法》決定「國家緊急狀態」結束前，該關稅將持續有效。

該行政令規定，美東時間2024年2月4日上午零點後所有原產於中國內地並“已入庫準備消費或從倉庫提出用於消費”的商品都須額外支付10%關稅。這項關稅將累加於現行關稅之上，包括川普首次執政期間對四篇清單中國進口商品增收高達50%的關稅。拜登政府隨後延續了川普時期的對華關稅政策，同時對包括電池零件、電動車、半導體及鋼鐵和鋁產品加徵額外關稅。

值得注意的是，行政令未提及適用的具體貨物範圍。相關規定可能會在隨後發行的《聯邦公報》或《聯邦公報》發行通知中頒布。

該新政同時規定，若中國徵收報復性關稅，川普總統「可提高或擴大依本命令徵收關稅的範圍」。中國商務部於2 月 2 日宣布將針對此關稅向世貿組織提出申訴並實施相應的反制措施。 2025 年 2 月 4 日，中國財政部宣布自 2025 年 2 月 10 日起，對美國進口的煤炭和液化天然氣徵收 15%的額外關稅，並對原油、農業設備和部分車輛徵收 10%的關稅。

美國將透過《虛假申報法》進一步打擊避稅行為

隨著新關稅政策的頒布，在中國生產、組裝產品或擁有中國供應鏈的公司或將面臨更嚴格的監管審查。《虛假申報法》是美國當局打擊涉嫌在目前高成本環境下公司避稅行為的主要執法工具。《虛假申報法》禁止行為人透過提供虛假資訊來逃避對美國政府的金錢義務，並對相應行為進行罰款。儘管法律要求美國政府承擔舉證責任，包括員工在內的個人和非政府組織卻可以透過Qui Tam機製作為原告提起訴訟。該法同時提供大量金錢獎勵以激勵舉報行為。

現行政策下，在中國進行部分產品生產、採購或組裝的非中國企業將面臨特別嚴重的執法風險。美國對於進口產品原產地的認定規則多種多樣，同一件產品可能隨著產品原料、零件和加工地的不同而適用不同規則。根據最新執法和監管解釋，一件台灣公司認為生產於台灣的產品可能因為使用了中國零件，而被美國當局認定為原產於中國，從而被徵收關稅。短期來看，企業仍可暫時將商品轉運至第三國，透過「實質改造」改變美國海關對商品原產地的認定。但這種行為早已成為美國執法機關的眼中釘，在可預見的高壓政策下能否長期持續仍尚未可知。

據我們吉布森了解，美國政府正在積極進行違反《虛假申報法》的執法調查。例如，近期就有兩家企業因為中國供應鏈相關的稅務問題與美國司法部簽署數百萬美元的和解協議：

2024 年 3 月，美國司法部對一家新澤西州化學品進口商與中國供應商之間涉嫌合謀逃避關稅的案件進行了調查，並簽署 310 萬美元的和解協議。
2024 年 1 月，美國司法部對一家汽車零件製造商故意不支付中國製造產品關稅的指控進行調查，並簽署 300 萬美元的和解協議。

新行政令同時對加拿大和墨西哥加徵關稅

包括台灣企業在內的許多涉中企業先前曾透過在加拿大和墨西哥開展生產業務來節省成本。在墨加辦廠一方面節省了美國本土高昂的成本。另一方面，《北美自由貿易協定》及後續的《美墨加協定》則給予了兩地出口商品極大的稅務優惠。但在 2 月 1 日的行政令中，川普總統宣布對原產於加拿大和墨西哥的商品徵收 25% 的關稅。美國同意將此計劃暫緩至3月4日實施。無論政策最終落實與否，這個涉中企業的避稅通道終將面臨更嚴厲的監管審查。

企業應及時應對並合理規避風險

在新的貿易環境下，台灣企業應警惕美國對逃避關稅行為的執法調查，並採取適當的預防措施，例如在供應鏈中對原產地進行嚴格的合規審查並保存相應記錄。

如果企業因可能違反《虛假申報法》而被美國當局以逃避關稅為由進行執法調查，或被所謂的舉報人指控有此類不當行為，建議企業尋求具有《虛假申報法》辯護經驗的美國律師的協助。

吉布森律師事務所市場領先的《虛假申報法》辯護業務團隊持續監控著這空間的演化，隨時支援協助台灣客戶應對調查和執法行動。此外，以下吉布森律師可使用國語進行溝通：

Winston Y. Chan (詹耀文) – Global Co-Chair, False Claims Act / Qui Tam Defense and White Collar Defense and Investigations Practice Groups, based in our San Francisco office
(+1 415.393.8362, wchan@gibsondunn.com)

Justin Lin (林昕弘) – Associate Attorney, False Claims Act / Qui Tam Defense and White Collar Defense and Investigations Practice Group, based in our San Francisco office
(+1 415.393.4653, jolin@gibsondunn.com)

Gabriela Li (黎哲媛) – Associate Attorney, False Claims Act / Qui Tam Defense and Securities Regulation and Corporate Governance Practice Groups, based in our San Francisco office
(+1 415.393.4602, gli@gibsondunn.com)

English:

On February 1, 2025, President Trump issued an Executive Order Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China. The Executive Order imposes a 10% ad valorem tariff on “all articles that are products of the PRC,” to be defined in a forthcoming Federal Register notice. The announced tariff is to stay in place until President Trump determines the “national emergency,” as assessed in his discretion under the International Emergency Economic Powers Act (IEEPA), is over.

The tariff applies to all “goods entered for consumption, or withdrawn from warehouse for consumption,” on or after 12:01 a.m. Eastern Time on February 4, 2024. And the tariff is cumulative to all existing tariffs, including the up to 50% tariffs imposed during the first Trump administration on four category lists of Chinese imports. Those tariffs remain in effect and were extended and supplemented under the Biden administration, including (among other sectors) to battery parts, electric vehicles, semiconductors, and steel and aluminum products.

The Executive Order does not include a list of specifically covered goods. The full details are likely to be included in a technical annex when the government publishes the order to the Federal Register or publishes a follow-up Federal Register notice.

The Executive Order states that if China imposes its own retaliatory tariffs, President Trump “may increase or expand in scope the duties imposed under this order.” On February 2, 2025, China’s Ministry of Commerce announced it would file a complaint to the WTO and implement corresponding “countermeasures.” Accordingly, on February 4, 2025, China’s Ministry of Finance announced, starting February 10, 2025, the imposition of additional tariffs of 15% on coal and liquified natural gas imports from the United States and a 10% tariff on crude oil, agricultural equipment, and certain vehicles.

Heightened U.S. Investigatory Environment for Tariffs Evasion—False Claims Act

One direct consequence of the new tariffs will be increased regulatory scrutiny of companies with manufacturing or assembly operations in China, or who have a China-based supply chain. And for those companies suspected of evading tariffs in this higher-cost environment, the False Claims Act (FCA) is a primary enforcement tool wielded by U.S. authorities. The FCA prohibits the avoidance of monetary obligations to the U.S. government by the presentation of false information. At the same time, the FCA provides substantial monetary incentives to private individuals—including current and former employees—who report suspected FCA violations, through “qui tam” or whistleblower lawsuits.

The risk of enforcement action is particularly acute for companies with some but not all of their manufacturing, sourcing, or assembly relationships tied to China. This is because different rules for determining product origin apply depending on the raw materials, components, and product finishing in question. For example, goods that a Taiwanese company may consider as finished in Taiwan but that partially incorporate China-sourced components may be determined by U.S. authorities to have Chinese-origin for tariff purposes in light of new enforcement and regulatory interpretations, approaches, and priorities. And while it is true that “substantial transformation” in a third country can alter the origin of products, U.S. authorities have grown increasingly suspicious of transshipment undertaken merely as “window dressing.”

We are aware of ongoing active investigations in this area, and examples of recent multi-million-dollar FCA settlements involving Chinese supply chain issues include:

A March 2024 U.S. Department of Justice investigation and settlement of $3.1 million for an alleged conspiracy to avoid customs duties between a New Jersey chemicals importer and Chinese suppliers.

A January 2024 U.S. Department of Justice investigation and settlement of $3 million to resolve allegations that an automobile parts manufacturer intentionally failed to pay tariffs on Chinese-manufactured products.

Simultaneous Executive Orders Imposing Canada and Mexico Tariffs

In addition, whereas some companies—including many Taiwanese companies—had previously pursued manufacturing operations in Canada and Mexico, in part to leverage the North American Free Trade Agreement (NAFTA) and its 2020 successor, the United States-Mexico-Canada Agreement (USMCA), and to maximize cost savings in both countries relative to startup costs in the United States, as part of the February 1 Executive Order, President Trump simultaneously announced 25% tariffs on Canada- and Mexico-origin goods. Although these tariffs have been paused for 30 days as of February 4, this regional cost-mitigation strategy may end up being foreclosed, or otherwise highly scrutinized by enforcement authorities.

Mitigating Risk

Given this new trade environment, Taiwanese companies should be attuned to the heightened U.S. investigatory environment for tariff evasion and take appropriate precautions, such as auditing origin-related compliance and recordkeeping processes throughout their value chains.

In the event that companies nevertheless become the subject of enforcement investigations by U.S. authorities for tariff evasion-based potential violations of the FCA or are accused of such misconduct by a purported whistleblower, companies are advised to seek the assistance of U.S. counsel with FCA defense experience.

The following Gibson Dunn lawyers prepared this update: Winston Chan, Justin Lin, and Gabriela Li.

With its market-leading False Claims Act / Qui Tam Defense Practice Group, Gibson Dunn continues to monitor developments in this area and is available to help Taiwanese clients understand and navigate FCA investigative and enforcement actions. In addition, the following practice group members have Mandarin Chinese language abilities:

Winston Y. Chan – Global Co-Chair, False Claims Act / Qui Tam Defense and White Collar Defense and Investigations Practice Groups, based in our San Francisco office
(+1 415.393.8362, wchan@gibsondunn.com)

Justin Lin – Associate Attorney, False Claims Act / Qui Tam Defense and White Collar Defense and Investigations Practice Group, based in our San Francisco office
(+1 415.393.4653, jolin@gibsondunn.com)

Gabriela Li – Associate Attorney, False Claims Act / Qui Tam Defense and Securities Regulation and Corporate Governance Practice Groups, based in our San Francisco office
(+1 415.393.4602, gli@gibsondunn.com)

Europe

01/20/2025

European Data Protection Board | Case Digest & Report | Right of Access

The European Data Protection Board (“EDPB”) has published a “One-Stop-Shop case digest on right of access” and a report on the “Implementation of the right of access by controllers”.

On January 16, 2025, the EDPB published a case digest providing examples on the exercise of the right of access in different contexts and analyzes, in this respect, national Supervisory Authorities’ (SAs) decisions under the one-stop-shop mechanism. In addition, on January 20, 2025, the EDPB released a report on the “Implementation of the right of access by controllers”. The report aggregates the findings of the SAs on the level of compliance of organizations regarding Article 15 of the GDPR, following a survey they conducted among 1,185 controllers from different sectors.

For more information: EDPB Website (Case Digest), EDPB Website (Report)

01/17/2025

European Data Protection Board | Guidelines | Pseudonymization

The European Data Protection Board (“EDPB”) has published new guidelines on pseudonymization.

The guidelines aim to clarify in particular the definition of pseudonymization, its objectives and benefits. They also provide guidance on the technical and organizational measures to be implemented to ensure its effectiveness, as well as examples of how pseudonymization is applied in real-world scenarios. The guidelines are under public consultation until February 28, 2025.

For more information: EDPB Website

01/17/2025

European Data Protection Board | Position Paper | Competition law

The European Data Protection Board (“EDPB”) has published a position paper regarding the interplay between data protection and competition law.

The EDPB recognizes that data protection and competition law have different legal frameworks but carry nonetheless many commonalities, such as the protection of individuals and their decision making. It stresses the importance of the cooperation between the data protection and competition authorities, and of a better understanding of related concepts in both areas, in order to improve consistency and efficiency.

For more information: EDPB Website

01/17/2025

European Commission | Regulation | Digital Operational Resilience Act

The Digital Operational Resilience Act (“DORA”) is applicable as of January 17, 2025.

As a reminder, the DORA lays down new requirements for the security of network and information systems in the financial sector.

For more information: Official Journal of the EU

01/15/2025

European Data Protection Supervisor | Concept Note | Digital Clearinghouse

The European Data Protection Supervisor (“EDPS”) published a concept note proposing the creation of the Digital Clearinghouse (“DCH”) 2.0.

The DCH was conceived by the EDPS as a voluntary network to promote a coherent enforcement of the EU legislation in the digital sector. With the DCH 2.0, the EDPS suggest turning this initiative into a forum with a permanent secretariat in order to identify cross-regulatory areas and allow interested authorities to exchange and coordinate their efforts.

For more information: EDPS website

01/09/2025

Court of Justice of the European Union | Judgment | Concepts of a ‘Request’ and ‘Excessive Requests’

On January 9, 2025, the Court of Justice of the European Union (“CJEU”) provides clarifications on the concepts of a ‘request’ and ‘excessive requests’ as part of a preliminary question referred by the Austrian Supervisory Authority.

The CJEU held that (i) the notion of “request” under Article 57(4) of the GDPR should be understood as including complaints lodged; (ii) the concept of “excessiveness” must be interpreted restrictively and the authority must demonstrate that the excessiveness of the requests stems from the applicant’s abusive intent, and (iii) when faced with excessive requests, the authorities may choose between charging reasonable fees and refusing to act on the requests.

For more information: Curia

01/09/2025

Court of Justice of the European Union | Judgment | Title and Gender Identity

On January 9, 2025, the CJEU published its judgment in Case C‑394/23 ruling that a customer’s gender identity was not necessary for the purchase of a rail transport ticket.

The CJEU clarified that the processing of personal data is only lawful if necessary for fulfilling a contract or for legitimate interest purposes. It ruled that personalizing commercial communications based on presumed gender identity, determined by a customer’s civil title, is not necessary, as it is not essential for a rail transport contract and could risk discrimination based on gender identity.

For more information: Curia

France

01/31/2025

French Supervisory Authority | Guidelines | Transfer Impact Assessment

The French Supervisory Authority (“CNIL”) published the final version of its guidelines on Transfer Impact Assessments (“TIA”) to help organizations comply with the GDPR when transferring data to third countries.

The CNIL’s guidelines outlines a methodology for evaluating the adequacy of protection in third countries, assessing potential legal and practical risks, and implementing supplementary measures where necessary.

For more information: CNIL Website

01/28/2025

French Supervisory Authority | Guidelines | Data Breach

The French Supervisory Authority (“CNIL”) published guidelines on personal data security.

In 2024, the CNIL saw a 20% increase in data breaches compared to the previous year. It has issued guidelines to help organizations prevent and manage data breaches, with cybersecurity being one of its priorities for 2025-2028.

For more information: CNIL Website [FR]

01/23/2025

French Supervisory Authority | GDPR | Publicly Available Databases

On January 23, 2025, the French Supervisory Authority (CNIL) published an article on its website outlining the necessary checks for controllers when using publicly available or third-party databases.

Data controllers must ensure that the database complies with the GDPR and other relevant regulations, such as information system security and intellectual property rights. Key considerations include whether the data was processed with the consent of the individuals and if the processing is based on legitimate legal grounds, especially for sensitive data or data related to criminal offenses. Additionally, the CNIL recommends formalizing the relationship with the data provider through a contract.

For further information: CNIL Website [FR]

01/16/2025

French Supervisory Authority | Action Plan | Children, AI, cybersecurity and digital

The French Supervisory Authority (“CNIL”) published its strategic action plan for 2025 to 2028.

The CNIL will focus on four main priorities: AI, children’s online privacy, cybersecurity, and daily digital use (mobile applications and digital identity). The CNIL plans to diversify its support for organizations and strengthen its dialogue with stakeholders in these areas.

For more information: CNIL Website [FR]

Germany

01/15/2025

Higher Regional Court of Karlsruhe | Judgement | Right of Erasure

On January 15, 2025, the Higher Regional Court of Karlsruhe (OLG Karlsruhe) ruled on the right to erasure and the possibility to retain personal data for the use in future legal disputes.

The OLG Karlsruhe ruled that companies cannot indefinitely store personal data for potential future claims if the underlying incident has already been subject to legal proceedings. The court held that once data is no longer necessary for the purpose it was collected, it must be deleted. Even if future claims are possible, there must be more than just a theoretical possibility that these claims are pursued to justify continued data storage under Article 17(3)(e) GDPR and to deny the right to erasure. The decision emphasized that the mere abstract possibility of future claims is not sufficient for data retention.

For more information: Official Court Website [DE]

Italy

01/31/2025

Italian Supervisory Authority | Temporary Ban | Chatbot

The Italian Supervisory Authority (“Garante”) imposed a temporary ban on an AI-powered chatbot service.

This follows a request for information addressed by the Garante to the companies providing the chatbot service. According to the Garante, the responses communicated by the companies were not satisfactory. In addition to the limitation order on the processing of Italian users’ data, the Garante opened an investigation.

For more information: Garante Website

Spain

01/14/2025

Spanish Council of Ministers | Transposition | NIS 2 Directive

The Spanish Council of Ministers approved the Draft Law on Coordination and Governance of Cybersecurity, transposing the NIS 2 Directive.

The Draft Law specifies the public and private entities that fall under the scope of the NIS 2 Directive as well as their obligations in terms of cybersecurity (such as incident notification). It also designates several national supervisory authorities for enforcement purposes, and creates the National Cybersecurity Centre, which will be the sole point of contact with the European Union and be in charge of intersectoral and cross-border cooperation.

For more information: Ministry of Interior Website [ES]

United Kingdom

01/23/2025

UK Supervisory Authority | Online Tracking | 2025 Strategy

The UK Supervisory Authority (“ICO”) has introduced its 2025 online tracking strategy.

The strategy aims to ensure that individuals have control over tracking within the context of online advertising. The ICO’s plan of action includes publishing guidelines on different subjects such as ‘consent or pay’ models or Internet of Things, engaging with different actors to promote and ensure compliance with the law (website publishers, consent management platforms, app developers, connected TV manufacturers). The ICO will also investigate data management platforms connecting advertisers and publishers.

For more information: ICO Website

The following Gibson Dunn lawyers prepared this update: Partners: Ahmed Baladi, Vera Lukic, and Kai Gesing; Associates: Thomas Baculard, Billur Cinar, Hermine Hubert, and Christoph Jacob.

Gibson Dunn lawyers are available to assist in addressing any questions you may have about these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Privacy, Cybersecurity & Data Innovation practice groups:

Privacy, Cybersecurity, and Data Innovation:

United States:
Ashlie Beringer – Co-Chair, Palo Alto (+1 650.849.5327, aberinger@gibsondunn.com)
Ryan T. Bergsieker – Denver (+1 303.298.5774, rbergsieker@gibsondunn.com)
Gustav W. Eyler – Washington, D.C. (+1 202.955.8610, geyler@gibsondunn.com)
Cassandra L. Gaedt-Sheckter – Palo Alto (+1 650.849.5203, cgaedt-sheckter@gibsondunn.com)
Svetlana S. Gans – Washington, D.C. (+1 202.955.8657, sgans@gibsondunn.com)
Lauren R. Goldman – New York (+1 212.351.2375, lgoldman@gibsondunn.com)
Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, shandler@gibsondunn.com)
Natalie J. Hausknecht – Denver (+1 303.298.5783, nhausknecht@gibsondunn.com)
Jane C. Horvath – Co-Chair, Washington, D.C. (+1 202.955.8505, jhorvath@gibsondunn.com)
Martie Kutscher Clark – Palo Alto (+1 650.849.5348, mkutscherclark@gibsondunn.com)
Kristin A. Linsley – San Francisco (+1 415.393.8395, klinsley@gibsondunn.com)
Timothy W. Loose – Los Angeles (+1 213.229.7746, tloose@gibsondunn.com)
Vivek Mohan – Palo Alto (+1 650.849.5345, vmohan@gibsondunn.com)
Rosemarie T. Ring – Co-Chair, San Francisco (+1 415.393.8247, rring@gibsondunn.com)
Ashley Rogers – Dallas (+1 214.698.3316, arogers@gibsondunn.com)
Sophie C. Rohnke – Dallas (+1 214.698.3344, srohnke@gibsondunn.com)
Eric D. Vandevelde – Los Angeles (+1 213.229.7186, evandevelde@gibsondunn.com)
Benjamin B. Wagner – Palo Alto (+1 650.849.5395, bwagner@gibsondunn.com)
Debra Wong Yang – Los Angeles (+1 213.229.7472, dwongyang@gibsondunn.com)

Europe:
Ahmed Baladi – Co-Chair, Paris (+33 (0) 1 56 43 13 00, abaladi@gibsondunn.com)
Kai Gesing – Munich (+49 89 189 33-180, kgesing@gibsondunn.com)
Joel Harrison – Co-Chair, London (+44 20 7071 4289, jharrison@gibsondunn.com)
Lore Leitner – London (+44 20 7071 4987, lleitner@gibsondunn.com)
Vera Lukic – Paris (+33 (0) 1 56 43 13 00, vlukic@gibsondunn.com)
Lars Petersen – Frankfurt/Riyadh (+49 69 247 411 525, lpetersen@gibsondunn.com)
Robert Spano – London/Paris (+44 20 7071 4000, rspano@gibsondunn.com)

Asia:
Connell O’Neill – Hong Kong (+852 2214 3812, coneill@gibsondunn.com)
Jai S. Pathak – Singapore (+65 6507 3683, jpathak@gibsondunn.com)

Today marks the effective implementation of sweeping changes to the Hart-Scott-Rodino (HSR) Act Premerger Notification and Report Form (HSR form) and associated instructions, following unanimous approval by the Federal Trade Commission (FTC) on October 11, 2024, with concurrence of the Department of Justice (DOJ), and subsequent publication in the Federal Register on November 12, 2024. While markedly narrower than the FTC’s initial proposal on June 27, 2023, the new HSR rules represent a pivotal and comprehensive overhaul of premerger notification requirements for all HSR-reportable transactions.

Recap of Key HSR Changes

Additional Deal and Competition (formerly “Item 4”) Documents: Expanded to include (i) transaction specific documents created by or for the acquiring party’s “supervisory deal team lead,” in addition to its directors or officers and, (ii) where the filing parties have or anticipate having overlapping products or services, certain ordinary course documents created within one year of filing that discuss competitive or market information for the overlapping areas that were shared with the CEO or Board.

Narrative Responses on Transaction Details, Competitive Overlaps: Filings will now require narrative responses addressing (i) each party’s transaction rationale; (ii) the acquiring party’s operating businesses and products and services (current and planned), including whether any compete with those of the other filing party; (iii) the acquiring party’s pre-existing diagrams on deal structure; (iv) direct supply relationships between the parties, if any; and, critically, (v) for transactions where the parties have or anticipate having overlapping products or services, additional narrative and geographic data regarding the same.

Expanded Company Disclosures: Filings now call for additional disclosures relating to (i) the acquiring party’s ownership structure, directors and officers, and minority holdings and holders; (ii) both parties’ foreign subsidies and defense or intelligence contracts; and (iii) the acquired person’s prior acquisitions (in addition to just the acquirer’s) meeting certain requirements.

With these and other changes now in effect, deal teams should reassess transaction timelines and recalibrate internal processes to keep pace with the heightened filing demands. Below are five practical steps filing parties can take to stay on track.

Practical Steps to Optimize Filings Under the New HSR Regime

Build in More Lead Time for HSR Compliance. The new HSR form will require significantly more time to complete and additional company resources due to expanded narrative requests and data and document requirements. What was once a relatively quick process may now take weeks.
- Practice Tip: Build HSR compliance into the deal timeline and begin identifying appropriate stakeholders to support with filing at early stages. Internal templates for recurring disclosures—such as prior acquisitions and minority holdings—can help streamline current and future filings.
Promptly Engage Antitrust Counsel to Form Strategy, Avoid Pitfalls. In addition to significantly expanding the scope of document requirements, the new HSR form requires that filing parties prepare detailed narrative responses that substantively address market dynamics for deals involving competitive overlaps, extending beyond former data-based reporting. The competitive overlap section of the new form also determines the scope of other required disclosures, including documents. These narratives not only demand significant business input but also expose filings to heightened regulatory scrutiny. Ensuring thoughtful coordination across narratives, document collections, and parallel global filings will be crucial to mitigate risk of filing delays or prolonged reviews.
- Practice Tip: Engage antitrust counsel early. Counsel can help ensure narratives are accurate and consistent with documents to be submitted with the HSR filing. Counsel can also synchronize filings of different regulatory regimes to reduce risk and support a cohesive, defensible submission strategy.
Standardize Coordination Across Business Units. The expanded disclosures will require input from multiple business teams, including finance and supply chain, and potentially decentralized data sources. Early coordination is critical to avoid bottlenecks and filing delays.
- Practice Tip: Deal teams should adopt a clear division of labor, including designated liaison roles for relevant business units or data sources, and establish a centralized process for streamlining inter-departmental coordination. Securing executive-level support from corporate leadership and department heads will also help underscore the importance of timely cooperation across business units.
Expect Accelerated, Heightened Agency Review. The expanded requirements will give the FTC and DOJ earlier and deeper insight into potential competitive issues, possibly leading to heightened agency scrutiny much earlier in the process.
- Practice Tip: Prepare by identifying key deal documents early—such as strategic presentations and board materials—and ensure consistency with the information provided in the HSR filing. Discrepancies between internal documents and the filing could raise red flags with regulators, leading to further inquiry or delays.
Manage Party Expectations Upfront. Acquisition targets, particularly smaller companies unfamiliar with HSR filings, may face challenges meeting the expanded data and document requirements, which can cause compliance delays.
- Practice Tip: Ensure the acquired party understands filing expectations early. Incorporate HSR form preparation into deal negotiations and due diligence to avoid surprises and ensure timely collection of necessary information.

Looking Ahead

While the HSR updates introduce new complexities, they also offer dealmakers a clearer roadmap for regulatory review. With proper strategic planning—such as updating internal deal processes, closely coordinating with business teams, and proactively addressing competition concerns that may be raised by antitrust regulators—dealmakers can effectively navigate this new terrain with confidence.

The FTC’s Premerger Notification Office (PNO) has issued guidance in a series of Q&As clarifying expectations on key aspects of the new HSR form, including how to approach the expanded narrative requirements and scope of the required document submissions. Filing parties are encouraged to work with counsel to closely monitor future updates from the PNO, as additional clarifications will be critical for maintaining compliance and minimizing delays.

Looking ahead, the expanded disclosures may even streamline certain aspects of agency review, giving the FTC and DOJ a fuller picture of transactions early on and, in some cases, accelerating approval for straightforward deals through the recently reinstated early termination process. How these changes will ultimately reshape the merger landscape remains to be seen, but those who prepare early will be best positioned for smoother HSR filings and more predictable deal outcomes.

Gibson Dunn attorneys are closely monitoring these developments and are available to discuss these issues as applied to your particular business. Please reach out to your Gibson Dunn contacts in the Antitrust and Competition group if you have questions about how the updated rules may affect your M&A plans and how best to prepare. If you are interested in challenging the final rule as Gibson Dunn successfully accomplished against the FTC’s non-compete rule in Ryan, LLC v. FTC, please reach out to your Gibson Dunn contacts in the Administrative Law and Regulatory Practice group.

For further details on these developments, see our previous Client Alerts and related HSR resources:

The following Gibson Dunn lawyers prepared this update: Jamie France, Sophia Hansell, Kristen Limarzi, Josh Lipton, Michael Perry, Andrew Cline, and Jenna Raspanti.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the new HSR size of transaction thresholds, or HSR and antitrust/competition regulations and rulemaking more generally. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Antitrust and Competition, Mergers and Acquisitions, or Private Equity practice groups:

Antitrust and Competition:
Rachel S. Brass – San Francisco (+1 415.393.8293, rbrass@gibsondunn.com)
Jamie E. France – Washington, D.C. (+1 202.955.8218, jfrance@gibsondunn.com)
Sophia A. Hansell – Washington, D.C. (+1 202.887.3625, shansell@gibsondunn.com)
Kristen C. Limarzi – Washington, D.C. (+1 202.887.3518, klimarzi@gibsondunn.com)
Joshua Lipton – Washington, D.C. (+1 202.955.8226, jlipton@gibsondunn.com)
Michael J. Perry – Washinton, D.C. (+1 202.887.3558, mjperry@gibsondunn.com)
Cynthia Richman – Washington, D.C. (+1 202.955.8234, crichman@gibsondunn.com)
Stephen Weissman – Washington, D.C. (+1 202.955.8678, sweissman@gibsondunn.com)

This edition of Gibson Dunn’s Federal Circuit Update for January 2025 summarizes the current status of petitions pending before the Supreme Court and recent Federal Circuit decisions concerning inventorship, reverse doctrine of equivalents, and personal jurisdiction.

Federal Circuit News

Noteworthy Petitions for a Writ of Certiorari:

There were a few potentially impactful petitions filed before the Supreme Court in January 2025:

Brumfield v. IBG LLC, et al. (US No. 24-764): The questions presented are: (1) “Whether the lower courts abused their discretion by denying the meritorious Rule 60(b)(3) motion, and whether Rule 60(b)(3) requires a showing that a moving party was diligent in uncovering fraud, misrepresentation, or misconduct to obtain relief from a judgment?”; (2) “Whether this Court’s three categorical judicial exceptions to patent eligibility that are further defined by the two-step Alice/Mayo test impose limitations on patent eligibility that are inconsistent with the text of 35 U.S.C. § 101 of the Patent Act of 1952?”; and (3) “Whether this Court’s supervisory authority is needed to correct the Federal Circuit’s improper (1) application of Rule 56 to patent cases and (2) practice of deciding issues that were never argued or briefed on appeal?” A response is due March 20, 2025.

DISH Network L.L.C. v. Dragon Intellectual Property, LLC, et al. (US No. 24-726): The questions presented are “1. Whether the Patent Act’s fee-shifting statute allows a district court discretion to impose joint and several liability for the fee award on a party’s attorney whose actions substantially contribute to the exceptionality of the case. 2. Whether the same fee-shifting statute allows a district court discretion to award attorney’s fees incurred by a prevailing accused infringer in a parallel administrative proceeding to invalidate a patent.” The respondents waived their right to respond, and one amicus curiae brief has been filed. The Court will consider this petition during its February 21, 2025 conference.

Provisur Technologies, Inc. v. Weber, Inc. (US No. 24-723): The questions presented are “I. Whether the Federal Circuit applied an incorrect standard of review for appeals of a Judgment as a Matter of Law (JMOL) and, as a result, improperly assumed the role of factfinder in overturning a jury verdict of willful patent infringement? Whether the Seventh Amendment permits the Federal Circuit to reexamine a jury’s factual findings and credibility determinations in reaching a verdict of willful patent infringement?” Weber waived its right to respond. The Court will consider this petition during its February 21, 2025 conference.

We provide an update below of the petitions pending before the Supreme Court, which were summarized in our November-December 2024 update:

In Celanese International Corp. v. International Trade Commission (US No. 24-635), one amicus curiae brief has been filed. The response is due March 24, 2025.

In Lighting Defense Group LLC v. SnapRays, LLC (US No. 24-524), after SnapRays waived its right to respond, the Court requested a response. The response is due February 10, 2025.

In Parker Vision, Inc. v. TCL Industries Holdings Co., et al. (US No. 24-518), after the respondents waived their right to respond, the Court requested a response, which is due February 14, 2025. Nine amicus curiae briefs have now been filed.

The Court denied the petition in Edwards Lifesciences Corporation, et al., v. Meril Life Sciences Pvt. Ltd., et al. (US No. 24-428).

Other Federal Circuit News:

Release of Materials in Judicial Investigation. The Federal Circuit released additional materials in connection with the proceeding under the Judicial Conduct and Disability Act and the implementing Rules involving Judge Pauline Newman. The materials may be accessed here: https://www.cafc.uscourts.gov/release-of-materials-in-judicial-investigation-5/.

Upcoming Oral Argument Calendar

The list of upcoming arguments at the Federal Circuit is available on the court’s website.

Key Case Summaries (January 2025)

BearBox LLC v. Lancium LLC, No. 23-1922 (Fed. Cir. Jan. 13, 2025): Mr. Storms (founder and sole employee of BearBox) and Mr. McNamara (co-founder of Lancium) met at a Bitcoin mining conference in 2019 where they discussed BearBox’s system, after which Mr. Storms sent Mr. McNamara an email with four attachments describing BearBox’s technology. Months later, Lancium filed a patent application that issued as the patent-at-issue, listing Mc. McNamara and a Dr. Cline (the other co-founder of Lancium) as inventors, claiming methods and systems for dynamic power delivery. BearBox sued Lancium asserting claims of sole or joint inventorship of Lancium’s patent, claiming that Mr. Storms had conceived of and shared with Mr. McNamara the claimed subject matter of Lancium’s patent. The district court held that BearBox had not met its burden to prove its inventorship claims by clear and convincing evidence based on testimony from Lancium’s witnesses about Lancium’s software and the development activities prior to the 2019 conference.

The Federal Circuit (Stoll, J., joined by Chen and Bryson, JJ.) affirmed. The Court upheld the district court’s denial of the correction to the inventorship claim, reiterating that “an alleged co-inventor must supply evidence to corroborate his testimony.” The Court reasoned that the email with the four attachments on which BearBox’s case rested was not sufficient to establish that Mr. Storms conceived of the claimed invention, or that he had communicated the information to Lancium prior to Lancium’s independent conception of the claimed matter.

Steuben Foods, Inc. v. Shibuya Hoppmann Corp., et al., No. 23-1790 (Fed. Cir. Jan. 24, 2025): Steuben sued Shibuya for infringement of patents directed to aseptic packaging of food products. Shibuya argued for a finding of noninfringement under the reverse doctrine of equivalents (RDOE), which allows an accused infringer to rebut infringement by showing the accused product is so far changed in principle from the asserted claims that it performs the same or similar function in a substantially different way. After the jury returned its verdict finding the asserted patents were infringed and not invalid, the district court granted Shibuya’s renewed motion for judgment as a matter of law (JMOL) of noninfringement under RDOE.

The Federal Circuit (Moore, C.J., joined by Hughes and Cunningham, JJ.) affirmed-in-part, reversed-in-part, vacated-in-part, and remanded. The Court held that the district court erred in granting JMOL of noninfringement under RDOE, determining that there was substantial evidence upon which a reasonable jury could have found that the accused products and claims were not so far changed as to support a theory of noninfringement under RDOE.

Regeneron Pharmaceuticals, Inc. v. Mylan Pharmaceuticals Inc., et al., Nos. 24-1965, 24-1966, 24-2082, 24-2083 (Fed. Cir. Jan. 29, 2025): Regeneron owns patents directed to the formulation of EYLEA®, a therapeutic product that stimulates blood vessel growth. Samsung Bioepis (SB) is a biosimilar products company headquartered in Incheon, South Korea. In 2019, SB signed an agreement with a U.S. company, Biogen, to provide it exclusive rights to commercialize SB’s FDA-approved EYLEA® biosimilar called SB15. SB filed an abbreviated Biologics License Application (aBLA) under the BPCIA seeking FDA approval to market SB15. Regeneron sued SB in West Virginia where a similar suit was pending against Mylan, and SB moved to dismiss for lack of personal jurisdiction. The district court determined the minimum contacts standard was met based on SB’s aBLA filing and evidence of distribution channels that SB had established for national marketing of its biosimilar, with no carve-out for West Virginia.

The Federal Circuit (Taranto, J., joined by Moore, C.J., and Renya, J.) affirmed. The Court determined that SB’s conduct satisfied the minimum contacts requirement for personal jurisdiction in West Virginia. For instance, the Court explained that SB had filed an application for aBLA with the FDA and served Regeneron with a notice in which it expressly communicated its intent to market SB15 upon FDA approval. The Court also pointed to the fact that SB had entered into an elaborate distribution agreement with Biogen to commercialize SB15 in the United States. The Court further explained that it and other courts have determined that “purposeful shipment or plans to do so through an established distribution channel,” such as the one SB had created, can establish personal jurisdiction.

The following Gibson Dunn lawyers assisted in preparing this update: Blaine Evanson, Jaysen Chung, Audrey Yang, Al Suarez, Vivian Lu, and Evan Kratzer.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Federal Circuit. Please contact the Gibson Dunn lawyer with whom you usually work, any leader or member of the firm’s Appellate and Constitutional Law or Intellectual Property practice groups, or the following authors:

Blaine H. Evanson – Orange County (+1 949.451.3805, bevanson@gibsondunn.com)
Audrey Yang – Dallas (+1 214.698.3215, ayang@gibsondunn.com)

Appellate and Constitutional Law:
Thomas H. Dupree Jr. – Washington, D.C. (+1 202.955.8547, tdupree@gibsondunn.com)
Allyson N. Ho – Dallas (+1 214.698.3233, aho@gibsondunn.com)
Julian W. Poon – Los Angeles (+ 213.229.7758, jpoon@gibsondunn.com)

Intellectual Property:
Kate Dominguez – New York (+1 212.351.2338, kdominguez@gibsondunn.com)
Y. Ernest Hsin – San Francisco (+1 415.393.8224, ehsin@gibsondunn.com)
Josh Krevitt – New York (+1 212.351.4000, jkrevitt@gibsondunn.com)
Jane M. Love, Ph.D. – New York (+1 212.351.3922, jlove@gibsondunn.com)

From the Derivatives Practice Group: This week, the CFTC announced plans to restructure the Division of Enforcement to refocus on fraud and stop regulation by enforcement.

New Developments

CFTC Announces Crypto CEO Forum to Launch Digital Asset Markets Pilot. On February 7, the CFTC announced that it will hold a CEO Forum of industry-leading firms to discuss the launch of the CFTC’s digital asset markets pilot program for tokenized non-cash collateral such as stablecoins. Participants will include Circle, Coinbase, Crypto.com, MoonPay and Ripple. [NEW]
CFTC Statement on Allegations Targeting Acting Chairman. On February 6, the CFTC released a statement regarding allegations targeting Acting Chairman Pham. [NEW]
David Gillers to Step Down as Chief of Staff. On February 6, the CFTC announced that David Gillers will step down as Chief of Staff to Commissioner Behnam on February 7. [NEW]
CFTC Announces Prediction Markets Roundtable. On February 5, the CFTC announced that it will hold a public roundtable in approximately 45 days at the conclusion of its requests for information on certain sports-related event contracts. The CFTC said that the goal of the roundtable is to develop a robust administrative record with studies, data, expert reports, and public input from a wide variety of stakeholder groups to inform the Commission’s approach to regulation and oversight of prediction markets, including sports-related event contracts. According to the CFTC, the roundtable will include discussion of key obstacles to the balanced regulation of prediction markets, retail binary options fraud and customer protection, potential revisions to Part 38 and Part 40 of CFTC regulations to address prediction markets, and other improvements to the regulation of event contracts to facilitate innovation. The roundtable will be held at the CFTC’s headquarters in Washington, D.C. [NEW]
CFTC Division of Enforcement to Refocus on Fraud and Helping Victims, Stop Regulation by Enforcement. On February 4, CFTC Acting Chairman Caroline D. Pham announced a reorganization of the Division of Enforcement’s task forces to combat fraud and help victims while ending the practice of regulation by enforcement. According to the CFTC, previous task forces will be simplified into two new Division of Enforcement task forces: the Complex Fraud Task Force and the Retail Fraud and General Enforcement Task Force. The Complex Fraud Task Force will be responsible for all preliminary inquiries, investigations, and litigations relating to complex fraud and manipulation across all asset classes. The Acting Chief will be Deputy Director Paul Hayeck. The Retail Fraud and General Enforcement Task Force will focus on retail fraud and handle general enforcement matters involving other violations of the Commodity Exchange Act. The Acting Chief will be Deputy Director Charles Marvine. [NEW]
CFTC Staff Issues No-Action Letter to Korea Exchange Concerning the Offer or Sale of KOSPI and Mini KOSPI 200 Futures Contracts. On February 4, the CFTC’s Division of Market Oversight issued a no-action letter stating it will not recommend the CFTC take enforcement action against Korea Exchange (“KRX”) for the offer or sale of Korea Composite Stock Price Index (“KOSPI”) 200 Futures Contracts and Mini KOSPI 200 Futures Contracts to persons located within the United State while the Commission’s review of KRX’s forthcoming request for certification of the contracts under CFTC Regulation 30.13 is pending. DMO issued similar letters when the KOSPI 200 became a broad-based security index in 2021 and 2022. See CFTC Press Release Nos. 8464-21 and 8610-22. The KOSPI 200 became a narrow-based security index in February 2024. The KOSPI 200 is set to become a broad-based security index on February 6, 2025, and the no-action position in DMO’s letter will be effective on that date. [NEW]
CFTC Staff Issues Supplemental Letter Regarding No-Action Position on Reporting, Recordkeeping Requirements. On January 31, the CFTC’s Division of Market Oversight and the Division of Clearing and Risk announced they have taken a no-action position regarding swap data reporting and recordkeeping regulations. The CFTC said this position is in response to a request from KalshiEX LLC, a designated contract market, and Kalshi Klear LLC, a derivatives clearing organization, to modify CFTC Letter No. 24-15 to remove the condition prohibiting third-party clearing by participants and to cover fully-collateralized variable payout contracts. The Divisions indicated that they will not recommend the CFTC initiate an enforcement action against KalshiEX LLC, Kalshi Klear LLC, or their participants for failure to comply with certain swap-related recordkeeping requirements and for failure to report to swap data repositories data associated with binary option transactions and variable payout contract transactions executed on or subject to the rules of KalshiEX LLC and cleared through Kalshi Klear LLC, subject to the terms of the no-action letter. The supplemental letter also removes the condition in CFTC Letter No. 24-15 that prohibits Kalshi participants from clearing contracts through a third-party clearing member. [NEW]
CFTC and SEC Extend Form PF Amendments Compliance Date. The CFTC, together with the SEC, extended the compliance date for the amendments to Form PF that were adopted Feb. 8, 2024. The compliance date for these amendments, which was originally March 12, 2025, has been extended to June 12, 2025. Form PF is the confidential reporting form for certain SEC-registered investment advisers to private funds, including those that also are registered with the CFTC as commodity pool operators or commodity trading advisers. This extension will mitigate certain administrative and technological burdens and costs associated with the prior compliance date. This extension will also provide more time for filers to program and test for compliance with these amendments.
Acting Chairman Pham Launches Public Roundtables on Innovation and Market Structure. On January 27, Acting Chairman Pham announced the launch of a series of public roundtables on evolving trends and innovation in market structure, including issues such as affiliated entities and conflicts of interest, prediction markets, and digital assets. Pham renewed calls for open public engagement and increased transparency by the CFTC on its policy approach to changes in derivatives markets last year.
Acting Chairman Pham Announces CFTC Leadership Changes. On January 22, Acting Chairman Pham announced the following CFTC leadership changes: Acting Chief of Staff: Harry Jung; Acting General Counsel: Meghan Tente; Acting Director of the Office of Public Affairs: Taylor Foy; Acting Director of the Office of Legislative and Intergovernmental Affairs: Nicholas Elliot; Acting Director of the Division of Market Oversight: Amanda Olear; Acting Director of the Division of Clearing and Risk: Richard Haynes; Acting Director of the Market Participants Division: Tom Smith; Acting Director of the Division of Enforcement: Brian Young; Acting Director of the Office of International Affairs: Mauricio Melara.
SEC Acting Chairman Uyeda Announces Formation of New Crypto Task Force. On January 21, SEC Acting Chairman Uyeda launched a crypto task force that, according to the SEC, is dedicated to developing a comprehensive and clear regulatory framework for crypto assets. Commissioner Hester Peirce will lead the task force. Richard Gabbert, Senior Advisor to the Acting Chairman, and Taylor Asher, Senior Policy Advisor to the Acting Chairman, will serve as the task force’s Chief of Staff and Chief Policy Advisor, respectively. The SEC said that the task force will collaborate with SEC staff and the public to set the SEC on a sensible regulatory path that respects the bounds of the law and that the task force’s focus will be to help the SEC draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously. The Sec indicated that the task force will operate within the statutory framework provided by Congress, coordinate the provision of technical assistance to Congress as it makes changes to that framework, and coordinate with federal departments and agencies, including the CFTC, and state and international counterparts.

New Developments Outside the U.S.

DPE Regime for Post-Trade Transparency Becomes Operational. On February 3, the public register listing designated publishing entities (“DPEs”) that now bear the reporting obligation for post-trade transparency under MIFIR went live, bringing the DPE regime into full operational effect. The public register can be found here. The post-trade reporting obligation for systematic internalizers (“SIs”) has been replaced by an analogous obligation on investment firms that have chosen to register as DPEs. As a further consequence of the DPE regime launch, ESMA has decided to discontinue the voluntary publication of quarterly SI calculations data early, ahead of the scheduled removal of the obligation on ESMA to perform SI calculations from September 2025. As of February 1, the mandatory SI regime will no longer apply and investment firms will not need to perform the SI test. However, investment firms can continue to opt into the SI regime. ESMA’s press release on these measures can be found here. [NEW]
ECB Publishes Guidance on Initial Margin Model Approval Under EMIR 3. On January 31, the European Central Bank (“ECB”) published guidance on the initial margin validation process for entities under its supervision under the European Market Infrastructure Regulation (EMIR 3). Following the European Banking Authority’s (“EBA”) no-action letter on December 17, the guidance addresses implementation issues such as what the ECB approach will be until the EBA’s relevant regulatory technical standards and guidelines are applicable, the initial application process and model changes. [NEW]
Equivalence Extension for UK CCPs Published in EU Official Journal. On January 31, the European Commission’s (“EC’s”) implementing decision extending the equivalence decision for UK central counterparties (“CCPs”) until June 30, 2028 was published in the Official Journal of the EU. ESMA will now need to formally extend the temporary recognition decisions and tiering determinations for UK CCPs. [NEW]
ESMA Provides Guidance on MiCA Best Practices. On January 31, ESMA published a new supervisory briefing aiming to align practices across the EU member states. The briefing, developed in close cooperation with National Competent Authorities (“NCAs”), promotes convergence and prevents regulatory arbitrage, providing concrete guidance about the expectations on applicant Crypto Asset Service Providers, and on NCAs when they are processing the authorization requests.
ESMA Publishes Data for Quarterly Bond Liquidity Assessment. On January 31, ESMA published the new quarterly liquidity assessment of bonds. ESMA’s liquidity assessment for bonds is based on a quarterly assessment of quantitative liquidity criteria, which includes the daily average trading activity (trades and notional amount) and the percentage of days traded per quarter.
Equivalence of UK CCPs Extended to June 30, 2028. On January 30, the European Commission determined that the regulatory framework applicable to central counterparties (“CCPs”) in the United Kingdom of Great Britian and Northern Ireland is equivalent, in accordance with Regulation No 648/2012 of the European Parliament and of the Council.
Euribor Panel to include Finland’s OP Corporate Bank and the National Bank of Greece. OP Corporate Bank and the National Bank of Greece join the group of credit institutions that contribute to Euribor under its revised methodology, which is a substitute for the panel banks’ expert judgement. The methodology was adopted in a phased approach by all members across the Euribor panel between May and October 2024.
EC Adopts Delegated Act On OTC Derivatives Identifier for MIFIR Transparency. On January 24, the EC adopted the delegated act on OTC derivatives identifying reference data for transparency under the Markets in Financial Instruments Regulation (MIFIR). The delegated act mandates the inclusion of the unique product identifier in identifying reference data for OTC interest rate swaps and credit default swaps. The selection of the provider of a consolidated tape for OTC derivatives cannot begin until the delegated act has entered into force. In an effort to ensure the selection process can begin on-time, the delegated act will apply from the date of its entry into force – 20 days after publication in the Official Journal of the EU – but, according to the EC, to allow sufficient time to adapt to the new requirements, the identifying reference data specified within the delegated act should only be used to identify interest rate swaps and credit default swaps from September 1, 2026. [NEW]
New Governance Structure for Transition to T+1 Settlement Cycle Kicks Off. On January 22, ESMA, the European Commission (“EC”) and the European Central bank (“ECB”) launched a new governance structure to support the transition to the T+1 settlement cycle in the European Union. Following ESMA’s report with recommendations on the shortening of the settlement cycle, the new governance structure has been designed to oversee and manage the operational, regulatory and technological aspects of this transition. Given the high level of interconnectedness within the EU capital market, a coordinated approach across the EU, involving authorities, market participants, financial market infrastructures and investors, is desirable. ESMA said that the key elements of the new governance model include an Industry Committee, composed of senior leaders and representatives from market players, several technical workstreams, operating under the Industry Committee, focusing on the technological operational adaptations needed in the areas concerned by the transition to T+1 (i.e. trading, matching, clearing, settlement, securities financing, funding and FX, asset management, corporate events, settlement efficiency), and two more general workstreams that will review the scope and the legal and regulatory aspects of these adaptations, and a Coordination Committee, chaired by ESMA and with representation from the EC, the ECB, ESMA and the chair of the Industry Committee, intended to ensure coordination between the authorities and the industry, advising on challenges that may arise during the transition. Additionally, ESMA said that the Commission is currently considering the merits of a legislative change mandating a potential transition to a shorter settlement cycle.

New Industry-Led Developments

ISDA Publishes Joint Trade Association letter to SEC on US Treasury Clearing. On January 24, ISDA, the Alternative Investment Management Association, the Futures Industry Association (“FIA”), the FIA Principal Traders Group, the Institute of International Bankers, the Managed Funds Association and the Securities Industry and Financial Markets Association and its asset management group sent a letter to Mark Uyeda, acting chair at the US Securities and Exchange Commission (SEC) requesting an extension to the implementation dates for the Treasury clearing mandate by a minimum of 12 months. The associations believe this would give the SEC time to consider and address several critical issues and for the industry to implement clearing. In the letter, the associations highlight their concern that, without an extension, the success of the transition to central clearing will be compromised and may lead to disruptions in the cash Treasury securities and repo markets.
ISDA and AFME Publish Joint Response to ECB Consultation on Options and Discretions under EU Law. On January 24, ISDA and the Association for Financial Markets in Europe (“AFME”) responded to the European Central Bank’s (“ECB”) consultation on its approach to options and discretions under EU law. In the response, the associations highlight the efforts of the ECB to establish consistent options and discretions that would harmonize rules and foster a level playing field in the euro area. The response also mentions that further actions are necessary, specifically on trading book boundary classifications and exemptions.
ISDA Publishes Equity Definitions VE, Version 2.0. On January 21, ISDA published version 2.0 of the ISDA Equity Derivatives Definitions (Versionable Edition) on the MyLibrary platform. This publication includes, among other updates, provisions that can be used for documenting transactions with time-weighted average price or volume-weighted average price features, futures price valuation in respect of share transactions and benchmark provisions in respect of an index.

The following Gibson Dunn attorneys assisted in preparing this update: Jeffrey Steiner, Adam Lapidus, Marc Aaron Takagaki, Hayden McGovern, and Karin Thrasher.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Derivatives practice group, or the following practice leaders and authors:

Jeffrey L. Steiner, Washington, D.C. (202.887.3632, jsteiner@gibsondunn.com)

Michael D. Bopp, Washington, D.C. (202.955.8256, mbopp@gibsondunn.com)

Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)

Darius Mehraban, New York (212.351.2428, dmehraban@gibsondunn.com)

Jason J. Cabral, New York (212.351.6267, jcabral@gibsondunn.com)

Adam Lapidus – New York (212.351.3869, alapidus@gibsondunn.com )

Stephanie L. Brooker, Washington, D.C. (202.887.3502, sbrooker@gibsondunn.com)

William R. Hallatt , Hong Kong (+852 2214 3836, whallatt@gibsondunn.com )

David P. Burns, Washington, D.C. (202.887.3786, dburns@gibsondunn.com)

Marc Aaron Takagaki , New York (212.351.4028, mtakagaki@gibsondunn.com )

Hayden K. McGovern, Dallas (214.698.3142, hmcgovern@gibsondunn.com)

Karin Thrasher, Washington, D.C. (202.887.3712, kthrasher@gibsondunn.com)

Key Developments:

On February 3, the Mayor and City Council of Baltimore, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, and the Restaurant Opportunities Centers United filed a lawsuit in the District of Maryland challenging two recent anti-DEI executive orders. The complaint raises six constitutional claims, including claims alleging that the orders violate the First Amendment, Due Process Clause, Spending Clause, and separation of powers. The complaint asks for a declaratory judgment that Executive Order 14151 and Executive Order 14173 are unconstitutional, as well as a preliminary injunction enjoining enforcement of these executive orders. The case has been assigned to Judge Adam Abelson.

On January 28, the Acting Chair of the Equal Employment Opportunity Commission (EEOC), Andrea Lucas, announced through an EEOC press release that the “agency is returning to its mission of protecting women from sexual harassment and sex-based discrimination in the workplace by rolling back the Biden administration’s gender identity agenda.” The press release described the actions Lucas has taken to effectuate President Trump’s Executive Order 14168, including removing EEOC employees’ ability to display their pronouns on software applications, ending the use of the “X” gender marker in the EEOC intake process, and removing “materials promoting gender ideology” from the EEOC’s internal and external websites. Lucas also initiated a review of the Commission’s “Know Your Rights” poster, which covered employers must post in their workplaces. The EEOC has not yet rescinded its Enforcement Guidance on Harassment in the Workplace, because a majority vote of the EEOC Commissioners is required to rescind guidance documents. On the same day that these changes were announced, the White House terminated two of the three Democratic Commissioners—former EEOC chair Charlotte Burrows and former EEOC vice chair Jocelyn Samuels. Karla Gilbride, the general counsel for the EEOC, was also terminated. On February 4, President Trump named Andrew Rogers as the acting general counsel for the EEOC. Rogers was previously Chief Counsel and Chief of Staff to acting EEOC Chair Andrea Lucas. Prior to that, Rogers worked in the US Department of Labor’s Wage and Hour Division and in private practice.

On January 28, state financial officials from eighteen states sent a letter to Mark Uyeda, the Acting Chair of the Securities and Exchange Commission, and Vince Micone, the Acting Secretary of Labor, requesting that the Commission and Department of Labor develop rules and guidance prohibiting investment decisions based on ESG or DEI objectives as “inconsistent with fiduciary duties.” The letter discussed “an indisputable trend, among large asset managers, to prioritize political and social agendas over the financial security of hardworking Americans,” and advocated that “[r]etirement security should not be jeopardized in order to facilitate corporate virtue signaling and activist-driven initiatives.”

On January 27, nineteen state Attorneys General, led by Iowa Attorney General Brenna Bird, sent a letter to Costco CEO Ron Vachris, urging Costco to repeal its DEI policies. In the letter, the attorneys general identified recent changes in the DEI policies of other major corporations and noted that companies that have not rolled back their programs have been sued or investigated over their DEI initiatives. The letter instructed Costco to respond within 30 days, “either notify[ing]” the group “that Costco has repealed its DEI policies or explain[ing] why Costco has failed to do so.”

In a January 21 memorandum, the U.S. Office of Personnel Management (OPM) provided guidance to all federal agencies regarding implementation of President Trump’s executive orders including Executive Order 14151 and Executive Order 14148. The memorandum required each agency to send agency-wide notices to all employees informing them that the agencies’ DEI offices would be closed, and “asking employees if they know of any efforts to disguise these programs by using coded or imprecise language.” The memorandum, signed by Acting OPM Director Charles Ezell, stated that failing to report on disguised DEI programs could result in “adverse consequences.” Ezell also ordered all agencies to place their DEI staff on paid leave by 5:00 p.m. on January 22, to take down any outward facing media relating to federal DEI offices, to cancel all DEI-related training, and to terminate relationships with all DEI-related contractors. The memorandum also instructed each agency, by close of business on January 31, to submit a “written plan for executing a reduction-in-force action regarding the employees who work in a DEIA office” and a “list of all contract descriptions or personnel position descriptions that were changed since November 5, 2024 to obscure their connection to DEIA programs.”

On January 20, Reverend Al Sharpton called for a boycott on companies eliminating their DEI programs. During a Washington, D.C.-based ceremony celebrating Martin Luther King, Jr. Day, Sharpton, speaking on behalf of his National Action Network, announced the convening of a council that will “engage in a 90-day study of what companies have given up on DEI and what their margins of profit are” before selecting two companies to “specifically be targeted in the boycott.” Sharpton stated that he will be supporting companies that have “doubled down” on DEI, including leading a “buy-cott” rally at a New Jersey Costco location to show support for companies that are maintaining DEI programs.

Media Coverage and Commentary:

Below is a selection of recent media coverage and commentary on these issues:

Bloomberg, “Costco Defended Its DEI Policies Now It Should Talk About Them” (February 3): Bloomberg Editorial’s Beth Kowitt reports on the response of Republican attorneys general to Costco’s shareholders rejecting a shareholder proposal that would have compelled reversal of the company’s DEI policies. Kowitt writes that Costco “did a powerful job of making a business case for why its DEI programs are important to the company,” but has failed to articulate what its DEI programs specifically entail, noting the lack of publicly available information on these programs. Kowitt recommends companies be more forthcoming about the details of their DEI initiatives, encouraging companies to “get granular” about what their DEI policies entail. She posits that companies that “vaguely allude to ‘doing DEI’” are much more likely to end up in the crosshairs of the Trump administration than those that make clear their policies comply with federal law. The article also quotes Jason Schwartz, co-chair of the Labor & Employment group at Gibson, Dunn & Crutcher LLP, who argues that, as a general matter, corporate America has not done “a good job at explaining itself and its programs,” and this failure has allowed opponents of DEI to “own[] the public dialogue about [DEI] without any nuance.”
ModernRetail, “How the Trump Presidency Upended Retailers’ DEI Policy Playbooks” (January 30): Writing for ModernRetail, Mitchell Parton and Allison Smith discuss the rapid shift in corporate DEI initiatives in recent months. They report that in 2020, companies “quickly committed to [DEI] measures,” but that many large companies have rolled back those commitments. Parton and Smith say that many other companies are adjusting the language they use to describe their DEI programs to avoid scrutiny. The authors note that “executives are scrambling to gauge their exposure to legal risks tied to diversity policies.” The article quotes Jason Schwartz of Gibson Dunn, who says phones are “ringing off the hook” with companies who “want to take a fresh look” at their programs in light of President Trump’s recent actions.
Law360, “Companies Risk White House Wrath By Keeping DEI Programs” (January 24): Law360’s Sarah Jarvis reports on President Trump’s executive orders in his first week in office targeting DEI programs. She notes that while “[m]any companies have retreated from their DEI commitments amid the pointed political landscape,” some major U.S. companies, including Costco, Apple, and Pinterest, “are staying the course with their existing DEI programs and policies.” The article quotes Jason Schwartz of Gibson Dunn, who says companies can take a range of approaches as they determine how to support a “robust pipeline of diverse talent,” but notes that the executive order involving federal contractors, in particular, creates a “massive expansion of potential liability.” Schwartz says that it is difficult to find the line between pursuing legally sound programs and avoiding unnecessary risk “because the law is in flux right now.”
Bloomberg, “Trump Redefining ‘Sex’ Sets Up Clash Over High Court Protections” (January 23): Bloomberg’s Rebecca Klar and Khorri Atkinson report that President Trump’s day-one executive order requiring the federal government to recognize only two sexes will likely face legal challenges. In the executive order, President Trump called on the Attorney General to “immediately issue guidance to agencies to correct the misapplication of the Supreme Court’s decision in Bostock v. Clayton County,” in which the Supreme Court held that sex discrimination under Title VII included discrimination based on sexual orientation and gender identity. Klar and Atkinson report that “Bostock was the foundation for agency actions like the EEOC’s harassment guidance addressing gender identity protections.” David Lopez, a Rutgers Law School professor and former EEOC general counsel under President Obama, said appellate courts have consistently ruled “with the EEOC position” and that the new executive order is an attempt “to achieve through executive action” what the administration could not previously “achieve in court.” However, at least one federal court has concluded that Bostock does not apply to “workplace policies on bathrooms, dress codes, and locker rooms.” Klar and Atkinson write that they expect litigation over Bostock’s reach and whether it prevents the rollback of gender identity protections the executive order mandates.
Litigation Daily, “With DEI Rollbacks, Employment Lawyers See Potential for Targeting Corporate Commitment to Equality” (January 23): Writing for Litigation Daily, Charles Toutant discusses how companies’ changes to DEI initiatives may be used against them in court. He reports that the National Institute for Workers’ Rights circulated a memorandum in October 2024 stating that a company’s choice to roll back DEI initiatives could be used against it in a discrimination case. Jason Solomon, director of the National Institute for Workers’ Rights, said that an employee bringing a discrimination lawsuit could use these roll backs as evidence that their employer failed to “use reasonable care” to prevent discrimination. Toutant reports that plaintiff-side employment lawyers believe that discovery into a company’s decisions about DEI programs would be “fair game” in a discrimination lawsuit. Conversely, Jason Schwartz of Gibson Dunn described the concern as “overblown.” Schwartz said that it was a “real stretch” to argue that a revision to DEI policies was evidence of animus or discriminatory intent, noting that he has “no doubt that plaintiffs’ lawyers will make that argument,” but that the argument is not “very compelling.” Schwartz concluded, “[t]here are lots of legitimate concerns that people are raising about the rollback of programs, and obviously they think it needs to be done in a thoughtful way. But the fact that it could evidence discrimination—I’m pretty skeptical [of that].”

Case Updates:

Below is a list of updates in new and pending cases:

1. Employment discrimination and related claims:

Paul Fowler v. Emory University, No. 1:24-cv-05353 (N.D. Ga. 2024): On November 21, 2024, a former Emory University employee sued the university, alleging that the Vice Provost for Career and Professional Development discriminated against white employees in investigations, discipline, hiring, and promotions. The plaintiff asserts employment discrimination claims arising from “unlawful race, gender, and age discrimination and retaliation” in violation of Title VII, the Age Discrimination in Employment Act, and Section 1981.
- Latest update: On January 21, 2025, Emory University answered the complaint, denying allegations that it engaged in employment discrimination.

2. Board of director or stockholder actions:

City of Riviera Beach Police Pension Fund v. Target, Corp., et al., No. 2:25-cv-00085 (M.D. Fla.): Institutional investor City of Riviera Beach Police Pension Fund sued Target and certain Target officers on behalf of a class of stockholders, alleging that defendants have defrauded investors by issuing false and misleading statements concerning conduct undertaken to further Target’s ESG and DEI initiatives, causing the company’s stock price to be artificially inflated. The lawsuit brings claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934
- Latest update: The docket does not indicate that Target has been served yet.

Craig v. Target Corp., No. 2:23-cv-00599-JLB-KCD (M.D. Fl. 2023): America First Legal sued Target and certain Target officers on behalf of a shareholder, claiming the board falsely represented that it monitored social and political risk, when instead it allegedly focused only on risks associated with not achieving ESG and DEI goals. The plaintiffs allege that Target’s statements violated Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 and that Target’s May 2023 Pride Month campaign triggered customer backlash and a boycott that depressed Target’s stock price. On December 4, 2024, the district court denied defendant’s motion to dismiss, concluding that the plaintiffs sufficiently pleaded both their Section 10(b) and Section 14(b) claims. On January 6, 2025, the court entered a stay pending mediation between the parties. On January 17, 2025, Target filed a status update regarding the parties’ proposed mediation, in which it asserted that plaintiffs “would only provide dates of availability to mediate if [Target] agreed to do so on a class-wide basis.” In its filing, Target argued that the case is not a class action, the Private Securities Litigation Reform Act prohibits plaintiffs from “purporting to act on behalf of a hypothetical class,” and the law requires “shareholders who file a class action complaint to provide notice to other shareholders” which plaintiffs have not done. Target asked the court to “direct Plaintiffs to provide their availability to mediate” on an individual basis.
- Latest update: On January 21, 2025, plaintiffs filed a Response to Target’s Status Update and a Motion to Lift the Stay. Plaintiffs assert that Target “misrepresent[ed] the dialogue between the parties,” and they moved to lift the stay to “enable Plaintiffs to pursue, among other things, (1) amending the complaint to add class allegations; and (2) determining the lead plaintiff under 15 U.S.C. § 78u-4(a)(3).” Plaintiffs asked the court to reopen the action, lift the stay, and cancel the mediation conference. On January 31, 2025, Target filed an Opposition to plaintiffs’ motion to lift the stay, asserting that plaintiffs failed to “satisfy the applicable good cause standard for canceling a court-ordered mediation.”

3. Actions against educational institutions:

Chu, et al. v. Rosa, No. 1:24-cv-75 (N.D.N.Y. 2024): On January 17, 2024, a coalition of education groups sued Betty Rosa, Commissioner of Education for the State of New York, alleging that the state’s free summer program discriminates based on race and ethnicity in violation of the Equal Protection Clause of the Fourteenth Amendment. The Science and Technology Entry Program (STEP) permits students who are Black, Hispanic, Native American, and Alaskan Native to apply regardless of their family income level, but all other students, including Asian and white students, must demonstrate “economically disadvantaged status.” On April 19, 2024, Rosa moved to dismiss the amended complaint for lack of subject-matter jurisdiction, arguing that neither the organizational plaintiffs (groups of parents) nor the named plaintiff, also a parent, have suffered any personal or individual injury, and that the plaintiffs cannot sue for alleged violations of members’ rights as prospective STEP applicants. Plaintiffs opposed the motion, arguing that the plaintiffs do not need to apply for the STEP program as a prerequisite for standing because their “injury is the inability to compete on an equal footing,” not whether they can secure a spot in the STEP program. On April 5, 2024, Plaintiffs filed an amended complaint, adding further details regarding organization members and their interests and including that certain students “meet[] the residency and academic requirements” for the program and are “ready and willing to apply.” Rosa moved to dismiss the amended complaint, but the court denied the motion on November 22, 2024. The court ordered Rosa to answer the complaint no later than December 6, 2024, later extending this deadline to January 21, 2025.
- Latest update: On January 21, 2025, Rosa answered the amended complaint, denying allegations of discrimination. She asserted that the plaintiffs lack standing and that the amended complaint failed to state a claim.

4. Challenges to statutes, agency rules, and regulatory decisions:

Do No Harm v. Gianforte, No. 6:24-cv-00024-BMM-KLD (D. Mont. 2024): On March 12, 2024, Do No Harm filed a complaint on behalf of “Member A,” a white female dermatologist in Montana, alleging that a Montana law requiring the governor to “take positive action to attain gender balance and proportional representation of minorities resident in Montana to the greatest extent possible” when making appointments to the twelve-member Medical Board violates the Equal Protection Clause. Do No Harm alleged that since ten seats are currently held by six women and four men, Montana law requires that the remaining two seats be filled by men, which would preclude Member A from holding the seat. Following Governor Gianforte’s motion to dismiss Magistrate Judge De Soto recommended that the case be dismissed for lack of subject matter jurisdiction. Magistrate Judge De Soto found Do No Harm lacked standing because it did not allege “facts demonstrating that at least one Member is both ‘able and ready’ to apply for a Board seat in the reasonably foreseeable future.” For the same reasons, the Magistrate Judge found the case unripe.
- Latest update: On January 24, 2025, Do No Harm objected to the Magistrate Judge’s findings and recommendations. Do No Harm argues that it has associational standing and that the case is ripe because the organization adequately pleaded “concrete factual allegations regarding the ability and readiness of its members” to apply for board membership, and that its injuries are definite and concrete.
Do No Harm v. Cunningham, No. 25-cv-00287 (D. Minn. 2025): On January 24, 2025, Do No Harm sued Brooke Cunningham, Commissioner of the Minnesota Department of Health, challenging a state law that requires the Commissioner to consider race in appointing members to the Minnesota Health Equity Advisory and Leadership Council. Do No Harm alleges that state law requiring that the board include representatives from either “African American and African heritage communities,” “Asian American and Pacific Islander communities,” “Latina/o/x communities,” and “American Indian communities and Tribal governments and nations,” violates the Fourteenth Amendment. Plaintiffs seek a permanent injunction and declaratory relief.
- Latest update: Do No Harm served defendants on January 30, 2025. Their answer is due February 20, 2025.
American Alliance for Equal Rights v. Walz, No. 24-cv-1748-PJS-JFD (D. Minn. 2024): On May 15, 2024, AAER filed a complaint against Minnesota Governor Tim Walz, challenging a state law that requires Governor Walz to ensure that five members of the Minnesota Board of Social Work are from a “community of color” or “an underrepresented community.” The fifteen-member Board, comprised of ten professionally licensed social workers and five public member positions, has three currently open seats and will have an additional six open seats in January 2025. AAER claimed that two of its white female members are “qualified, ready, willing and able to be appointed to the board,” but that they will not be given equal consideration. AAER seeks a permanent injunction and a declaration that the law violates the Equal Protection Clause of the Fourteenth Amendment. On January 3, 2025, AAER filed an amended complaint to reflect the fact that they no longer rely on one of their original white female members.
- Latest update: On January 17, 2025, Governor Walz answered the amended complaint, denying the allegations of unlawful discrimination and asserting that the plaintiffs lack standing and failed to state a claim upon which relief can be granted.
American Alliance For Equal Rights v. Bennett, No. 1:25-cv-00669 (N.D. Ill. 2025): On January 21, 2025, AAER sued the Attorney General of Illinois, the Director of the Illinois Department of Human Rights, and the Secretary of State of Illinois. AAER alleges that an Illinois law requiring “qualifying nonprofits to gather and publicize” certain demographic data online compels organizations to engage in unlawful discrimination. They assert that “[b]y forcing charities to publicize the demographics of their senior leadership, the law pushes them to hire candidates based on race.” AAER also alleges the law violates the First Amendment by compelling organizations “to speak about a host of controversial demographic issues.” AAER seeks a permanent injunction and declaratory relief.
- Latest update: AAER served defendants on January 24, 2025. Their answer is due February 14, 2025.

The following Gibson Dunn attorneys assisted in preparing this client update: Jason Schwartz, Mylan Denerstein, Blaine Evanson, Molly Senger, Zakiyyah Salim-Williams, Zoë Klein, Cate McCaffrey, Jenna Voronov, Emma Eisendrath, Felicia Reyes, Allonna Nordhavn, Laura Wang, Maya Jeyendran, Kristen Durkan, Ashley Wilson, Lauren Meyer, Kameron Mitchell, Chelsea Clayton, Albert Le, Emma Wexler, Heather Skrabak, and Godard Solomon.

Jason C. Schwartz – Partner & Co-Chair, Labor & Employment Group
Washington, D.C. (+1 202-955-8242, jschwartz@gibsondunn.com)

Katherine V.A. Smith – Partner & Co-Chair, Labor & Employment Group
Los Angeles (+1 213-229-7107, ksmith@gibsondunn.com)

Mylan L. Denerstein – Partner & Co-Chair, Public Policy Group
New York (+1 212-351-3850, mdenerstein@gibsondunn.com)

Zakiyyah T. Salim-Williams – Partner & Chief Diversity Officer
Washington, D.C. (+1 202-955-8503, zswilliams@gibsondunn.com)

Molly T. Senger – Partner, Labor & Employment Group
Washington, D.C. (+1 202-955-8571, msenger@gibsondunn.com)

Blaine H. Evanson – Partner, Appellate & Constitutional Law Group
Orange County (+1 949-451-3805, bevanson@gibsondunn.com)

As we write, Attorney General Pamela Bondi is putting her stamp on corporate criminal enforcement through the issuance of memoranda directing prosecutors to focus effort and resources on cases involving transnational corporate organizations, drug cartels, and terrorism. In this alert, we survey negotiated corporate criminal resolutions in 2024 and offer thoughts about how the trends observed in 2024 will change in the wake of the Attorney General’s February 5, 2025 memoranda to the U.S. Department of Justice (“DOJ”).

Changes Following Attorney General Bondi’s February 5, 2025 Memoranda

In the first day of her tenure as Attorney General of the United States, Attorney General Bondi issued a number of directives to federal prosecutors to guide their effort and focus in the coming years. Those memoranda will shape efforts in this area for the next four years, if not longer. Gibson Dunn issued a more detailed analysis of the impacts of these directives, from which we synthesize a few headline points:

DOJ’s stated investigative and charging priorities are now immigration enforcement; human trafficking and smuggling; transitional criminal organizations (“TCOs”), cartels, gangs; and protecting law enforcement.[1] Attorney General Bondi elevated the leadership of two task forces (one focused on MS-13, and the other on human trafficking) to the Office of the Attorney General, in a clear signal of where DOJ’s new priorities lie.[2]
Resources devoted to certain other enforcement efforts were redirected, such as disbanding the Foreign Influence Task Force[3] and limiting criminal charges under the Foreign Agents Registration Act and 18 U.S.C. § 951 “to more traditional espionage by foreign government actors.”[4]
For other areas, the practical implications of the announcements may be less apparent. For example, the Attorney General’s requirement that the Foreign Corrupt Practices Act (“FCPA”) Unit prioritize investigations of foreign bribery that “facilitates” cartels and TCOs, including human smuggling and narcotics and firearms trafficking, and to “shift focus away from investigations and cases that do not have such a connection” may signal a reduced emphasis on FCPA enforcement, insofar as the FCPA unit brought very few such cases historically. However, it is also possible that this is more a measure to ensure that investigations into cartels and TCOs are not stymied by DOJ red tape, consistent with the subsection’s heading, “Removing Bureaucratic Impediments to Aggressive Prosecutions.” Indeed, the new guidance also suspends, for new FCPA and Foreign Extortion Act matters relating to cartels and TCOs, the Justice Manual’s requirements for Criminal Division approval, and it also allows U.S. Attorneys’ Offices seeking to bring FCPA charges in cartel- or TCO-related cases to proceed with only 24 hours’ notice to the Fraud Section–both actions that permit greater, but not unfettered, leeway to pursue this subset of FCPA cases much more aggressively than ever before.[5]
Similarly, the immediate, practical impact from disbanding the National Security Division’s (“NSD”) Corporate Enforcement Unit is also likely to be small, insofar as the unit was already thinly staffed.[6]
Despite their number, the recent DOJ memoranda may signal that the pendulum will swing away from extensive DOJ policies and guidance. Although it does not single out corporate criminal enforcement, the Attorney General’s prohibition on guidance documents that “violate the law when they are issued without undergoing the rulemaking process” but nevertheless “purport to have a direct effect on the rights and obligations of private parties”[7] may well lay the groundwork for revisiting DOJ-issued guidance from the past four years–including guidance around corporate enforcement and compliance.
Finally, in a development directly relevant to some types of corporate criminal resolutions, except in limited circumstances, “settlements should not be used to require payments to third-party, non-governmental organizations that were neither victims nor parties to the law suits”[8]—as did some of the resolutions in 2024 surveyed below.

Notwithstanding these pronouncements signaling an intended departure from the policies and priorities of the Biden administration, we note that DOJ has proceeded to resolve several significant criminal matters in the early days of the Trump administration. For example, on January 27, 2025, online cryptocurrency exchange and trading platform, KuCoin, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of New York for operating an unlicensed money servicing business (“MSB”) and failure to implement an Anti-Money Laundering (“AML”) program. In addition to servicing approximately 1.5 million users in the United States as an unlicensed MSB and futures commission merchant, KuCoin allegedly transmitted billions of dollars in suspicious proceeds due to the lack of an AML program. The plea agreement stipulates forfeiture of $184.5 million, representing the fees paid by U.S. users; a criminal fine of $112.9 million; and a two-year probationary term, during which KuCoin will exit the U.S. market. Notably, the forfeiture amount is lower than one might anticipate based on DOJ’s prior position that companies could be required to forfeit all funds transmitted by U.S., or potentially all, users. It is difficult to say whether this signals the influence of the new Administration or is a product of the specific fact pattern and nuances of the negotiation that pre-dated the change in guard.

Similarly, on February 6, 2025, Brink’s Global Services USA, Inc. (“Brink’s), a cash handling company, announced that it had entered into a two-year non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of California to resolve charges of knowingly operating an unlicensed money transmitting business and failing to maintain an effective AML program. According to the NPA, Brink’s was required to register with FinCEN as a money transmitting business because, on several occasions between 2019 and 2020, it transported both U.S. dollars and other currencies to and from the U.S., totaling approximately $50.4 million, and exceeded the limited “currency transporter exemption” to the registration requirement by failing to adequately identify the source of funds and ultimate destination of funds it transported. Under the NPA, Brink’s agreed to forfeit $25 million, which reflected credit for Brink’s’s acceptance of responsibility and implementing a new AML compliance program. The NPA also credited civil penalties Brink’s would pay pursuant to a parallel consent order with FinCEN.

Survey of Negotiated Corporate Criminal Resolutions in 2024

In 2024, DOJ continued its multi-year trend of resolving fewer cases using corporate non-prosecution agreements (“NPAs”) and deferred prosecution agreements (“DPAs”).[9] Indeed, the relative proportion of resolution types has not changed appreciably in the past three years (as shown in Chart 3 below). DOJ overwhelmingly favored corporate guilty pleas last year, with a total of 75 plea agreements publicized by year-end, compared to 22 NPAs and DPAs, as well as two declinations with disgorgement. The language and substance of these corporate resolutions reflected the intentionality of application of enforcement priorities and detailed policies put forward by DOJ; for example, many resolutions contained express language addressing specific considerations under DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy. As detailed below, many updates in the corporate enforcement arena centered around incentivizing voluntary disclosure and whistleblowing. This included pilot programs and policies by several prominent U.S. Attorneys’ Offices. And while prosecutions of corporate fraud-related offenses continued apace in 2024, no corporate criminal resolution involved cartels (in any sense), transnational criminal organizations, or human trafficking. Across the board, U.S. Attorneys’ Offices continued to play an important role in the vast majority of corporate criminal resolutions, a role that Attorney General Bondi’s initial directives suggest may increase further in 2025.

In this client alert, we: (1) report key statistics regarding corporate resolutions, including an analysis of NPAs, DPAs, and Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP” or “Corporate Enforcement Policy”) declinations from 2000 through 2024 and of corporate guilty pleas between 2022 and 2024, based on data compiled by Gibson Dunn; (2) assess developments in DOJ enforcement policy and priorities in 2024; (3) summarize the 99 agreements in 2024; and (4) survey recent developments in DPA-like regimes abroad.

Key Statistics

Chart 1 below reflects the NPAs and DPAs that Gibson Dunn has identified through public-source research from 2000 through the end of 2024. Of the 22 total agreements in 2024, there were 14 DPAs and eight NPAs. The SEC, consistent with its trend since 2016, did not enter any NPAs or DPAs in 2024.

Chart 2 reflects total monetary recoveries related to publicly available NPAs and DPAs from 2000 through the end of 2024. At approximately $2.6 billion, 2024 recoveries associated with DPAs and NPAs are higher than those in 2023 and continue their upward trend, although they rank as the 16th lowest of our 25 years of annual totals.

Chart 3 reflects the relative mix of NPAs, DPAs, declinations-with-disgorgement and guilty pleas since we began tracking the latter in 2022.

Charts 4 and 5 below focus on 2022 through 2024, and show the numbers of DPAs, NPAs, plea agreements, and declinations with disgorgement in those years, as well as recoveries associated with each category of agreement.[10] These charts illustrate that while DOJ has used all forms of resolution, the relative proportion of guilty pleas to other forms of resolution has not changed significantly in the three years we have tracked plea agreements. Consistent with the higher number of plea agreements relative to other forms of resolution, recoveries associated with guilty pleas have also always been highest. At $5.9 billion, recoveries associated with plea agreements in 2024 more than doubled those associated with NPAs and DPAs but did not outpace them as significantly as in recent years.

[Values shown on a logarithmic scale.]

[Values shown on a logarithmic scale.]

Although it would be impossible to determine with certainty the root cause of the relative decline in NPAs and DPAs that began around 2022, the shift coincided with significant updates announced in the September 2022 Monaco Memorandum (which we analyzed in depth in our October 3, 2022 publication) that broadened policies on voluntary self-disclosure and signaled a meaningful pivot in prosecutors’ charging assessments.

We note a few statistics and possible trends, although it is difficult to say whether they reflect any shift in focus or standards or are a function of the natural ebb and flow of enforcement actions—nor can we predict the prospective impact of the incoming administration’s priorities on them.

Since 2022, all “blockbuster” resolutions involving criminal penalties and forfeiture totaling $1 billion or more across parallel criminal and civil settlements involved plea agreements—with three in that category in 2022, one in 2023, and two in 2024. Looking back over time, we note at least seven NPAs and DPAs involving criminal penalties of $1 billion or more, between 2009 and 2020.
On the other end of the penalty spectrum, the only two publicly available corporate resolutions in 2024 that explicitly cited timely voluntary self-disclosure were both declinations with disgorgement—and both resolved by the Fraud Section of DOJ’s Criminal Division. Historically, voluntary self-disclosure of misconduct had been a significant feature of many NPAs and DPAs, although—consistent with the announcement and expansion of the CEP—the numbers of NPAs and DPAs citing voluntary disclosure as a factor have declined significantly since 2016.
Indeed, every one of the corporate declinations or declinations with disgorgement publicly announced pursuant to the CEP since 2016 has involved the Fraud Section.
Despite DOJ first expanding the predecessor to the Corporate Enforcement Policy to reach beyond the Foreign Corrupt Practices Act (“FCPA”) in 2018, and later underscoring that it applied to all corporate criminal matters in 2023, the Fraud Section was involved in approximately one-third (67) of all (194) DPAs, NPAs, and declinations announced since 2018. That percentage held even after the past three years’ relative decline in DPAs, NPAs and declinations, with the Fraud Section involved in 22 of the 67 total such agreements.
For plea agreements, a similar distinction goes to environmental-related prosecutions. Of the 190 corporate guilty pleas publicly announced from 2022-2024, 50 (slightly more than one-fourth) involved DOJ’s Environmental Natural Resources Division and/or the Environmental Protection Agency. Of the guilty pleas related to enforcement of environmental laws and regulations, almost 20 percent involved tampering or disengagement of monitoring devices designed to detect or prevent pollution, and over 10 percent involved the improper release of oily bilgewater.
DOJ’s Antitrust Division had eight public NPAs and DPAs in 2020-21, three in 2023, and none in 2022 and 2024. But in 2022-2024, it also entered 13 plea agreements. Of these plea agreements, 11 were tied to schemes previously publicly disclosed.
Precisely 50% (344) of all 688 corporate DPAs, NPAs, and declinations issued under the CEP in our 25 years of data involve an allegation or charge of fraud of some sort, ranging from bank or mail fraud to FCPA violations. Since we began tracking plea agreements in 2022, the percentage is slightly lower at 29%, i.e., 74 of the total 252 negotiated corporate resolutions—40 of which were guilty pleas.
U.S. Attorneys’ Offices continue to play an important role in corporate prosecutions, which were historically concentrated in the biggest DOJ offices or Main Justice units. 93% of 2024’s 99 corporate negotiated resolutions involved a U.S. Attorney’s Office.
Monitoring obligations, whether in the form of an independent monitor or self-reporting, have continued to feature in corporate resolutions at approximately the same rate over the past three years. As a percentage, 23%-46% of all publicly reported DPAs, NPAs, and declinations for which data is available for each year between 2022 and 2024 included a monitoring obligation: 25% in 2022, 23% in 2023, and 46% in 2024. While these percentages reflect a steep decline from the prior three years, which ranged from 59%-73% (59% in 2019, 73% in 2020, and 69% in 2021), monitorships and self-reporting are by no means extinct.
In 2024, nine corporate resolution agreements were also signed by parent companies that were not defendants in the proceedings. In these resolutions, the parent company typically agreed to provisions relating to payment, continued cooperation, and compliance enhancements, but certain agreements went farther, requiring specific guarantees or collateral and subjecting the parent to sanctions for any breach of the agreement.

The evolution in form, structure, and elements of corporate resolutions will no doubt continue. More than 20 years ago, Gibson Dunn led the dramatic shift toward increased use of NPAs and DPAs in corporate cases and has recently been at the forefront of monitoring and addressing the apparent shift back toward plea agreements.

2024 Developments in DOJ Corporate Enforcement Policy

Many of DOJ’s policy updates and pilot programs in 2024 centered around incentivizing voluntary disclosure, including by individuals. For business organizations, these initiatives further underscore the need for companies to revisit compliance program elements relating to reporting misconduct and whistleblower protections and may alter the calculus around their own voluntary self-disclosure decisions. Specifically, these initiatives would encourage business organizations to revisit their compliance programs to ensure that they get first notice of issues that may be externally reported, and also to ensure that they investigate reports sufficiently speedily and effectively to allow for timely corporate self-disclosure assessments.

With that said, the policy memoranda issued by Attorney General Bondi on February 5, 2025, cast doubt on whether DOJ will continue to prioritize voluntary disclosure and other corporate criminal enforcement initiatives to the same degree moving forward, as DOJ reorients toward immigration and transnational criminal organizations.[11]

Criminal Division’s Pilot Program on Voluntary Self-Disclosure for Individuals

On April 15, 2024, DOJ’s Criminal Division announced a new Pilot Program on Voluntary Self-Disclosure for Individuals (“the Individuals VSD Pilot Program”). While not directly applicable to corporations, this program is likely to affect the design of corporate compliance programs. The Individuals VSD Pilot Program aims to incentivize individual participants in certain types of criminal conduct involving corporations to voluntarily self-disclose information about the criminal conduct in exchange for an NPA, subject to certain conditions. Specifically, under the Individuals VSD Pilot Program, culpable individuals may receive an NPA if they (1) voluntarily, (2) truthfully, and (3) completely self-disclose original information about misconduct in certain high-priority enforcement areas that was otherwise unknown to the Department; (4) fully cooperate and provide substantial assistance against those who are equally or more culpable; and (5) forfeit any ill-gotten gains and compensate victims. The program is notably not available to Chief Executive Officers, Chief Financial Officers, or their equivalents, nor to individuals reporting violent crimes or who have prior felony convictions for crimes involving fraud or dishonesty.

The applicable “high priority” enforcement areas articulated in 2024 include schemes involving financial institutions, including money laundering; related to the integrity of financial markets involving financial institutions, investment advisors or funds, or public or large private companies; foreign corruption schemes, including violations of the FCPA or Foreign Extortion Prevention Act; healthcare fraud and kickback schemes; federal contract fraud schemes; and domestic corruption schemes involving bribes or kickbacks paid by or through public or private companies.

Going forward, it seems likely that these priorities may shift toward immigration and transnational criminal organizations, consistent with Attorney General Bondi’s memorandum on charging, plea negotiations, and sentencing.[12]

Criminal Division’s Corporate Whistleblower Awards Pilot Program

Several months later, the Criminal Division formally announced another, parallel pilot program, the Corporate Whistleblower Awards Pilot Program, effective immediately upon its announcement on August 1—although Principal Deputy Assistant Attorney General (then-Acting Assistant Attorney General) Nicole M. Argentieri had initially previewed the program in March at the American Bar Association’s 39th National Institute on White Collar Crime.

As we described in greater detail in our prior alert, under this pilot program, a whistleblower who provides the Criminal Division with original and truthful information about corporate misconduct that leads to a forfeiture exceeding $1 million may be eligible for a monetary award, from a portion of that forfeiture. To qualify, the information provided must relate to certain “high priority” enforcement areas including (1) certain crimes involving financial institutions, (2) foreign corruption involving company misconduct, (3) domestic corruption involving company misconduct, or (4) healthcare fraud schemes involving private insurance plans.

Although corporate entities are not themselves eligible for an award under the program, the pilot program guidance clarifies that companies that voluntarily self-report within 120 days of receiving a whistleblower report internally may be eligible for a presumption of declination under the Criminal Division’s Corporate Enforcement Policy, provided that the company reports to the DOJ before the DOJ contacts the company.

According to the 2024 Justice Department, this new program aims to fill important gaps in the existing federal whistleblower programs run by the SEC, CFTC, and FinCEN by seeking original information not covered by those programs. The Program also aims to complement and strengthen the DOJ’s existing voluntary self-disclosure programs for individuals and companies. In the keynote address at the December 2024 Practicing Law Institute’s White Collar Crime 2024 Program, the former Principal Associate Deputy Attorney General stated that the program has received more than 250 tips “many of which appear to identify criminal conduct we didn’t know about.”[13]

Various U.S. Attorneys’ Offices Announce Voluntary Self-Disclosure Pilot Programs

As of this publication, 12 U.S. Attorneys’ Offices have announced their own, separate individual whistleblower or voluntary self-disclosure pilot programs.[14] The programs are similar to one another and to the DOJ Criminal Division’s pilot program in some respects and generally allow a prosecutor to enter an NPA with an individual who (1) reports misconduct not previously known to the office, (2) voluntarily discloses the misconduct, without government inquiry or imminent threat of disclosure, (3) provides substantial assistance and full cooperation, (4) completely and truthfully discloses all criminal conduct in which the individual participated, and (5) agrees to forfeit proceeds and pay restitution to victims.[15]

However, the devil is in the details, and the offices stand out for their differences more than their cohesion. For example, the Central District of California contemplates DPAs in addition to NPAs, while the Northern District of Illinois offers no guarantee of an NPA but rather “maintains the discretion to determine on a case-by-case basis” whether an individual “merits” an NPA (though time will tell whether this is merely a semantic difference, as surely all offices will employ their discretion to determine whether their respective standards have been met).[16] Individuals are eligible to participate in all offices’ programs, with certain common exclusions, such as: (1) federal elected officials or law enforcement officers and, in some offices’ programs, state-elected equivalents; (2) the CEO and, in some offices’ programs, the CFO or Chief Compliance Officer; (3) individuals with felony convictions or, in some offices’ programs, histories of certain types of misconduct.[17] In the Southern District of Texas, business organizations are also eligible to participate in the program.[18]

Although a U.S. Attorney’s Office is subject to jurisdictional and DOJ policy limits on what misconduct it may charge, the types of criminal conduct that qualify for each office’s program also vary significantly. Fraud or control failures involving public or private companies are common, if not universal, among the pilot programs, as is state or local bribery.[19] The District of New Jersey and the Northern District of Illinois programs cover anything not specifically excluded.[20] Most districts exclude misconduct that would be prosecuted by Main Justice such as FCPA violations, violations of campaign finance laws, federal tax offenses, or federal environmental offenses, but in the Eastern District of New York and Northern District of California, nothing is explicitly excluded.[21] Where misconduct could arguably be charged in one of many districts, one could easily imagine a savvy whistleblower and their counsel forum shopping for the program where they stand the best or most certain chance of reaping rewards.

Looking ahead, Attorney General Bondi’s February 6, 2025, policy memoranda appear to signal her intention to empower U.S. Attorneys’ Offices to investigate and prosecute cases with less direct involvement by Main Justice, which could make these programs increasingly important—to the extent they continue.

DOJ Updates Its Evaluation of Corporate Compliance Programs Guidance

As we analyzed in depth in our contemporaneous update, on September 23, 2024, the Criminal Division announced relatively modest revisions to its Evaluation of Corporate Compliance Programs (“ECCP”) guidance, focusing on the following three areas: (1) evaluation and management of risk related to new technologies, such as artificial intelligence (“AI”); (2) further emphasis on the role of data analysis; and (3) whistleblower protection and anti-retaliation. Among these, the Department’s changes in its approach to AI were the most significant, underscoring DOJ’s continued focus on the misuse of technology in criminal conduct and reflecting DOJ’s current expectations as companies tailor their compliance programs to both identify and manage the risks posed by AI. Other key takeaways from the revisions include that in adopting a tailored, risk-based approach, companies should (1) assess whether their use of technology falls within the scope of this guidance; (2) ensure new technologies are as transparent as possible; (3) continuously monitor and revise their compliance programs to keep up with rapid technological developments; (4) allocate the resources at their disposal to identifying and mitigating risks posed by technology; and (5) revisit their approach to compliance reporting to account for the probability of increased activity following DOJ’s recent launch of several new whistleblowing and anti-retaliation programs.

Antitrust Guidelines for Collaboration Among Competitors Withdrawn

On December 11, 2024, the DOJ Antitrust Division and Federal Trade Commission (“FTC”) withdrew longstanding guidelines for collaboration among competitors.[22] Issued in April 2000, the guidelines provided substantive guidance on the types of collaborations and factors that the Division would be more or less likely to view as anticompetitive. The withdrawal notice explained that technological and jurisprudential developments have rendered the guidelines unreliable and stated that the Division is “committed to vigorous antitrust enforcement on a case-by-case basis” going forward. Although the withdrawal is not a criminal enforcement policy, the notice stated that the guidelines “risk[ed] creating safe harbors that have no basis” in law. It also cited “artificial intelligence” and “algorithmic pricing models” as examples of new technologies that the guidelines had not addressed,[23] both of which may be relevant to traditional areas of antitrust criminal enforcement such as price fixing, bid rigging, and market allocation.[24]

2024 Resolutions

This portion of the alert summarizes publicly available corporate resolutions from January 1, 2024 through December 31, 2024. While most are listed alphabetically below, the 14 guilty pleas relating to allegations of tampering with pollution control devices on diesel trucks in violation of the Clean Air Act, which were extracted by the Environmental Crimes Section of DOJ’s Environment and Natural Resources Division and various U.S. Attorneys’ Offices, are grouped together toward the end, for ease of reference. The appendix provides key facts and figures regarding all 99 resolutions, along with links to the resolution documents themselves (where available).

AAR CORP. (NPA)

On December 19, 2024, AAR CORP., a publicly traded aviation services company based in Illinois, entered into an 18-month NPA with DOJ’s Fraud Section and the U.S. Attorney’s Office for the District of Columbia to resolve DOJ’s investigation into an alleged conspiracy to violate the FCPA’s anti-bribery provisions.[25] According to the NPA, between 2015 and 2020, AAR allegedly conspired to pay bribes to government officials in Nepal and South Africa to obtain and retain business with state-owned airlines.[26] As a result of the scheme, AAR reportedly obtained nearly $24 million in profits.[27] Pursuant to the NPA, AAR agreed to pay a $26.4 million criminal penalty and to forfeit at least $18.6 million in proceeds traceable to the offense; however, DOJ agreed to credit disgorgement paid pursuant to AAR’s parallel SEC resolution against the forfeiture amount.[28] According to the NPA, the penalty reflected a 45% discount below the bottom of applicable Guidelines range, and DOJ credited AAR for self-reporting the potential violations to the DOJ and SEC and cooperating with both agencies throughout their multi-year investigations.[29] AAR’s self-report did not qualify as a “voluntary self-disclosure,” however, because media outlets in Nepal and South Africa published several English-language articles reporting potential irregularities in the relevant contracts prior to the company’s disclosure and an independent source reported the alleged Nepal misconduct to U.S. prosecutors 12 days prior to the company’s self-disclosure.[30]

DOJ also charged two individuals in connection with their involvement in these alleged bribery schemes. Deepak Sharma, a former AAR subsidiary executive, pleaded guilty in the District of Columbia on August 1, 2024 to a conspiracy to violate the FCPA for his role in the Nepal scheme and settled related SEC charges on December 19, 2024. Julian Aires, a third-party agent of AAR, pleaded guilty in the District of Columbia on July 15, 2024 to a conspiracy to violate the FCPA for his role in the South Africa scheme.[31]

To resolve parallel SEC charges, AAR consented to a cease-and-desist order finding that the company had violated the FCPA’s anti-bribery and accounting provisions and agreed to pay $29.2 million in disgorgement plus prejudgment interest.[32] In sum, after offsets, AAR agreed to payments totaling approximately $55.6 million.

Advoque Safeguard LLC (Guilty Plea)

On October 24, 2024, Advoque Safeguard LLC, a protective equipment manufacturer, together with three individual defendants, entered a guilty plea for conspiracy to introduce or deliver for introduction into interstate commerce a misbranded device with intent to defraud or mislead pursuant to a plea agreement with the United States Attorney’s Office for the District of Massachusetts.[33] The government alleged that Advoque Safeguard conspired to ship N95 facemasks, misbranded as National Institute of Occupational Safety and Health (NIOSH)-approved while not meeting NIOSH filtration standards.[34] Pursuant to the plea agreement, the parties agreed to recommend a criminal fine of $700,000 to be paid within 120 days and probation of one year.[35] Sentencing has not yet occurred.

Akua Mosaics, Inc. (Guilty Plea)

On March 19, 2024, Akua Mosaics, Inc. (“Akua Mosaics”) entered into a plea agreement with the U.S. Attorney’s Office for the District of Puerto Rico to resolve charges alleging that Akua Mosaics conspired to defraud the U.S. by smuggling and importing porcelain mosaic tiles manufactured in China in violation of 18 U.S.C. §§ 371, 545.[36] The government alleged that from 2021 through about June 2022, Akua Mosaics and its president conspired with a Chinese citizen and resident to ship the Chinese-manufactured tiles to Malaysia, causing the boxes to be labeled “Made in Malaysia,” and then shipping those tiles to Puerto Rico.[37]

In connection with the agreement, Akua Mosaics and its president, also charged in the same case, face a maximum penalty of five years in prison, a $250,000 fine, a three-year term of supervised release, and $1,090,000 in restitution.[38] Pursuant to the agreement, Akua Mosaics agreed to pay restitution of $1,090,000, and a recommendation that no fine be imposed. In related actions, the Chinese national with which the company and president allegedly conspired was arrested in April 2023 in the Northern District of California while attempting to leave the U.S., pleaded guilty to participation in the conspiracy, and was sentenced in September 2023 to four months in prison.[39]

Al’s Asphalt Paving Company, Inc. (Guilty Plea)

On January 31, 2024, Al’s Asphalt Paving Company, Inc. (“Al’s Asphalt”), a provider of asphalt paving services, entered into a plea agreement with the DOJ Antitrust Division.[40] The agreement resolved allegations involving bid rigging, in which Al’s Asphalt and other companies coordinated, and conspired to coordinate, bid prices, resulting in non-competitive bids from March 2013 through as late as June 2019 U.S.C. § 1.[41] Al’s Asphalt’s plea agreement was part of a broader investigation conducted by the DOJ Antitrust Division, which has resulted in nine guilty pleas by companies and executives in the Michigan asphalt-paving services industry, and in which DOJ has coordinated with the Department of Transportation Office of the Inspector General and the U.S. Postal Service Office of Inspector General.[42] This scheme allegedly involved at least $3.6 million in commerce attributable to Al’s Asphalt.[43] On July 31, 2024, the U.S. District Court for the Eastern District of Michigan sentenced the company, imposing a criminal penalty of $795,662, to be paid in installments over the course of five years.[44]

AM/NS Calvert, LLC (Guilty Plea)

On July 23, 2024, AM/NS Calvert, LLC (“AM/NS”), a steel plant owner and operator, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of Alabama and the Environmental Crime Section of the Department of Justice.[45] The plea agreement resolved allegations that, from approximately February 2014 through April 2017, AM/NS’s acid regeneration plant was not using caustic solution required by its Clean Air Act permit, in violation of the Clean Air Act.[46] In October 2024, AM/NS was sentenced to three years of probation and a $750,000 fine.[47] The plea agreement also requires AM/NS to comply fully with the terms of a separate, related settlement agreement with the U.S. Environmental Protection Agency’s Office of Debarment and Suspension.[48]

Amigos Mexican Cuisine & Cantina LLC (Guilty Plea)

On November 27, 2023 (though publicly filed on April 29, 2024), Amigos Mexican Cuisine & Cantina LLC (“Amigos Mexican”) entered into a plea agreement with the U.S. Attorney’s Office for the District of Oregon to resolve allegations that the company stole federal funds intended to help small businesses during the COVID-19 pandemic.[49] According to the agreement, over the course of about one year, Amigos Mexican allegedly submitted five fraudulent loan applications to steal more than $759,000 from three COVID-19 pandemic relief programs: the Paycheck Protection Program, Economic Injury Disaster Loan program, and the Restaurant Revitalization Fund. The company’s owners allegedly transferred these funds into personal accounts for personal expenditures.[50] Pursuant to the agreement, Amigos Mexican agreed to pay a fine of $200,000, as well as $759,100 in restitution to the Small Business Administration.[51] In a separate civil proceeding, the company was ordered to pay $1.6 million to resolve a related False Claims Act allegation.[52]

AMVAC Chemical Corp. (Guilty Plea)

On May 24, 2024, AMVAC Chemical Corp. (“AMVAC”), a pesticide manufacturer, entered into a plea agreement with the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resource Division and the U.S. Attorney’s office for the Southern District of Alabama, to resolve Resource Conservation and Recovery Act (“RCRA”) transportation violation charges.[53] The plea agreement resolved allegations that AMVAC knowingly transported hazardous waste without a required hazardous waste manifest.[54] The government alleged that AMVAC imported tens of thousands of used containers of a pesticide called “Thimet” without labeling the containers as containing hazardous waste.[55] On October 25, 2024, the court sentenced AMVAC to a fine of $400,000 and a three-year probation period where AMVAC will be required to fund and develop an Environmental Compliance Plan (“ECP”), the recommended sentence provided in the agreement.[56] Pursuant to the agreement, the ECP shall be developed and administered by a third-party environmental auditor.

Asphalt Specialists LLC (Guilty Plea)

On January 30, 2024, Asphalt Specialists LLC (“Asphalt Specialists”), a provider of asphalt paving services, entered into a plea agreement with the DOJ Antitrust Division.[57] The agreement was part of a broader investigation into anticompetitive behavior in the asphalt paving industry[58] and resolved allegations involving bid rigging, in which Asphalt Specialists and other companies (including Al’s Asphalt, supra) coordinated, and conspired to coordinate, bid prices, resulting in non-competitive bids from March 2013 through as late as May 2021 in violation of the Sherman Act, 15 U.S.C. § 1.[59] This scheme allegedly involved at least $23,465,114 in commerce attributable to Asphalt Specialists.[60] On August 15, 2024, the U.S. District Court for the Eastern District of Michigan sentenced Asphalt Specialists, imposing a criminal penalty of $6.5 million, as recommended by the government, to be paid over the course of six years.[61]

Austal USA (Guilty Plea)

On August 26, 2024, Austal USA LLC (“Austal USA”), a Navy shipbuilder, entered into a plea agreement resolving allegations regarding securities fraud and obstruction of a federal audit with the U.S. Attorney’s office for the Southern District of Alabama and DOJ’s Fraud Section.[62] The agreement resolved allegations that Austal reported false financial results to investors, lenders, and its auditors.[63] The government alleged Austal USA artificially suppressed an accounting metric known as “estimate at completion” (“EAC”) in relation to its construction of multiple combat ships that Austal USA was building for the U.S. Navy, overstating profitability and earnings in its public financial statements.[64] Under the plea agreement, Austal USA agreed that an approximately $73,572,680 criminal fine was appropriate, but, due to Austal USA’s inability to pay, the plea agreement proposed a criminal fine of $24,000,000 and a three-year probation period during which Austal USA will undergo an independent compliance monitorship.[65] The plea agreement provided up to a 100% credit against the fine for payments made by Austal USA toward a parallel settlement with the SEC in federal court relating to violations of the antifraud provisions of the Securities Exchange Act of 1934.[66] Austal USA’s parent company, Austal Limited was not a defendant in the action though Austal Limited still consented to engage in remedial measures required in the probation.[67]

Aventura Technologies, Inc. (Guilty Plea)

On March 19, 2024, Aventura Technologies, Inc. (“Aventura”), a security and surveillance hardware and software manufacturer, pled guilty in the Eastern District of New York to mail and wire fraud conspiracy, 18 U.S.C. §§ 1341, 1343, and illegal importation, 18 U.S.C. § 1349.[68] Aventura admitted to a more than decade-long, $112 million scheme to purchase Chinese-made security equipment and resell it, while representing that the equipment was U.S.-made.[69] From 2006 to November 2019, Aventura imported and then resold the Chinese-made equipment to the U.S. government and military and other overseas private and public customers, earning over $20 million in government contracts.[70] Aventura actively concealed the equipment’s origins, including by working with Chinese suppliers to label equipment as “Made in USA” and with an American flag, and by showing visitors both a fake lab and fake classified building at the company’s facility on Long Island.[71] The company also falsely represented that it was a woman-owned small business.[72]

Under the guilty plea, Aventura agreed to dissolve itself following sentencing and to three years’ probation, to provide continued federal court jurisdiction during the state-law corporate dissolution process.[73] It also agreed to forfeit over $3 million in assets and 7,000 items of merchandise.[74] Seven individual defendants had previously pled guilty, including to charges of wire fraud conspiracy.[75]

Avin International Ltd & Kriti Ruby Special Maritime Enterprise (Guilty Plea)

On December 23, 2024, shipping companies Avin International Ltd (“Avin”) and Kriti Ruby Special Maritime Enterprise (“Kriti Ruby SME”) entered into a plea agreement with the U.S. Attorney’s Offices for the District of New Jersey and the Middle District of Florida and with the Environmental Crimes Section of DOJ’s Environment and Natural Resources Division.[76] The agreement resolved multiple counts arising from allegations that Avin and Kriti Ruby SME violated the Act to Prevent Pollution from Ships, failed to maintain records, falsified records, and obstructed justice. Specifically, between May 2022 and September 2022, crew members of an oil tanker, which was commercially operated and managed by Avin and owned by Kriti Ruby SME, allegedly knowingly bypassed required pollution prevention equipment by discharging oily waste from the vessel into the sea during port calls in New Jersey and Florida.[77] According to the agreement, crew members allegedly failed to record the discharges in the vessel’s oil record book and were directed to conceal the equipment used to conduct the transfers before inspection by the United State Coast Guard.[78]

In connection with the agreement, Avin and Kriti Ruby SME were ordered to pay a criminal fine of $3,375,000, of which $1,250,000 will be designated as a community service payment to the National Fish and Wildlife Foundation.[79] The companies were sentenced to five-year terms of probation during which they must adopt and implement environmental compliance plans, retain the services of an independent third-party auditor to perform external audits, and fund a court-appointed monitor.[80]

BIT Mining Ltd. (DPA)

On November 18, 2024, BIT Mining Ltd. (“BIT Mining”), which operated as a cryptocurrency mining company based in the Cayman Islands and was formerly known as 500.com Ltd., agreed to enter into a three-year DPA to resolve an investigation by the Fraud Section of DOJ’s Criminal Division and the U.S. Attorney’s Office for the District of New Jersey into alleged violations of the anti-bribery and books-and-records provisions of the FCPA.[81] In particular, DOJ alleged one count of conspiracy to violate the anti-bribery and books-and-records provisions, and one count of violating the books-and-records provisions.[82] The allegations stemmed from the company’s alleged participation in a 2017-2019 scheme to pay $1.9 million in bribes to Japanese government officials and the company’s consultants to win a contract to open a resort and casino in Japan.[83]

The Justice Department also announced on November 18, 2024 that an indictment had been unsealed charging the company’s former CEO with FCPA violations for his alleged role in the scheme.[84] In connection with the DPA, BIT Mining acknowledged that an appropriate criminal penalty would be $54 million.[85] Based on its proven inability to pay this amount, however, the parties agreed to a criminal penalty of $10 million; DOJ also agreed to credit up to $4 million against the civil penalty BIT Mining had agreed to pay the SEC to resolve a parallel investigation into the same conduct.[86] In addition, BIT Mining agreed to continued cooperation, any appropriate enhancements to its compliance program, and periodic reporting to the government regarding remediation and the implementation of compliance measures during the DPA’s three-year term.[87]

The parallel SEC resolution, which alleged approximately $2.5 million in improper payments, charged BIT Mining with violations of the anti-bribery, books-and-records, and internal controls provisions of the FCPA, and imposed a $4 million civil penalty.[88]

BNL Technical Services, LLC (Guilty Plea)

On October 22, 2024, BNL Technical Services, LLC (“BNL”), a small business that provides engineering support for environmental remediation and renewable energy projects, entered into a plea agreement to resolve allegations of bank fraud with the U.S. Attorney’s Office for the District of Eastern Washington.[89] The government alleged that BNL applied for and received a $493,865 loan in April 2020 as part of the Paycheck Protection Program (“PPP”) even though its employee pay and benefits were already being covered by Department of Energy and other federal sources including the Veterans Administration.[90] In August 2021, BNL, through its sole owner Wilson Pershing Stevenson III, requested and was granted forgiveness of the $493,865 PPP loan, by falsely certifying the loan proceeds had been used for eligible uses and business expenses.[91] BNL agreed to pay restitution of $493,865, no additional fine, and a $400 special assessment fee.[92] The agreement included no probation, reporting, or monitor because BNL was no longer a going concern. In exchange, the government agreed to dismiss all remaining indictment counts against BNL, and to dismiss a pending indictment against Wilson Pershing Stevenson III with prejudice.[93] Sentencing is scheduled for March 11, 2025.[94]

Boston Consulting Group (Declination with Disgorgement)

On August 27, 2024, the Fraud Section of DOJ’s Criminal Division issued a “declination with disgorgement” letter to U.S.-based consulting firm Boston Consulting Group, Inc. (“BCG”) for violations of the FCPA’s anti-bribery provisions.[95]

The declination requires that BCG continue to cooperate with the investigation and disgorge more than $14.4 million.[96] The declination letter cited several factors favorable to BCG, including the absence of aggravating factors such as executive management involvement or significant profit, as well as the company’s voluntary and timely self-disclosure, full and proactive cooperation, and substantial remediation efforts, which included terminating employees in Portugal involved in the misconduct, requiring them to forfeit their equity in the company, and withholding bonuses.[97] The declination also credited BCG for significant improvements to its compliance program and internal controls.[98]

Boyd Farm LLC (Guilty Plea)

On June 27, 2024, Boyd Farm, LLC entered into a plea agreement with the U.S. Attorney’s Office for the Eastern District of Virginia to resolve allegations of unlawfully discharging a pollutant in violation of the Clean Water Act.[99] Between 2017 and 2019, Boyd Farm used excavators and other earthmoving equipment to pull vegetation, grub stumps and grade land at three sites in Virginia’s Piedmont region, which left behind debris that made its way into wetlands and streams at the properties.”[100] Boyd Farm was sentenced to pay a fine of $300,000 and serve a year of probation.[101]

Brazos Urethane, Inc. (DPA)

On February 7, 2024, Brazos Urethane, Inc. (“Brazos Urethane”), a commercial building contractor, entered into a three-year DPA with the U.S. Attorney’s Office for the Western District of Wisconsin.[102] The agreement resolved allegations that the company conspired to defraud the United States in connection with the company’s contract with the Federal Bureau of Prisons (“BOP”) to replace roofs on buildings of a correctional facility in Oxford, Wisconsin.[103] The government alleged that Brazos Urethane illegally dumped asbestos-containing materials at a site used to house workers in violation of its contract, which was valued at over $3.9 million.[104] After the Wisconsin Department of Natural Resources discovered the illegal dumping, the government alleged that Brazos Urethane falsely claimed to have completed the cleanup when in reality, it had merely pushed the waste further into the woods.[105] According to the agreement, Brazos Urethane acknowledged its responsibility and received full credit for its cooperation, which included two separate debriefings of all relevant facts, as well as ongoing remediation.[106]

In connection with the agreement, Brazos Urethane agreed to pay a monetary penalty of $300,000 and enhance its compliance and ethics program and internal controls.[107] The agreement did not require restitution because Brazos Urethane had already paid approximately $480,000 to remediate the dump site.[108] However, three months later, on May 6, 2024, the parties amended the DPA, agreeing that the payment “should not be considered a monetary fine because the Court has not initiated any action against the defendant in this case,” seeking to reclassify the payment as restitution, and petitioning the court to transfer it from the clerk of court to the Bureau of Prisons,[109] a motion which the court granted on May 20.[110]

Cambridge International Systems, Inc. (Guilty Plea)

On April 16, 2024, Cambridge International Systems, Inc. (“Cambridge”), a defense contractor, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of California to resolve allegations of conspiracy to commit bribery of, among others, a former Naval Information Warfare Center employee, in violation of 18 U.S.C. § 201.[111] According to the agreement, from 2014-2019, Cambridge allegedly provided jobs to the employee’s family and friends, meals, and sports tickets, in exchange for awarding Cambridge two contracting jobs worth over $132 million.[112] Pursuant to the agreement, Cambridge agreed to forfeit $1,672,102.23, representing the total paid to date under the awarded contracts, and the government agreed to recommend a fine “at the low end of the advisory guideline range recommended by the Government at sentencing.”[113] The agreement did not recommend the court to impose any term of probation.[114]

On September 24, 2024, Cambridge was sentenced to two years of probation and $2.25 million in fines, in addition to the $1.67 million in forfeitures.[115] As part of the condition of the probation, the court ordered the company to set up a fund valued at $250,000 to benefit the family of a slain employee.[116]

CBM SAS, CBM NA, and CBM U.S. (NPA)

On July 8, 2024, CBM SAS, together with its wholly-owned subsidiaries CBM NA and CBM US (collectively “CBM”), an international bus parts supplier, entered into a two-year non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York.[117] The agreement resolved allegations that CBM engaged in a scheme to defraud U.S. transit authority customers through false and misleading statements about the sources of contracted-for bus parts from about 2010 to April 2021.[118] Although CBM did not receive credit for voluntary disclosure, to account for “CBM’s significant and early cooperation,” the monetary penalty the company ultimately agreed to pay reflects a 50% discount off the bottom of the U.S. Sentencing Guidelines fine range.[119]

According to the agreement, CBM is required to pay $463,243.41 in forfeiture to the United States, representing its profits from the scheme, and pay a fine of $1,500,000.[120] In addition, CBM has agreed to pay restitution to victims who submit claims, and to hold $2,000,000 in escrow to account for any victim restitution claims made directly to CBM.[121] At the conclusion of the NPA’s term, CBM must revert unclaimed funds up to $438,859.52 to the Crime Victims Fund, which is administered by DOJ’s Office for Victims of Crime.[122] For the duration of the agreement, CBM also must cooperate with the United States, report any violations of U.S. law, and continue its ongoing efforts to implement and maintain an adequate compliance program.[123]

Cerebral, Inc. (NPA)

On November 4, 2024, Cerebral, Inc. (“Cerebral”), an online mental healthcare company, entered into a 30-month NPA with the U.S. Attorney’s Office for the Eastern District of New York.[124] The agreement resolved allegations that Cerebral had improperly promoted distribution of controlled substances through its telehealth services from 2019 through 2022, in violation of 21 U.S.C. §§ 841 and 846.[125] The government alleged that Cerebral, which provided telehealth and prescription treatment for ADHD and other conditions through its app, deliberately pushed prescriptions of controlled substances to increase its revenue and patient retention.[126] The government also alleged that the company’s risk diversion controls were insufficient.[127] While Cerebral did not self-report the conduct, it cooperated with the investigation and took remedial measures including removing its CEO, halting use of prescription metrics for individual employees, and ceasing prescription of controlled substances, among other steps.[128] In consideration of these remedial measures, no independent monitor was imposed by the agreement.

Pursuant to the NPA, Cerebral will forfeit $3,652,000 in profits.[129] The NPA also assessed a fine of $2,922,000 (accounting for an aggregate discount of 20 percent in consideration of Cerebral’s timely cooperation). The fine is deferred for the term of the NPA because Cerebral is financially unable to pay and will be waived at the end of the agreement’s term unless Cerebral’s financial position has changed.[130]

Covetrus North America LLC (Guilty Plea)

On February 12, 2024, Covetrus North America LLC (“Covetrus”), a prescription drug company, entered into a plea agreement with the U.S. Attorney’s Office for the Western District of Virginia to resolve allegations of criminal drug misbranding in connection with the sale of veterinary prescription drugs.[131] Pursuant to the plea agreement, Covetrus agreed to pay a $1,000,000 fine to the Virginia Department of Health Professions and approximately $21,534,091 in forfeiture, representing the total value of misbranded prescription drugs.[132] The company was further sentenced to one year of probation and an additional $1,000,000 criminal penalty.[133] Covetrus also agreed to implement a corporate compliance program, and to annual reporting and certification of compliance for a period of two years.[134]

Cruise, LLC (DPA)

On November 15, 2024, Cruise, LLC (“Cruise”) entered into a DPA with the U.S. Attorney’s Office for the Northern District of California to resolve allegations that it violated Section 1519 of Title 18 of the United States Code by submitting a false report to a federal agency to obstruct justice.[135] Specifically, Cruise allegedly provided a false record to National Highway Traffic Safety Administration (“NHTSA”) with the intent to impede, obstruct, or influence the investigation of a crash involving one of Cruise’s autonomous vehicles.[136] Pursuant to the DPA, Cruise agreed to pay a $500,000 monetary penalty; adopt various remedial, review, and audit measures; and submit annual self-reports during the DPA’s three-year term.[137] DOJ credited Cruise’s cooperation, including sharing privileged documents pursuant to a limited waiver of privilege, and remediation, including terminating responsible employees and revamping the company’s safety and incident response protocols.

Defyned Brands (Guilty Plea)

On January 12, 2024, Defyned Brands (also known as 5 Star Nutrition LLC), a product development, brand marketing, and multi-channel retail company, entered into a plea agreement with DOJ Civil Division’s Consumer Protection Branch and the U.S. Attorney’s Office for the Western District of Texas.[138] Defyned pleaded guilty to three counts of distributing misbranded dietary supplements—workout supplements Epivar, Alpha Shredded and Laxobolic—in interstate commerce in violation of the federal Food, Drug and Cosmetic Act (“FDCA”), from September 2018 to July 2020.[139] The products were allegedly misbranded because they contained ingredients mislabeled as dietary ingredients or not listed on the product label.[140] In connection with the agreement, Defyned agreed to forfeit $4.5 million composed of 90 monthly payments of $50,000, and agreed to implement specific compliance program measures and to satisfy related reporting requirements for a term of three years.[141]

Dlubak Glass Company (Guilty Plea)

On December 2, 2024, Dlubak Glass Company entered into a plea agreement with the U.S. Attorney’s Office for the Northern District of Texas and DOJ’s Environmental Crimes Section.[142] The government alleged that the Company made materially false statements to the Texas Commission on Environmental Quality regarding its crushed cathode ray tube glass, which is subject to stringent environmental regulations.[143] Specifically, Dlubak allegedly represented that the crushed glass contained no lead, when in fact, the glass contained materials that have significant levels of lead.[144] Pursuant to the plea arrangement, the parties agreed that an appropriate sentence for Dublak would be four years’ probation and a $100,000 fine, and Dlubak would be required to appoint an Environmental Compliance Officer within 30 days of sentencing.[145] Arraignment is scheduled for April 3, 2025.

Domermuth Environmental Services, LLC (Guilty Plea)

On July 16, 2024, Domermuth Environmental Services, LLC (“DES”), a Tennessee-based petroleum spill clean-up company, entered into a guilty plea with the U.S. Attorney’s Office for the Eastern District of Tennessee to resolve allegations that DES knowingly discharged pollutants into navigable waters without a permit in violation of the Federal Water Pollution Control Act.[146] The government alleged that in 2018, petroleum-contaminated wastewater spilled on an outdoor concrete pad at DES’s processing facility.[147] Employees attempted to manage the spill by using absorbent pads and then pumping the contaminated water over a retaining wall into a patch of vegetation, but this water eventually flowed into a shallow ditch and discharged into the Holston River, a navigable waterway.[148] Pursuant to the agreement, the government recommended that DES be sentenced to three years’ probation and a $50,000 criminal fine, reflecting a downward departure of two levels due to the nature and quantity of substance involved.[149] The Honorable Thomas Varlan sentenced DES to the agreed terms on December 12, 2024.[150]

Eagle Renovations LLC (Guilty Plea)

On April 18, 2024, Eagle Renovations LLC (“Eagle Renovations”), a real estate company, pleaded guilty to one count wire fraud in the U.S. District Court in Dayton, Ohio in connection with an investigation into the misuse of COVID-relief program funds.[151] Eagle Renovations admitted to improperly applying for rental assistance through a federally funded CARES Act program in October and November 2020.[152] Eagle Renovations allegedly applied for funds through the program for at least seven properties, including some that were not inhabited or where the amount paid was “well in excess of what would be needed to cover any actual monthly rent.”[153] Reportedly, Eagle Renovations received about $70,875 through the program and paid back approximately $40,000.[154] As of the time of this publication, the plea agreement remains under seal.

On August 26, 2024, Eagle Renovations was sentenced to five years of probation and ordered to pay $24,150 restitution.[155]

eBay Inc. (DPA)

On January 10, 2024, eBay Inc. (“eBay”) entered into a three-year DPA with the U.S. Attorney’s Office for the District of Massachusetts.[156] In connection with the agreement, eBay agreed to pay a $3 million penalty, retain an independent compliance monitor, and make certain compliance enhancements.[157]

Endo Health Solutions Inc. (Guilty Plea)

In connection with the chapter 11 cases of global pharmaceutical manufacturer Endo International plc, a Gibson Dunn-led secured creditor group negotiated a multi-agency economic settlement with the federal government resolving approximately $8 billion in asserted claims, including several billion dollars of disputed tax claims, FDCA claims, and healthcare claims, in exchange for a single net present value payment of $200 million paid upon emergence of Endo’s business from chapter 11 in April 2024.[158] This global resolution included a misdemeanor guilty plea made shortly after emergence by non-successor debtor Endo Health Solutions Inc., which was negotiated with the DOJ’s Consumer Protection Branch to resolve alleged violations of the FDCA, and a stipulated unsecured claim in the form of $1.086 billion in criminal fines and an additional $450 million criminal forfeiture, which was deemed fully satisfied (along with all other federal claims) by the aforementioned global economic settlement payment.[159]

Envigo RMS LLC and Envigo Global Services Inc. (Guilty Plea)

On June 3, 2024, Envigo RMS LLC (“Envigo RMS”) and Envigo Global Services Inc. (“Envigo Global”), two related companies involved in dog breeding operations, pleaded guilty with the U.S. Attorney’s Office for the Western District of Virginia and the Environmental Crimes Section of DOJ’s Environment and Natural Resources Division to conspiracy to violate the Animal Welfare Act and Clean Water Act.[160] The plea agreement resolved allegations that Envigo RMS failed to provide adequate veterinary care, adequate staffing, and safe and sanitary living conditions for the dogs housed at its breeding facility, and that Envigo Global failed to properly treat its wastewater or safely dispose of it.[161] The companies agreed to criminal fines—$11 million for Envigo RMS and $11 million for Envigo Global, for a total fine of $22 million—along with $6.5 million in payments to non-governmental organizations, a $7 million commitment to improving their facilities and personnel, five years’ probation, and a compliance monitor to submit reports every six months during a five-year term.[162] On October 24, 2024, Envigo RMS and Envigo Global were sentenced in accordance with the agreement.[163]

Environmental Resources Inc. (Guilty Plea)

On August 15, 2024, Environmental Resources, Inc. DBA Easy Rooter Plumbing, a Nevada company providing waste removal services, entered a plea agreement with the DOJ’s Environmental and Natural Resources Division and the U.S. Attorney’s Office for the District of Nevada, tied to a group plea deal with its co-defendant Matthew Thurman, pursuant to which the company pleaded guilty to a single count of knowingly violating a Clean Water Act pretreatment standard by illegally discharging grease waste and wastewater into the local publicly owned treatment works.[164] The plea agreement resolves allegations that the company and its owner collected grease wastes from food-service businesses and pumped them down manholes or into the grease traps of other customers.[165] Consistent with the agreement, on December 10, 2024, Environmental Resources, Inc. was sentenced to three years of probation and a $680,000 fine, for which the company was solely liable.[166] The owner was sentenced to two years in prison, one year of supervised release, and ordered to pay a $680,000 fine.[167]

Evans Concrete, LLC (Guilty Plea)

On April 2, 2024, Evans Concrete, LLC, a concrete sales company, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of Georgia and the DOJ Antitrust Division, pursuant to which it pleaded guilty to conspiracy in restraint of trade in violation of the Sherman Act.[168] The plea agreement resolved allegations that Evans Concrete, from 2011-2013, knowingly entered into and engaged in a conspiracy to suppress and eliminate competition by fixing prices, rigging bids, and allocating specific jobs for sales of ready-mix concrete.[169] The government alleged that Evans Concrete and its co-conspirators agreed on pricing levels for ready mix concrete jobs in Statesboro, Georgia and allocated specific ready-mix concrete jobs in Statesboro, and that the conspirators used a third party to facilitate the transfer of information to one another to conceal the conspiracy.[170] Previously, in 2021, the government entered into a DPA with one of the co-conspirators, Argos USA, LLC, which had started cooperating with the government in 2020 and agreed to pay more than $20 million in criminal penalties in a DPA in 2021.[171] Evans Concrete paid a fine of over $2.7 million, and the court imposed one year of probation.[172]

Evoqua Water Technologies (NPA)

On May 13, 2024, Evoqua Water Technologies Corp. (“EVOQUA”) entered into a two-year NPA with the U.S. Attorney’s Office for the District of Rhode Island to resolve securities fraud charges relating to the company’s revenue recognition and statements to auditors.[173] The government alleged that between 2016 and 2018, EVOQUA booked revenue from purported sales of products where the receiving revenue was not reasonably assured, the products had not shipped to customers in the quarter the revenue was recognized, and/or the component parts had not been completed.[174] The government further alleged that these bookings caused the company to make misstatements in its financial statements and annual and quarterly SEC filings.[175]

In connection with the agreement, EVOQUA agreed to pay $8.5 million in criminal penalties and monitoring, reporting and compliance obligations for a two-year period.[176] The government did not impose an independent monitor because of EVOQUA’s acquisition by another company, EVOQUA’s remedial improvements to its compliance program and internal controls, and its agreement to enhance its compliance program.[177] The company also entered into a March 2023 resolution with the SEC for the same conduct and paid a civil penalty of $8.5 million.[178]

Family Dollar Stores, LLC (Misdemeanor Guilty Plea)

On February 26, 2024, Family Dollar Stores, LLC (“Family Dollar Stores”), a subsidiary of the retail company, entered into a plea agreement involving a misdemeanor offense with DOJ’s Consumer Protection Branch and the U.S. Attorney’s Office for the Eastern District of Arkansas.[179] The agreement resolved allegations that the subsidiary violated a strict liability misdemeanor provision of the Federal Food, Drug, and Cosmetic Act (“FDCA”) related to the adulteration of food, cosmetics, drugs, and devices.[180] The government alleged that a distribution center in West Memphis, Arkansas fell into a state of disrepair in 2019 and had rodent activity as a result that led to adulterated product being shipped in interstate commerce.[181]

In connection with the agreement, the subsidiary agreed to pay a fine of $200,000, a special assessment of $125, and forfeiture of $41.5 million.[182] The agreement notes the company’s extensive cooperation and significant remedial efforts, including the voluntary recall of affected products, retention of a third-party FDA expert to develop standard operating procedures for handling and storage of FDA-regulated products, and the appointment of experienced legal and compliance leaders to oversee the enhanced compliance program including food safety, among other measures. The DOJ credited the company’s development, implementation and maintenance of effective corporate compliance measures, and the Company agreed to self-report on its progress to DOJ for a period of three years.[183]

Fidelity Development Group LLC

On September 16, 2024, Fidelity Development Group LLC (“Fidelity”), a real estate development company, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of Ohio.^[184] Although the agreement remains under seal, according to a press release, the agreement resolved allegations that Fidelity violated the Clean Air Act by failing to inspect for the presence of asbestos before renovating a building.^[185] The government alleged that in 2015 or 2016, Fidelity purchased the property and began renovations without conducting or acquiring an asbestos survey, despite an April 2020 asbestos survey that identified more than 12,000 linear feet of friable asbestos pipe wrap insulation in the building.^[186]

On January 16, 2025, Fidelity pleaded guilty to the charge.^[187] News sources claiming to have reviewed the plea agreement report that it includes a $100,000 fine and that the company expects to receive a two-year sentence of organizational probation.^[188] Sentencing is scheduled for March 4, 2025.^[189]

Frame, Inc. (Guilty Plea)

On February 22, 2024, Frame, Inc., a construction service company operating in West Virginia and Florida, entered into a plea agreement with the U.S. Attorney’s Office for the Northern District of West Virginia to resolve allegations of conspiracy to commit wire fraud.[190] Frame, Inc. was contracted by EMCOR Facilities Services, Inc. to provide repair services at U.S. Postal Service (USPS) facilities within a 150-mile radius of Charleston, West Virginia.[191] While Frame, Inc. was permitted to use subcontractors for this work, certain disclosure and maximum mark-up requirements applied.[192] The government alleged that Frame, Inc. committed wire fraud when it submitted bills for supposed services with rates above what was being charged by the subcontractors (including above maximum mark-up limits), after many times certifying that Frame, Inc. conducted the work, when in fact, a subcontractor had been used.[193] Pursuant to the agreement, Frame agreed to pay restitution of $187,286 and agreed that it is debarred from future federal government contracts.[194] According to a DOJ press release announcing the plea agreement, Frame also agreed to dissolve the corporation.[195] The court did not impose any additional penalties at sentencing.[196]

Gremex Shipping S.A. de C.V. (Guilty Plea)

On October 30, 2024, Gremex Shipping S.A. de C.V. (“Gremex”), a Mexican corporation that managed ships, entered into a plea agreement with the U.S. Attorney’s Office for the with the Northern District of Florida and DOJ’s Environmental Crimes Section.[197] The agreement resolved one felony charge of violation of the Act to Prevent Pollution from Ships (APPS) through the illegal discharge of bilge waste, and one charge of providing false records to the U.S. Coast Guard to conceal the illegal discharge.[198] In particular, the plea agreement resolved allegations that Gremex discharged oily bilge water without first removing the oil from the bilge water via an oil water separator, as required by international treaty.[199] Gremex was further alleged to have failed to adequately document its oily water discharges in its oil record book.[200] As part of its plea, Gremex agreed to pay a $1.75 million fine, to serve a four-year term of probation, and to fund and implement a detailed environmental compliance plan that includes retention of an independent third-party auditor to execute a prescribed audit plan.[201] Gremex also consented to the imposition of a court-appointed monitor for the duration of probation.[202] At the time of publication, sentencing had not yet occurred.

Gunvor (Guilty Plea)

On March 1, 2024, Gunvor, S.A. (“Gunvor”), a commodities trading company, entered into a plea agreement with U.S. Department of Justice’s Criminal Division, Fraud and Money Laundering and Asset Recovery Section (“MLARS”), and the U.S. Attorney’s Office for the Eastern District of New York.[203] The agreement resolved allegations that Gunvor paid bribes to Ecuadorean government officials to secure business with Ecuador’s state-owned oil company between 2012 and 2020.[204] The government alleged that Gunvor, through Gunvor Singapore, paid more than $97 million to brothers Antonio Pere and Enrique Pere knowing that a portion of the payments were intended as bribes for Ecuadorian officials.[205] The Pere brothers had previously pleaded guilty to conspiracy to commit money laundering, as had a former Gunvor employee and former senior official at Ecuador’s state-owned oil company.[206] The Pere brothers also pleaded guilty to conspiracy to violate the FCPA.[207]

In connection with the agreement, Gunvor agreed to pay a criminal penalty of over $374 million and forfeiture of approximately $287 million, for a total of $661 million, with credit of up to one quarter of the criminal fine for the amounts of any resolutions within one year of the agreement, with Swiss and/or Ecuadorian authorities, related to the same conduct.[208] Swiss authorities announced a parallel resolution for approximately $98 million simultaneously with the U.S. plea agreement, and in June 2024, Gunvor resolved with Ecuadorian authorities for $93.6 million.[209] DOJ cited Gunvor’s cooperation and remediation as mitigating factors, and also considered a separate bribery resolution with Swiss authorities for actions contemporaneous with, but unrelated to, the conduct at issue that also involved alleged flaws in Gunvor’s internal controls.[210] Gunvor’s penalty reflects a discount of 25 percent from the 30^th percentile of the applicable Sentencing Guidelines range.[211]

DOJ determined that an independent compliance monitor was not necessary based on Gunvor’s remediation and the state of its compliance program, but Gunvor is required to annually report on remediation and compliance measures during the agreement’s three-year term.[212]

See our 2024 Year-End FCPA Update for additional details and analysis.

Hexamed Business Solutions LLC and Trinity Champion Healthcare Partners LLC (Guilty Plea)

On April 3, 2024, Hexamed Business Solutions LLC (“Hexamed”) and Trinity Champion Healthcare Partners LLC (“Trinity”), both “Managed or Management Service Organizations” (“MSOs”) operated by Med Left LLC, a pharmacy marketer, pleaded guilty to conspiracy to commit concealment money laundering in the U.S. District Court for the Northern District of Texas.[213] The charges, brought by the U.S. Attorney’s Office for the Northern District of Texas, relate to an alleged patient referral scheme involving Med Left and Next Health, a pharmacy and laboratory services company.[214] According to the indictment, from about September 1, 2013, through at least October 2018, Next Health and several doctors allegedly agreed to split profits on prescriptions filled at pharmacies owned by Next Health.[215] NextHealth allegedly identified the industry’s most profitable prescriptions and then paid physicians to prescribe those medications through NextHealth pharmacies.[216] The scheme allegedly involved granting doctors “ownership” of specific pharmacies for a nominal fee.[217] From about September 1, 2013 through February 1, 2017, bribes and kickbacks were allegedly paid to referring physicians under the guise that the payments were legitimate returns on investment from the physicians’ ownership in the pharmacies.[218] Beginning in February 2017, doctors who no longer wanted to be invested in the pharmacies or were not offered the chance to buy-in, were instead allegedly paid bribes and kickbacks through MSOs operated by Med Left, such as Hexamed and Trinity.[219] The prescribing pharmacy would allegedly track each prescription by doctor by profit, send the proceeds to Med Left, and then Med Left would pay kickbacks to physicians through Hexamed and Trinity.[220] From about February 2017 through about October 2019, bribes and kickbacks were allegedly paid to physicians under the guise that the payments were legitimate returns on investment in the MSOs.[221]

As part of the plea agreements, Trinity and Hexamed agreed to pay fines not exceeding $10,000 and to forfeit funds seized from each entity’s bank account, amounting to $9,172.20 and $13,929.46, respectively.[222] Both companies agreed to pay a mandatory special assessment of $400 prior to sentencing.[223] The court accepted the companies’ guilty plea on November 14, 2024, but sentencing has not occurred at the time of this writing.[224]

JDM Supply (Guilty Plea)

On September 30, 2024, JDM Supply, LLC (“JDM Supply”), a manufacturing company, entered into a plea agreement with the U.S. Attorney’s Office for the District of Massachusetts relating to alleged conspiracy to introduce or deliver for introduction into interstate commerce a misbranded device with intent to defraud or mislead, in violation of the FDCA.[225] The government alleged that JDM conspired to ship N95 facemasks, misbranded as National Institute of Occupational Safety and Health-approved N95 respirators, to hospitals in Massachusetts.[226] Pursuant to the plea agreement, JDM Supply agreed to one year of probation and faces a maximum fine upon sentencing of $3,800,000.[227] A sentencing hearing is scheduled for March 25, 2025.[228]

KBC Capital (Guilty Plea)

On July 31, 2024, KBC Capital, LLC (“KBC Capital”), an after-market firearm accessory manufacturer and distributor, entered into a plea agreement with the U.S. Attorney’s Office for the District of Massachusetts, in which it agreed to plead guilty to 26 counts of transferring a firearm in violation of the National Firearms Act (“NFA”).[229] The government alleged that from about 2017 to September 2023, KBC Capital was responsible for illegally transferring firearm suppressors (i.e., silencers) to Massachusetts residents, noting that making gunshots harder to hear impedes law enforcement response to shootings.[230] KBC Capital admitted to the underlying facts and agreed to pay a fine of $260,000 and to three years of probation to resolve the charges.[231] The probation requirement also included an agreement to cease marketing of firearms accessories.

KVK Research Inc. (Guilty Plea) and KVK Tech Inc. (DPA)

On March 6, 2024, generic pharmaceutical manufacturer KVK Research Inc. (“KVK Research”) entered into a plea agreement with DOJ’s Consumer Protection Branch and the U.S. Attorney’s Office for the Eastern District of Pennsylvania.[232] The criminal information charged KVK Research and its corporate affiliate, KVK Tech Inc. (“KVK Tech”) with two misdemeanor counts of introducing adulterated drugs into interstate commerce in violation of the Federal Food, Drug and Cosmetic Act (FDCA) and recommended forfeiture of $1 million. Pursuant to the plea agreement, KVK Research agreed to this forfeiture amount and to pay a criminal fine of $750,000.[233]

In pleading guilty, KVK Research admitted that from 2011 to 2013, it introduced into interstate commerce at least 62 batches of adulterated hydroxyzine tablets, which were manufactured with an active pharmaceutical ingredient made at a foreign facility for which KVK Research had not sought authorization from the FDA.[234] In addition to the monitor imposed on KVK Tech, the plea agreement imposes quarterly reporting obligations on KVK Research to DOJ regarding remediation and implementation of the compliance measures established in the plea agreement.[235]

Separately, the corporate affiliate KVK Tech, Inc. entered into a three-year DPA with DOJ’s Consumer Protection Branch and the United States Attorney’s Office for the Eastern District of Pennsylvania, relating to the same conduct.[236] The DPA requires KVK Tech to implement a compliance program designed to prevent and detect violations of federal regulations[237] as well as current good manufacturing processes, and imposes an independent compliance monitor to evaluate KVK Tech’s corporate compliance program to address and reduce the risk of future violations during the duration of the DPA’s three-year term.[238]

In addition to these resolutions, the government announced that KVK agreed to pay $2 million to resolve alleged civil liability under the False Claims Act arising from the company’s alleged failure to exercise appropriate controls, causing the company to introduce adulterated drugs into interstate commerce drugs.[239] This in turn allegedly resulted in the submission of false claims to the TRICARE program, Federal Employees Health Benefits Program (FEHBP), Veterans Administration (VA) and Department of Labor, Office of Workers Compensation Programs (DOL-OWCP).[240]

Limited Properties, Inc. (Guilty Plea)

On July 23, 2024, Limited Properties, Inc. entered into a plea agreement with the U.S. Attorney’s Office for the District of South Carolina to resolve allegations of wire fraud conspiracy and money laundering conspiracy.[241] The indictment alleges that Limited Properties and its co-defendant Randy Cannon were engaged in the rental property business and would notify a third co-defendant (Leslie Sievers) of the items they wanted her to buy using her employer’s credit card for non-business-related purchases at a major home improvement retailer. Cannon would then pick up the items from the retailer, for which he would pay her (at a steeply discounted rate) with money or prescription pills. Limited Properties would then use those fraudulently obtained items in its rental properties.[242] Limited Properties is awaiting sentencing, and no specific fine or penalty has been agreed between the parties. Limited Properties agreed to forfeit “all assets subject to forfeiture,” including a list of 272 pieces of equipment, four vehicles, four bank accounts, and 40 firearms that had been seized and were subject to forfeiture.[243]

Logsdon Valley Oil, Inc. a/k/a Hart Petroleum (Guilty Plea)

On January 18, 2024, Logsdon Valley Oil, Inc., a/k/a Hart Petroleum (“Logsdon Valley”), a Kentucky-based oil company, entered into a plea agreement with the U.S. Attorney’s Office for the Western District of Kentucky to resolve allegations that it violated the Safe Drinking Water Act.[244] The government alleged that Logsdon Valley improperly discharged fluid generated from oil and gas production into sinkholes without a permit.[245] Logsdon Valley had previously pleaded guilty to similar charges in 2013, paid a $45,000 fine, and completed two years’ probation. In connection with the guilty plea, Hart Petroleum was sentenced to three years’ probation and a criminal fine of $100,000.[246]

Magellan Diagnostics, Inc. (Guilty Plea and related DPA)

On June 27, 2024, Magellan Diagnostics, Inc. (“Magellan”), a medical technology manufacturer, entered into both a plea agreement and a two-year DPA with the U.S. Attorney’s Office for the District of Massachusetts.[247] These agreements resolved allegations that Magellan concealed a device malfunction that produced inaccurate test results for thousands of patients. Specifically, the devices were used for lead testing in blood samples and accounted for more than half of all blood tests conducted in the U.S. from 2013 through 2017.[248] The Food & Drug Administration (“FDA”) found that the devices could not accurately test samples, leading to a recall of all the devices and a warning to the public.[249] In its plea agreement, Magellan admitted that it did not timely notify the FDA about a malfunction causing the company’s devices to provide inaccurate lead level results and that it changed the user instructions for the devices without FDA notice or approval.[250]

Magellan pleaded guilty to two counts of introducing a misbranded medical device into interstate commerce in violation of the Food, Drug, and Cosmetic Act (“FDCA”).[251] It separately entered into a DPA with the U.S. Attorney’s Office for the District of Massachusetts for conspiracy to commit wire fraud in violation of 18. U.S.C. § 1349 and conspiracy to defraud the U.S. in violation of 18 U.S.C. §371, in connection with the same conduct.[252] Magellan was sentenced in connection with the plea agreement on October 10, 2024, and ordered to pay $21.8 million in fines and $10.9 million in forfeiture. The DPA separately requires the company to establish and fund a victim compensation fund with a minimum of $9.3 million to compensate patient victims.[253] In addition, pursuant to the DPA Magellan must retain an independent compliance monitor for two years, implement certain compliance measures, and submit periodic reports regarding its compliance program.[254]

MAM Construction, Inc. (Guilty Plea)

On October 16, 2024, MAM Construction, Inc., a construction management company, pleaded guilty to one count of fraud pursuant to a plea agreement with the United States Attorney’s Office for the District of Puerto Rico.[255] The plea agreement resolved charges that MAM Construction defrauded investors by misrepresenting that it would broker the issuance of state, federal, and administrative permits for lifetime licenses from the FCC for construction of cell towers and that the investors would receive payments for permitting the construction. The government alleged that MAM Construction facilitated the investment of $194,786.46 for the fraudulent scheme. Pursuant to the plea agreement, MAM Construction agreed, jointly with its president Miguel Merced-Torres, to pay restitution in the same amount, and the parties agreed to recommend at sentencing that no fine be imposed. Sentencing is scheduled for February 11, 2025.

Martinez Builders Supply (Guilty Plea)

On October 28, 2024, Martinez Builders, a construction materials supplier, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of Florida, resolving charges of alleged conspiracy to harbor aliens by means of employment.[256] In particular, the plea agreement resolved charges that, from 2018-2021, Martinez Builders’ officers and employees conspired to harbor aliens by establishing a fictitious entity to employ aliens who were not authorized to work in the United States, so that they would no longer appear on Martinez Builders’ payroll, though they continued to work on Martinez Builders projects.[257] Pursuant to the plea agreement, Martinez Builders agreed to forfeit $450,000. On January 24, 2025, Martinez Builders was sentenced to two years of probation and a $100,000 fine.[258]

Mary Mahoney’s Old French House, Inc. (Guilty Plea)

On May 20, 2024, Mary Mahoney’s Old French House, Inc. (“Mary Mahoney’s”), a well-known restaurant in Mississippi, entered into a plea agreement with the United States Attorney’s Office Southern District of Mississippi and the Environmental Crimes Section of DOJ’s Environment and Natural Resources Division.[259] The agreement resolved allegations that the restaurant misrepresented the species, sources, and cost of the seafood sold to customers, thereby deceiving them about the nature and quality of the products being purchased.[260] The government alleged that from 2013 through November 2019, the restaurant, and its co-owner and manager conspired to misbrand and sell frozen fish imported from other countries as local premium species.[261] Pursuant to the agreement, Mary Mahoney’s agreed to plead guilty to a single count of conspiring to defraud its customers, was ordered to pay a $149,000 criminal fine and $1,350,000 in forfeiture, and was sentenced to five years’ probation.[262] Mary Mahoney’s co-owner and manager Anthony Charles Cvitanovich concurrently pleaded guilty to a felony charge of misbranding seafood during 2018-19, was ordered to pay a $10,000 fine, and was sentenced to three years of probation and four months of home detention.[263]

McKinsey and Company Africa (Pty) Ltd (DPA)

On December 5, 2024, McKinsey and Company Africa (Pty) Ltd (“McKinsey Africa”), a subsidiary of international consulting firm McKinsey & Company, Inc. (“McKinsey”) operating in South Africa, entered into a three-year DPA with the Fraud Section of DOJ’s Criminal Division and the U.S. Attorney’s Office for the Southern District of New York to resolve a single count of conspiracy to violate the anti-bribery provisions of the FCPA.[264] A former McKinsey senior partner who worked at McKinsey Africa had previously pleaded guilty to one count of conspiracy to violate the FCPA arising from the same misconduct.[265] According to the DPA, to obtain consulting contracts, McKinsey Africa allegedly agreed to pay bribes to officials at Transnet SOC Ltd., South Africa’s state-owned and state-controlled custodian of ports, rails, and pipelines, and at Eskom Holdings SOC Ltd., the country’s state-owned and state-controlled energy company.[266]

Pursuant to the DPA, McKinsey Africa agreed to pay a criminal penalty of $122,850,000; however, DOJ agreed to credit up to 50% of the criminal penalty against amounts that McKinsey pays to authorities in South Africa within 12 months. In determining the penalty, DOJ acknowledged McKinsey Africa for suspending and requiring continued cooperation by the implicated partner, conducting trainings, enhancing due diligence processes and controls, and voluntarily repaying all revenues from potentially tainted contracts, resulting in a 35% discount from the fifth percentile of the applicable USSG range. Due to McKinsey Africa and McKinsey’s remediation and compliance program, no monitor was imposed, but both companies agreed to annual self-reporting during the term, followed by certain certifications at expiration. Although not a defendant, McKinsey signed the DPA and agreed to certain terms and obligations, including cooperation, reporting, and implementation of a compliance and ethics program.

McKinsey & Company, Inc. United States (DPA)

On December 13, 2024, McKinsey & Company, Inc. United States (“McKinsey US”), the U.S. subsidiary of the global management consulting firm McKinsey & Company, Inc. (“McKinsey”), entered into a five-year DPA with DOJ’s Consumer Protection Branch and the U.S. Attorney’s Offices for the Western District of Virginia (where proceedings were filed) and for the District of Massachusetts, to resolve charges of (1) one misdemeanor count arising from McKinsey US allegedly conspiring with Purdue Pharma LLP and others to aid and abet the misbranding of prescription drugs, held for sale after shipment in interstate commerce, without valid prescriptions and (2) one felony count of obstruction of justice, arising through the acts of a McKinsey senior partner allegedly destroying and concealing records.[267] Although not a defendant in the criminal proceedings, McKinsey signed the DPA and agreed to certain terms and obligations—including, for example, the payment provisions and annual self-reporting certifications. Procedurally, the DPA was entered in a miscellaneous case proceeding as an attachment to an “Agreed Order Compelling Compliance” by both McKinsey and McKinsey US that provided for the court to “impose any sanction it deems appropriate” for a violation of the DPA, including criminal contempt.[268]

According to the DPA, after a Purdue Pharma affiliate pleaded guilty to misbranding OxyContin in 2007 by falsely marketing it as less addictive, McKinsey partners allegedly worked with Purdue Pharma over the course of 75 different engagements between 2004 and 2019 to enhance “brand loyalty” for OxyContin when sales declined, assessed underlying drivers of OxyContin performance, and identified opportunities to increase OxyContin revenue.[269] These efforts included approaches for “turbocharging the sales engine” by intensifying marketing to prescribers who were writing prescriptions for uses that were “unsafe, ineffective, and medically unnecessary,” along with other initiatives regarding the drug.[270] (Because the alleged misconduct was charged and resolved as a misdemeanor violation of the Federal Food, Drug & Cosmetic Act of 1938 (“FDCA”), the offense is a strict liability crime with no mens rea requirement.[271]) When scrutiny around Purdue Pharma’s role with the opioid crisis increased, a McKinsey senior partner allegedly deleted documents related to Purdue that allegedly would have been pertinent to investigations into Purdue Pharma.[272] As part of the resolution, the senior partner pleaded guilty to obstruction of justice.[273]

Pursuant to the DPA, McKinsey US and McKinsey jointly agreed to pay a total of $650 million, of which $231 million would be allocated as a criminal penalty and $93.5 million as forfeiture, with the vast majority of the remainder ($323 million) allocated to a parallel civil settlement agreement, described below, and $2 million to the Virginia Medicaid Fraud Control Unit. Notably, the DPA included as attachments both a security agreement granting a security interest in and lien on McKinsey US’s receivables[274] and an agreed verified complaint for forfeiture in rem of McKinsey US (that is, to forfeit the entity McKinsey US), to be stayed pending submission of the final forfeiture payment.[275] McKinsey received credit for cooperating with the government in connection with the investigation and for engaging in remedial measures.[276]

The companies also agreed to forgo any work related to the marketing, sale, promotion, or distribution of controlled substances, and agreed to maintain for three years a “conspicuous public link” on its website homepage to a public statement of contrition and a copy of the DPA.[277] The DPA also specifically required the companies to require certain senior executives to read the DPA, information, and statement of facts within 30 days, and to develop global training for specific functions about the resolution, its root cause, remediation efforts, and ongoing compliance commitments. In an attachment, the DPA imposed additional requirements for the companies’ corporate compliance program, specifying detailed obligations such as factors to be considered in a mandatory, standardized “client service risk assessment” framework and review and escalation protocols based on risk tiers.[278]

As referenced in the payment provisions of the DPA, the resolution also included a civil settlement of False Claims Act allegations that the company misled the FDA and that it caused false and fraudulent claims for OxyContin to be submitted to federal healthcare programs such as Medicare and Medicaid. McKinsey US entered into this False Claims Act settlement with the Fraud Section of the Commercial Litigation Branch of DOJ’s Civil Division; the Office of Inspector General of the Department of Health and Human Services; the Defense Health Agency, acting on behalf of the TRICARE program; the Office of Personnel Management, which administers the Federal Employees Health Benefits Program; and the United States Department of Veterans Affairs, which administers the Veterans Health Administration.[279]

MGM Grand Hotel, LLC and The Cosmopolitan of Las Vegas (NPA)

On January 9, 2024 and January 11, 2024, MGM Grand Hotel, LLC (“MGM Grand”) and The Cosmopolitan of Las Vegas (“The Cosmopolitan”), respectively, entered into two-year NPAs with the U.S. Attorney’s Office for the Central District of California.[280] The agreements resolve allegations that MGM Grand and The Cosmopolitan violated the Bank Secrecy Act and money laundering statutes by allowing a casino patron who ran and operated an illegal bookmaking business to gamble at the casinos and affiliated properties with illicit proceeds generated from the illegal bookmaking business.[281] Pursuant to its NPA, MGM Grand agreed to pay a monetary fine of $6,527,728; to forfeit $500,000, which will be counted toward the fine; and to spend $750,000 in new funding over two years on its compliance program.[282] Pursuant to its NPA, the Cosmopolitan agreed to pay a monetary fine of $928,600, and to forfeit $500,000 in proceeds, which will be counted toward the fine.[284] MGM Grand and The Cosmopolitan both received cooperation credit, and the respective NPAs noted that both companies engaged in timely remedial measures.[285] Both companies agreed to enhance their joint compliance program and to implement additional review and reporting requirements.[286]

Mold Wranglers, Inc. (Guilty Plea)

On October 24, 2024, Mold Wranglers, Inc. (“Mold Wranglers”), a company that provides hazardous material mitigation services, pleaded guilty to an information charging one count of conspiracy to violate the False Claim Act pursuant to a plea agreement with the U.S. Attorney’s Office for the District of Montana.[287] The plea agreement resolved allegations that Mold Wranglers, through other companies, submitted false requests for payment to the U.S. Department of Veterans Affairs falsely claiming that lead-based paint work had been performed.[288] Mold Wranglers faces a maximum fine of $500,000 fine as well as restitution. Sentencing is scheduled for March 4, 2025.[289]

Morgan Stanley & Co. LLC (NPA)

On January 12, 2024, Morgan Stanley & Co. LLC (“Morgan Stanley”) entered into an NPA with the U.S. Attorney for the Southern District of New York.[290] The agreement involved allegations that, between 2018 and August 2021, certain Morgan Stanley employees made representations regarding confidentiality to block sellers that were both false and material to the relevant transactions insofar as leaks to the market risked driving down the market price of the stock, which could decrease the money the sellers received for the block sales.[291] Instead of keeping the information about the relevant transactions confidential, as sellers were promised, Morgan Stanley employees shared highly specific information with buy-side investors, including information about the size and precise timing of the block trades, benefiting Morgan Stanley at the expense of block sellers.[292]

Morgan Stanley is required, pursuant to the NPA, to forfeit $72.5 million, to pay $64 million in restitution to the block sellers, and to pay a $16.9 million criminal fine.[293] Morgan Stanley received credit for its extensive cooperation, remedial efforts, and continued cooperation, resulting in a 35% reduction from the bottom of the applicable USSG range.[294] The non-prosecution agreement also requires Morgan Stanley to continue to cooperate with and provide information to the United States for at least three years from the date of the agreement.[295] The Morgan Stanley employee who supervised the block trades, Pawan Passi, entered into a DPA concurrently, pending court approval.[296]

Morgan Stanley and Passi also resolved parallel SEC proceedings relating to the same misconduct.[297] Pursuant to the cease-and-desist order, Morgan Stanley must pay $166 million in disgorgement and interest, to be offset by payments made pursuant to the forfeiture or restitution order in conjunction with the NPA, and a civil penalty of $83 million.[298]

N. Ali Enterprises Inc. and 21^st Century Distribution Inc. (Guilty Plea)

On January 11, 2024, N. Ali Enterprises, Inc. of Naperville, Illinois and 21st Century Distribution Inc., of Las Vegas, Nevada, both pleaded guilty with the U.S. Attorney’s Office for the Eastern District of California to 20 counts of mail and wire fraud in a California excise tax fraud scheme.[299] The entities’ president, Rahman Lakhani, also pleaded guilty.[300] The guilty pleas resolved allegations that Lakhani and the corporate defendants used warehouses in Illinois, Nevada, and California to move more than $25 million worth of non-cigarette tobacco across the United States and into California, submitting false excise tax returns intended to hide the true size and value of the shipments.[301] On August 1, 2024, Lakhani was sentenced to four years in prison, the entities were each sentenced to three years of probation, and all three defendants were ordered to pay more than $5.9 million in restitution, jointly and severally.[302] Pursuant to plea agreements, assets seized, including $41,274.49 from a bank account, and forfeited would be credited against the restitution.[303]

Northridge Construction Corporation (Guilty Plea)

Northridge Construction Corporation (“Northridge”), a construction company based in Long Island, NY, entered into a plea agreement with DOJ’s Environment and Natural Resources Division to resolve federal charges stemming from a 2018 incident that resulted in the death of an employee who fell from an improperly secured roof during construction.[304] The case was investigated by the Occupational Safety and Health Administration (OSHA), which found that Northridge violated regulations requiring the stability of metal structures during construction.[305] In addition to the safety violation, the company was charged with making two false statements that obstructed OSHA’s investigation.[306] On August 6, 2024, U.S. District Court Judge Joan M. Azrack sentenced Northridge to a $100,000 fine and five years of probation, during which the company must implement enhanced safety training for its employees.[307]

Peticub Pharmacy Corporation (Guilty Plea)

On March 11, 2024, Peticub Pharmacy Corporation (“Peticub”) pleaded guilty to (1) conspiracy to distribute and possess with intent to distribute tapentadol (an opioid), and (2) conspiracy to (i) introduce or delivery for introduction into interstate commerce adulterated and misbranded drugs, and (ii) receive adulterated and misbranded drugs and deliver or proffer for delivery to another, pursuant to a plea agreement with the U.S. Attorney’s Office for the Central District of California.[308] The government alleged that the operator of Peticub—who also pleaded guilty—ran an illicit pill trafficking business from Peticub.[309] Pursuant to the agreement, the government agreed to recommend a fine of $20,000.[310] At sentencing on July 31, 2024, Peticub was placed on probation for five years on each count and fined $5,000.[311]

Prive Overseas Marine LLC and Prive Shipping Denizcilik Ticaret, A.S. (Guilty Plea)

On May 21, 2024, Prive Overseas Marine LLC (“Prive Overseas”) and Prive Shipping Denizcilik Ticaret, A.S. (“Prive Shipping”), two related shipping companies that operated the motor tanker P.S. Dream, pleaded guilty to conspiracy, knowingly violating the Act to Prevent Pollution from Ships (APPS) and obstruction of justice in a plea agreement with DOJ’s Environment & Natural Resources Division, and the U.S. Attorney’s Office for the Eastern District of Louisiana.^[312] The plea agreement resolved allegations that the companies discharged oil-contaminated waste into open waters in violation of applicable maritime pollution regulations and falsified Oil Record Book records to conceal the violation.[313] The government also alleged that the crew members removed visible oil residue from the ship’s Residual Tanks to conceal the discharges, and that crew members further made false statements to U.S. Coast Guard inspectors about the contents of the Residual Tank and the crew’s disposal of the waste.[314]

Prive Overseas and Prive Shipping were sentenced to pay a total penalty of $2 million, including a criminal fine of $1.5 million and a $500,000 donation to the National Fish & Wildlife Foundation as organizational community service.[315] Prive Overseas and Prive Shipping were also ordered to adopt and implement an environmental compliance plan.[316]

Proterial Cable America, Inc. (Declination with Disgorgement)

On April 12, 2024, the Fraud Section of DOJ’s Criminal Division issued a “declination with disgorgement” letter to Proterial Cable America, Inc. (“PCA”) (formerly known as Hitachi Cable America Inc.), a global manufacturer of specialized technologies for the data communications, medical, and automotive industries, declining prosecution of PCA for wire fraud and conspiracy in violation of 18 U.S.C. §§ 1343, 1349 “despite the fraud committed by employees of Hitachi Cable.”[317] According to the letter, the Fraud Section alleged that between 2006 and 2022, Hitachi Cable misrepresented to customers that its motorcycle brake hose assemblies met federal safety performance standards, thereby obtaining roughly $15.1 million in illicit profits through its sales of noncompliant brake hose assemblies.[318]

The letter stated that the Fraud Section’s decision to decline prosecution was based on an assessment of factors including: (1) PCA’s voluntary and timely self-disclosure of the misconduct to the Fraud Section within weeks after the company discovered the issue during an internal audit; (2) PCA’s “full and proactive cooperation” in this matter; (3) the nature and seriousness of the offense; (4) PCA’s timely and appropriate remediation measures undertaken, including terminating relevant employees and “significant investment in designing, implementing, and testing” PCA’s compliance program; and (5) PCA’s agreement to pay disgorgement of $15,126,204, which the DOJ described as the total profit obtained through the alleged scheme, to two brake assemblers and a motorcycle company.[319]

Q Link Wireless LLC (Guilty Plea)

On October 15, 2024, Q Link Wireless LLC, a telecommunications company, together with its CEO Issa Assad, pleaded guilty to a single count of conspiring to wire fraud and to defraud and commit offenses against the United States pursuant to a plea agreement with the U.S. Attorney’s Office for the Southern District of Florida.[320] The plea agreement resolves claims that Q Link engaged in a scheme to defraud the Federal Communications Commission (“FCC”)’s Lifeline program that sought to provide discounted phone service to people in need.[321] The government alleged that Q Link, directed by its CEO, cheated the program by making repeated false claims for reimbursement, including by manufacturing non-existent cellphone activity and engaged in coercive marketing techniques to get people to remain Q Link customers.[322] Q Link and its CEO agreed to pay jointly $109,637,057 in restitution to the FCC.[323] Q Link also agreed to forfeit proceeds traceable to the offense but represented that it was unable to pay a fine in addition to the restitution amount, subject to assessment prior to sentencing scheduled for April 22, 2025.[324]

Quality Poultry and Seafood, Inc. (Guilty Plea)

On August 27, 2024, Quality Poultry and Seafood, Inc. (“QPS”), the largest seafood distributor on the Mississippi Gulf Coast, along with managers Todd Rosetti and James Gunkel, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of Mississippi and the Environmental Crimes Section of DOJ’s Environment and Natural Resources Division to resolve allegations that it conspired to defraud customers by marketing mislabeled seafood products and wire fraud.[325] The government alleged that QPS misbranded and sold fish that had been imported from other countries as local premium species.[326] Despite a criminal search warrant executed by the FDA to investigate the mislabeled seafood, QPS continued its fraudulent activities for over a year by selling frozen fish from Africa, South America, and India as local species.[327] Pursuant to the agreement, QPS agreed to forfeit $1,000,000 and five years’ probation.[328] Although consistent with the plea agreement, the government recommended that a $150,000 fine be imposed on QPS, at sentencing, the Honorable Halil Suleyman Ozerden departed from this recommendation and ordered QPS to pay a $500,000 fine.[329]

Raytheon Company (DPA)

On October 16, 2024, DOJ and SEC announced parallel resolutions relating to allegations that, between 2012 and 2016, Raytheon authorized nearly $2 million in corrupt payments to a high-level official of the Qatari Air Force to secure air defense contracts through an alleged “sham subcontractor,” and failed to disclose these subcontractor payments as required by the Arms Export Control Act (“AECA”) and International Traffic in Arms Regulations (“ITAR”).[330] The SEC additionally alleged that over a longer period Raytheon paid more than $30 million to a Qatari-based agent, who was a relative of the Qatari Emir, under circumstances that presented elevated corruption risk.[331] To resolve the criminal FCPA, AECA, and ITAR allegations, Raytheon entered into a three-year deferred prosecution agreement and agreed to pay a $230.4 million criminal fine plus approximately $36.7 million in forfeiture, though up to $7.4 million of the forfeiture amount was credited against the SEC resolution. In the SEC matter, parent company RTX Corporation consented to a cease-and-desist proceeding alleging FCPA anti-bribery, books-and-records, and internal controls violations, and agreed to pay $49.1 million in disgorgement and prejudgment interest plus a civil penalty of $75 million, though $22.5 million of that penalty is offset against the criminal fine. And in a separate but coordinated matter, Raytheon resolved allegations of major fraud against the United States in a separate deferred prosecution agreement and civil False Claims Act settlement alleging that the company provided inaccurate pricing data to the U.S. Department of Defense associated with foreign defense contracts.[332] In total, and coupled with an earlier consent decree with the State Department, Raytheon and RTX agreed to pay nearly $1 billion to resolve the FCPA and non-FCPA charges, and also agreed to retain a compliance monitor jointly focused on anti-corruption and government contracts pricing compliance. But in contrast to the SEC resolution, parent RTX is not a defendant in either of the criminal resolutions and agreed only to adhere to the compliance- and disclosure-related obligations of its subsidiary Raytheon.[333]

RKB Handyman Services, Inc. (Guilty Plea)

On June 21, 2024, RKB Handyman Services, Inc. (“RKB”), a maintenance company that subcontracted to perform repair jobs at United States Post Offices, entered into a plea agreement with the U.S. Attorney’s office for the Eastern District of Pennsylvania.[334] The agreement resolved allegations that RKB engaged in wire fraud by submitting falsified invoices to overcharge the United States Postal Service for maintenance work performed by its own subcontractors.[335] Specifically, the government alleged that, between October 2019 and March 2021, RKB intentionally submitted more than 300 false and altered invoices for payment, causing the United States Postal Service to overpay for services and supplies in the amount of $117,781.36.[336] In connection with the agreement, the company was sentenced to a $240,000 fine and ordered to pay $117,781.36 in restitution.[337]

SAP SE (DPA)

On January 10, 2024, SAP SE (“SAP”), a publicly traded global software company based in Germany, entered into a three-year DPA and agreed to pay over $220 million to resolve an investigation by the DOJ Fraud Section and the U.S. Attorney’s Office for the Eastern District of Virginia into violations of the Foreign Corrupt Practices Act (“FCPA”) arising out of alleged schemes to pay bribes to government officials in South Africa and Indonesia.[338] The Company received credit for its substantial cooperation with the DOJ’s investigation as well as its timely remediation, which included withholding bonuses from employees who engaged in suspected wrongdoing or who had supervisory authority over those employees.[339] SAP was penalized, however, for prior criminal and civil resolutions, including a 2021 NPA with DOJ’s National Security Division and a 2016 resolution with the SEC regarding alleged FCPA violations in Panama.[340] It did not receive voluntary disclosure credit. Under the terms of the DPA, SAP paid a criminal penalty of $118.8 million, representing a 40% discount off the low end of the U.S. Sentencing Guidelines, and an administrative forfeiture of $103,396,765, and agreed to self-reporting during the three-year term.[341] DOJ coordinated its resolution with both the SEC and prosecutors in South Africa. DOJ agreed to credit up to $55.1 million of the criminal penalty against amounts that SAP paid to resolve the South African investigation. The Department further agreed to credit up to the full forfeiture amount against any disgorgement that SAP paid to either the SEC or South African authorities. SAP’s parallel resolution with the SEC called for it to pay disgorgement of $85 million plus prejudgment interest of more than $13.4 million, totaling more than $98 million, which in turn was to be offset by up to $59 million paid to the South African government.[342]

Satori Recovery Center, LLC (Guilty Plea)

On September 5, 2024, Satori Recovery Center, LLC, an alcohol and drug treatment facility based in Orange County, California, pleaded guilty to conspiracy to violate the Travel Act pursuant to a plea agreement with the United States Attorney’s Office for the Central District of California .[343] The government alleged that Satori paid referral fees to patient brokers after patients stayed at Satori for a period of time and received treatment, for which services Satori was reimbursed by insurers.[344] Satori allegedly falsely characterized these fees at “marketing” payments.[345] The plea agreement did not include a recommended sentence. Sentencing is scheduled for February 4, 2025.

Siemens Energy, Inc. (Guilty Plea)

On September 30, 2024, Siemens Energy, Inc. (“SEI”), a U.S.-based energy company, entered into a plea agreement with the U.S. Attorney’s Office for the Eastern District of Virginia to resolve criminal allegations of conspiracy to commit wire fraud arising out of the misappropriation of confidential competitor information.[346] In 2019, Dominion Energy, Inc. (“Dominion”) sought to construct a power plant and solicited requests for proposals from SEI and two other companies. During the procurement process, a Dominion employee improperly shared confidential pricing information from the two other bidders with a SEI employee.[347] That information was used in a revised bid by SEI to Dominion.[348] To resolve the allegations, Siemens agreed to pay $104 million in fines and to three years’ organizational probation.[349] Sentencing occurred December 5, 2024, and the Court imposed a $104 million fine, a three-year probation term, and a $400 special assessment.[350] Three individuals involved in the conduct also entered into plea agreements.[351]

Star Enterprises (Guilty Plea)

On February 14, 2024, Star Enterprises Inc. (“Star Enterprises”), an educational company, pleaded guilty to Federal Program Theft with the U.S. Attorney’s office for the District of Puerto Rico.[352] The plea agreement resolved one count of federal program theft, arising from allegations that Star Enterprises contracted in 2019-2020 with the Puerto Rico Department of Education (“PRDOE”) despite having no certificate of eligibility to contract with Puerto Rican agencies.[353] The government alleged the director of the Technical Education Program for PRDOE funneled $213,210.07 to Star Enterprises, which was owned by someone with whom he cohabited, for unspecified services, and which the plea agreement alleged were obtained through theft, embezzlement, or fraud.[354] Star Enterprises was sentenced to pay $206,639 in restitution.[355]

Taaj Services US LLC (Guilty Plea / DPA)

On June 26, 2024, Taaj Services US LLC, a money transmitting business, pleaded guilty for failing to report financial transactions involving more than $10,000 in U.S. currency as required by the Bank Secrecy Act, pursuant to a two-year agreement with the U.S. Attorney’s Office for the Southern District of California.[356] Taaj Services admitted as part of the agreement that it was never licensed to operate in California and so beginning in November 2019, it entered into a conspiracy with another money transmitting business that was licensed to operate in California to transfer money in California.[357] Notably, although the agreement is labeled and referred to as a plea agreement and some of its substance—such as the admission of organizational guilt—is consistent with a plea agreement, its operation is that of a DPA insofar as the government agreed to defer judgment for 24 months and to seek dismissal of the prosecution thereafter if Taaj Services complies with the terms and conditions of the agreement.[358] As part of the agreement, Taaj Services agreed to forfeit $700,000 to the U.S. government, and the parties agreed to recommend no additional fine if the prosecution were to proceed to sentencing.[359]

TD Bank, N.A. and TD Bank U.S. Holding Company (Guilty Plea)

On October 10, 2024, TD Bank, N.A. (“TDBNA”) and its direct parent TD Bank U.S. Holding Company (“TDBUSH”) (collectively, “TD Bank”) each entered into concurrent plea agreements with the Money Laundering and Asset Recovery Section (“MLARS”) of DOJ’s Criminal Division and the U.S. Attorney’s Office for the District of New Jersey.[360] The dual pleas were part of coordinated resolutions with the Board of Governors of the Federal Reserve Board (“FRB”), the Treasury Department’s Office of the Comptroller of the Currency (“OCC”), and Financial Crimes Enforcement Network (“FinCEN”).[361] (Although the charges and penalties vary between the two plea agreements, the facts, reporting requirements, and compliance commitments are substantively similar in both documents.) Pursuant to the plea agreements, TDBNA pleaded guilty to a single count of conspiring to fail to maintain an adequate anti-money laundering (“AML”) program, to fail to file accurate currency transaction reports, and to launder monetary instruments; and TDBUSH pleaded guilty to two counts of causing TDBNA to fail (1) to maintain an adequate AML program and (2) to file accurate currency transaction reports.[362] According to the plea, between 2014 and 2023, TD Bank allegedly failed to maintain an AML program that complied with the Bank Secrecy Act (“BSA”), which enabled, among other things, three money laundering networks to launder approximately $671 million.[363] Although not parties to the plea agreements, global parent company Toronto-Dominion Bank and intermediate holding company TD Group US Holdings LLC agreed to certain terms, such as providing officer certifications and ensuring that the defendant entities comply with their compliance commitments.

TD Bank agreed to forfeit over $452 million and pay an approximately $1.4 billion criminal fine, for a total financial penalty of $1.8 billion, to engage an independent compliance monitor for three years, and to a five-year term of probation.[364] TD Bank received credit for providing partial cooperation and engaging and agreeing to continue to engage in remedial measures, and the penalty reflects a discount of 20 percent from the “agreed upon fine.”[365] TDBNA’s plea agreement credited $123.5 million paid to the FRB against the forfeiture amount, and TDBUSH’s plea agreement credited $2 million against the fine pursuant to the Criminal Division’s pilot program on compensation incentives and clawbacks, while allowing for a potential additional clawback credit of $5.5 million subject to TDBUSH providing information about additional bonuses withheld or clawed back as a result of the misconduct no later than January 31, 2025.[366] TD Bank also agreed to engage an independent compliance monitor for a period of three years.

TD Securities (DPA)

On September 30, 2024, TD Securities (USA) LLC (“TD Securities”), a subsidiary of TD Group US Holdings LLC, entered into a three-year DPA with the Fraud Section of DOJ’s Criminal Division.[367] On the same day, TD Securities entered into settlements in separate, parallel proceedings with the SEC and Financial Industry Regulatory Authority (“FINRA”).[368] The DPA would resolve DOJ’s criminal information for one count of wire fraud for placing false orders for U.S. Treasuries. According to the DPA, Jeyakumar Nadarajah, who at the time served as a Director at TD Securities and the Head of its U.S. Treasury desk, allegedly engaged in “spoofing” and “layering” to give the false impression of genuine demand and artificially increase prices for U.S. Treasuries products.[369] Mr. Nadarajah was indicted in November 2023 in connection with the same facts and is currently awaiting trial.[370] Although TD Group US Holdings LLC is not named as a defendant in the DPA, it is a signatory to the DPA and subject to the cooperation, compliance, and annual self-reporting requirements.

Pursuant to the DPA, TD Securities agreed to pay a criminal penalty of approximately $9.4 million, as well as over $4.7 million in victim compensation and $1.4 million in forfeiture.[371] TD Securities received credit for its cooperation and remediation, though its cooperation was described as “largely reactive,” resulting in a discount of 5 percent from the bottom of the applicable USSG range.[372] Additionally, TD Securities agreed to pay a $6.5 million civil penalty and $400,000 in disgorgement (all $400,000 of which will be credited against forfeiture to DOJ) including $135,700 in prejudgment interest in connection with the SEC settlement, and a $6 million civil penalty in connection with the FINRA settlement.[373]

Telefónica Venezolana C.A. (DPA)

On November 8, 2024, Telefónica Venezolana C.A. (“Telefónica Venezolana”), a Venezuela-based subsidiary of the Spain-based global telecommunications operator Telefónica S.A. (Telefónica), entered into a three-year deferred prosecution agreement with the U.S. Department of Justice’s Criminal Division, FCPA Section, and the U.S. Attorney’s office for the Southern District of New York.[374] The agreement resolved charges of one count of conspiracy to violate the anti-bribery provisions of the FCPA.[375] In particular, the government alleged that the company, acting as an agent of Telefónica, bribed Venezuelan government officials to participate in government currency exchange auctions through which it exchanged Venezuelan currency for U.S. dollars. To ensure its success at auction, Telefónica Venezolana allegedly enlisted suppliers to funnel bribes through intermediaries to the government officials. In connection with the agreement, Telefónica Venezolana agreed to pay a criminal penalty of $85,260,000.[376] In addition, as part of the DPA, Telefónica Venezolana and its parent Telefónica agreed to continued cooperation, any appropriate compliance program enhancements, and periodic reporting to the government regarding remediation and compliance program enhancements during the DPA’s three-year term.[377]

Tip the Scale LLC (Guilty Plea)

On June 13, 2024, Tip the Scale LLC (“Tip”) (d/b/a L&D Kitchen and Bath) entered into a plea agreement with the U.S. Attorney’s Office for the Western District of Washington, to resolve allegations in violation of the Lacey Act for making false declarations relating to the species and harvest location of timber used in cabinets and vanities.[378] According to the agreement, the government alleged that Tip imported shipping containers containing wooden products produced in China that were all falsely declared as a false species of wood harvested in Malaysia, avoiding over $850,000 in import duties.[379] While the plea agreement indicates that the maximum fine Tip could face is $500,000 and that Tip could be sentenced to probation for up to five years, the agreement contains a recommended sentence of three years’ probation, $110,000 in criminal fines, and $250,000 in penalties.[380] The agreement itself also does not impose any form of reporting or monitoring requirement on Tip but it does require the company to implement the “Environmental and Customs Compliance Plan” that was filed with the plea.[381]

On the same day as pleading guilty, Tip was sentenced to the recommended three-year term of probation and $360,000 in fines and penalties, one condition of which is that it will implement the Compliance Plan within 60 days.[382]

TPC Group LLC (Guilty Plea)

On May 21, 2024, TPC Group LLC (“TPC”), a Texas petrochemical company, entered into a plea agreement with the U.S. Attorney’s office for the Eastern District of Texas and the U.S. DOJ’s Environment and Natural Resources Division relating to one count of a violation of the Clean Air Act.[383] The plea agreement intended to resolve allegations that TPC knowingly failed to adhere to its own written operating procedures, resulting in two explosions and a series of fires that released contaminants into the air within a four-mile radius of the operating facility.[384] TPC initially agreed to pay criminal fines and civil penalties of over $30 million ($18 million criminal, $12.1 million in civil penalties paid to bankruptcy claimants) and to spend approximately $80 million to improve its risk management program and safety issues at facilities, and to $212 million in restitution already paid.[385] However, on January 10, 2025, the Court allowed TPC to withdraw its guilty plea after the court indicated its plan to increase restitution.[386]

TPC has separately settled civil actions related to the blasts. On November 22, 2024, in a settlement with the State of Texas, TPC agreed to pay $12.6 million in penalties and fees and to repair or replace certain equipment.[387] In August 2024, TPC also agreed to pay $150 million in penalties related to allegations by the Texas Commission of Environmental Quality, and the State of Texas decided to subordinate its claim to these penalties because TPC had already filed for bankruptcy, because the State of Texas wanted to ensure that victims of the blast were made whole to the greatest extent possible.[388] The EPA also filed a related civil complaint and consent decree under the Clean Air Act.[389]

Trafigura Beheer B.V. (Guilty Plea)

On March 28, 2024, Trafigura Beheer B.V. (Trafigura), a Dutch oil distribution and commodities trading company with its principal place of business in Switzerland, entered into a plea agreement with the DOJ Criminal Division, Fraud Section, and the U.S. Attorney’s Office for the Southern District of Florida, pleading guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA.[390] According to the agreement, Trafigura paid approximately $19.7 million in commissions to third parties, a portion of which was used to pay bribes to Brazilian officials.[391]

In connection with the agreement, Trafigura agreed to pay a total of over $126 million, including approximately $80.5 million in criminal fines and approximately $46.5 million in forfeiture.[392] Penalties were calculated in consideration of many factors, among them, Trafigura’s cooperation and remedial efforts to date and its history of prior misconduct. DOJ agreed to credit up to $26.8 million of the criminal fine against the amount the company pays to resolve charges in Brazil relating to the same conduct.[393] The agreement requires annual compliance reporting for three years but does not impose an independent monitor based on the company’s remediation and the state of its compliance program.[394]

Tribar Technologies, Inc. (Guilty Plea)

On December 18, 2024, Tribar Technologies, Inc., an automobile parts manufacturer, entered into a plea agreement with the U.S. Attorney’s Office for the Eastern District of Michigan and the Environmental Crimes Section of DOJ’s Environment and Natural Resources Division.[395] The agreement resolved allegations that the Company negligently violated a pretreatment standard under the Clean Water Act.[396] The government alleged that a Tribar plant discharged approximately 10,000 gallons of wastewater containing high concentrations of known carcinogen hexavalent chromium that it failed to pretreat after an employee disabled alarms and then failed to report the incident for three days.[397]

The guilty plea recommends a criminal penalty of $200,000 and five years’ probation, and requires Tribar to develop and implement an Environmental Management System/Compliance Plan that mandates a series of audits by an EPA-approved auditor and quarterly self-reporting.[398] The guilty plea further directs the court to order restitution to every identifiable victim of the offense, including Wixom publicly-owned treatment works, but notes that no victims appeared to have been physically harmed at the time of the agreement.[399] Tribar’s sentencing hearing is scheduled for April 29, 2025.

Valley Processing Inc. (Guilty Plea)

On December 17, 2024, Valley Processing Inc. (“VPI”), a fruit juice manufacturing company, pleaded guilty to conspiracy to introduce adulterated and misbranded fruit juice into interstate commerce in violation of the FDCA, pursuant to a plea agreement with DOJ’s Consumer Protection Branch and the U.S. Attorney’s Office for the Eastern District of Washington.[400] Under the plea agreement, VPI admitted to conspiring to distribute tainted apple and grape juice to customers between October 2012 and June 2019, and that this juice was potentially unsafe. [401] The company further admitted that it sold the juice to customers as if it were a new product, even though the juice was really a mixture of newer grape juice concentrate and years-old concentrate that had been stored outside and exposed to the elements.[402] VPI closed in 2021 and was indicted in 2022 with 12 counts of fraud and food safety violations[403] Pursuant to the plea agreement, VPI agreed to pay a criminal forfeiture of $742,139 jointly and severally with its co-defendant owner, Mary Ann Bliesner, and the parties agreed to recommend no criminal fine or restitution.[404] VPI’s sentencing hearing is scheduled for March 26, 2025[405]

Valley Property Partners LLC (Guilty Plea)

On August 30, 2024, Valley Property Partners LLC D/B/A “House Dudes” (“VPP”), a Minnesota-based residential real estate company, entered into a plea agreement with the U.S. Attorney’s Office for the District of North Dakota.[406] The agreement resolved allegations that VPP failed to provide a lead-based paint disclosure to the buyer of a pre-1978 home in Hillsboro, North Dakota, in violation of the Toxic Substances Control Act.[407] The government alleged that two young children living in this home were diagnosed with elevated blood lead levels in 2022.[408]

In connection with the agreement, VPP agreed to plead guilty to a Class A misdemeanor, to one year of probation, to include a notice on its website about the harms of lead paint exposure and disclosure obligations, to perform 50 hours of community service, and to pay no more than $15,000 in restitution and fines.[409] Charges against co-defendant Jack Hoss were dismissed on acceptance of VPP’s plea. On December 3, 2024, VPP was sentenced to the agreed terms, including $4,274.78 in restitution and $10,000 in fines.[410]

Vitamin Shack and Shakes, LLC (Guilty Plea)

On December 6, 2024, Vitamin Shack and Shakes, LLC (d/b/a “The Shack”), a retail nutritional supplement company, entered into a plea agreement with the U.S. Attorney’s Office for the Southern District of Texas.[411] The agreement resolved allegations that The Shack violated the FDCA by misbranding drugs in interstate commerce.[412] Specifically, the government alleged that The Shack sold products containing ostarine, a selective androgen receptor modulator (SARM) not approved for human consumption, that were falsely labeled as “research product[s].”[413]

Pursuant to the plea agreement, The Shack agreed to forfeit $175,000 and pay a special assessment of $125.[414] Additionally, the company agreed to develop policies on batch record-keeping, recalls, adverse event reporting, and periodic product testing.[415] The agreement further stipulates that the Defendant must also show proof of its FDA registration as an own-label distributor, if required by law.[416]

Vulto Creamery LLC (Guilty Plea)

On March 5, 2024, Vulto Creamery LLC (“Vulto”), a former raw milk cheese manufacturer, pleaded guilty, pursuant to a plea agreement with DOJ’s Consumer Protection Branch and the U.S. Attorney’s office for the Northern District of New York, to shipping adulterated cheese in interstate commerce.[417] The plea agreement resolved misdemeanor allegations that Vulto prepared, packed, and held its products under unsanitary conditions from 2014 to 2017, that led to a listeriosis outbreak in 2017.[418] In particular, the government alleged that between 2014 and 2017 Vulto Creamery had sold unpasteurized cheese despite numerous, frequent tests showing that listeria was present in the facility.[419] The resulting listeriosis outbreak led to eight hospitalizations and two deaths.[420] According to the plea, after the Food & Drug Administration recalled the cheese, the company immediately closed the facility, and the owner agreed to a permanent injunction against food manufacturing and assisted with the FDA’s investigation.[421] Vulto, which no longer operates, was sentenced to 12-months’ probation, including regular or unannounced examinations by the probation officer or experts engaged by the court.[422]

Western Sea, Inc. (Guilty Plea)

On March 11, 2024, Western Sea, Inc., a fishing company, entered into a plea agreement with the U.S. Attorney’s office for the District of Maine, pursuant to which it pleaded guilty to falsification of records.[423] The plea agreement resolved allegations that the “Western Sea” fishing vessel submitted false Fishing Vessel Trip Reports (“FVTR”) to the National Oceanic and Atmospheric Administration at the end of each fishing trip.[424] The government alleged that from June 2016 through September 2019, the crew of the Western Sea sold Atlantic herring to purchasers and then failed to report some of these sales on FVTRs, including when the vessel caught more than the quantity of herring allowed under weekly catch limits established by NOAA.[425] Western Sea was sentenced to 24-months’ probation and to pay a $400 assessment and $175,000 fine.[426]

Wynn Las Vegas, LLC (NPA)

On September 6, 2024, Wynn Las Vegas, LLC (“Wynn”) entered into a two-year non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of California to resolve an investigation into various transactions relating to foreign patrons that facilitated unlicensed money transmitting businesses.[427] The government alleged that Wynn conspired with various third parties, agents, and individuals to use unregistered money transmitting businesses to transmit value from one geographic location to another, outside the conventional financial system.[428] In reaching the decision to offer Wynn an NPA, DOJ took into consideration Wynn’s cooperation with the investigation and its timely remedial measures, including submitting to an external compliance review and providing written reports on its progress in enhancing its Bank Secrecy Act/anti-money laundering compliance program.[429] Pursuant to the NPA, Wynn agreed to forfeit $130,131,645,[430] which is believed to be the largest forfeiture by a casino in a criminal case.[431]

Diesel Pollution Control Tampering Plea Agreements

Allegations of tampering with pollution control devices on diesel trucks in violation of the Clean Air Act served as the basis for a series of plea agreements in districts around the country, which we summarize below.

All Out Diesel, LLC (Guilty Plea)

On December 4, 2024, All Out Diesel, LLC (“All Out”), a diesel truck repair shop in Salem, Missouri, and its owner Joseph Easter, entered into a plea agreement with the U.S. Attorney’s Office for the Eastern District of Missouri.[432] The agreement resolved allegations that All Out violated the Clean Air Act by tampering with monitoring devices on diesel trucks.[433] According to the agreement, between October 2019 and March 2020, All Out allegedly falsified, tampered with, and rendered inaccurate at least 75 monitoring devices.[434]

In connection with the agreement, All Out agreed to a sentence of 3 years’ probation and a $400 special assessment.[435] Sentencing is scheduled for March 14, 2025.[436]

Clancy Logistics, Inc. (Guilty Plea)

On September 18, 2024, Clancy Logistics, Inc. (“Clancy Logistics”) entered into a plea agreement with the U.S. Attorney’s Office for the District of Oregon to resolve allegations that it tampered with a monitoring device, resulting in charges of one count of violating the Clean Air Act.[437] According to the agreement, between 2019 and 2023, Clancy Logistics allegedly removed at least 13 diesel trucks’ pollution control hardware and disabled their on-board diagnostic systems that would have detected the removal of the hardware.[438] Pursuant to the plea agreement, Clancy Logistics agreed to three years’ probation,[439] annual self-reporting,[440] a $400 special assessment, and a criminal fine of $101,510 to be paid jointly and severally with co-defendant Timothy Curtis Clancy,[441] who was also indicted for associated conduct and entered into a separate plea agreement.[442] Clancy Logistics further agreed to implement a compliance program requiring, among other obligations, affected vehicles to be restored by a licensed mechanic to their certified configuration and mandating annual compliance reporting obligations to the U.S. Attorney’s Office.[443] Clancy Logistics’ sentencing is scheduled for February 25, 2025.[444]

Diesel & Offroad Authority, LLC (Guilty Plea)

On April 10, 2024, Diesel & Offroad Authority, LLC (“Diesel”), and its owner, Christopher Kauffman, entered into a plea agreement with the U.S. Attorney’s Office for the District of Oregon to resolve allegations of tampering with pollution monitoring devices in violation of the Clean Air Act.[445] According to the agreement, between 2018 and 2022, Diesel removed emissions control systems designed to reduce pollutants from more than 180 diesel vehicles, for which it collected fees totaling $378,313.[446] Pursuant to the agreement, Diesel agreed to a sentence of three years’ probation and a criminal fine of $150,000 to be paid jointly with Kauffman.[447] The agreement did not impose any form of reporting or monitoring.[448] On September 6, 2024, Diesel was sentenced to three years’ probation and required to pay $150,000 in fines and a $400 special assessment.[449]

Elite Diesel Service (Guilty Plea)

On June 12, 2024, Elite Diesel Service, Inc., a marine diesel engine service company, pleaded guilty to conspiracy to violate the Clean Air Act in an agreement with the U.S. Attorney’s office for the District of Colorado.[450] The plea agreement resolved allegations that Elite Diesel tampered with diesel truck emissions control systems installed in hundreds of heavy-duty commercial diesel vehicles.[451] The government alleged Elite Diesel conspired with diesel shops to tune onboard diagnostic computer software systems to prevent them from detecting emissions control malfunctions.[452] On December 16, 2024, Elite Diesel was sentenced to a five-year term of probation and ordered to pay a fine of $37,500 and a $400 special assessment.[453] Elite Diesel was also ordered to pay $12,500 to a program operated by the Colorado Department of Public Health and the Environment to repair the emissions control systems on vehicles owned by low-income drivers, who cannot afford to bring their vehicles into compliance.[454] As part of its continuing obligations during the duration of the plea agreement, Elite Diesel also agreed to submit annual reports and certifications regarding its compliance program and continued compliance with the plea agreement.[455]

Frock Brothers Trucking, Inc. (Guilty Plea)

On October 1, 2024, Frock Brothers Trucking, Inc. (“Frock”), a long-distance trucking company based in Pennsylvania, entered into a plea agreement with the U.S. Attorney’s Office for the Middle District of Pennsylvania to resolve allegations that the company conspired to violate the Clean Air Act.[456] Specifically, DOJ alleged that Frock, between November and December 2018, contracted with a mechanic to disable and/or remove emissions control components and equipment from eight trucks, which allowed the trucks to operate without emissions control devices as required under the Clean Air Act.[457] According to the agreement, prosecutors agreed to recommend that the court impose an $80,000 fine and two years of probation for Frock.[458] The defendant also agreed to a $400 special assessment.[459] A sentencing hearing is scheduled for March 6, 2025.[460]

Hardway Solutions LLC, Spokane Truck Service LLC, Pauls Trans LLC, PT Express LLC (Guilty Pleas)

On October 24, 2024, Hardway Solutions LLC d/b/a Hardway Performance entered into a plea agreement with the U.S. Attorney’s Office for the Eastern District of Washington to resolve allegations that Hardway Solutions and its owner, Ryan Hugh Milliken, conspired to violate the Clean Air Act.[461] On December 12, 2024, the other entities and individual named as co-defendants—Spokane Truck Service LLC, Pauls Trans LLC, PT Express LLC, and Pavel Ivanovich Turlak—also entered into plea agreements with the same U.S. Attorney’s Office to resolve a similar charge and a second count of making a false claim against the U.S. Small Business Administration in violation of Section 287 of Title 18.[462] According to the agreements, all defendants allegedly tampered with pollution control equipment software in diesel trucks in violation of the Clean Air Act.[463] The latter three corporate defendants also allegedly made false claims when applying for COVID-19-related small business loans.[464] While the plea agreements indicate that the maximum fine each corporate defendant could face is $500,000, the agreements do not make a recommendation as to the criminal fine.[465] The agreements recommend a five-year term of probation for each defendant, during which time the corporate defendants agree to submit annual self-reports.[466] Additionally, the agreements require the defendants to implement a compliance program requiring, among other obligations, affected vehicles to be restored by a licensed mechanic to its certified configuration.[467] Spokane Truck Service LLC, Pauls Trans LLC, PT Express LLC, as well as owner Pavel Ivanovich Turlak, agreed that they will be jointly and severally liable for restitution in the amount of at least $317,388.46.[468] On January 22, 2025, Hardway Solution was sentenced to a term of probation of five years and was ordered to pay a fine of $75,000 and a $400 special assessment.[469] Sentencing for Spokane Truck Service LLC, Pauls Trans LLC, and PT Express LLC is scheduled for April 2, 2025.[470]

Highway and Heavy Parts, LLC (Guilty Plea)

On August 16, 2024, Highway and Heavy Parts, LLC (“HHP”), a heavy-duty diesel parts supplier, entered into a plea agreement with the U.S. Attorney’s Office for the Northern District of New York, pursuant to which it agreed to plead guilty to conspiracy to violate the Clean Air Act.[471] The plea agreement resolved allegations investigated by the EPA’s Criminal Investigation Division that HHP conspired to violate the Clean Air Act by tampering with required emissions controls on diesel vehicles.[472] Specifically, the government alleged that between 2017 and 2019, HHP referred customers to a co-conspirator to reprogram the onboard diagnostic systems, allowing the trucks to travel at normal speeds while bypassing Clean Air Act requirements.[473] In exchange, customers paid $1,250 to $1,750 per truck, of which HHP kept $250 and remitted the rest to the co-conspirator.[474]

HHP was sentenced to a $25,000 criminal fine and $400 assessment.[475] No term of supervision was imposed.[476] An individual co-defendant entered into a plea agreement the next month, pursuant to which he agreed to pay a fine of $100,000 and face a sentence of up to five years imprisonment followed by three years of supervised release.[477] Other co-conspirators had previously pleaded guilty and had been sentenced to a fine of $13,000 but were not subject to supervision given compliance with EPA and New York Department of Environmental Conservation monitoring.[478]

Moody Motor Co., Inc. (Guilty Plea)

On April 1, 2024, Moody Motor Co., Inc. (“Moody Motor”), a Ford dealership located in Niobrara, Nebraska, pleaded guilty to accessory after the fact to a Clean Air Act violation in the U.S. District Court of Nebraska.[479] The case stemmed from an investigation initiated in January 2022 by the EPA’s Criminal Investigations Division (EPA-CID).[480] Moody Motor had purchased tuners and delete kits from Diesel Performance of Texas, products that unlawfully modified vehicle exhaust systems in violation of the Clean Air Act.[481] Between April 2019 and January 2022, the dealership received these products about 14 times and installed about 10 to 20 of them.[482] On July 31, 2024, Moody Motor was sentenced to one year of probation, fined $39,741.95, and required to pay a $125 special assessment.[483]

Racing Performance Maintenance Northwest LLC & RPM Motors and Sales LLC (Guilty Pleas)

On March 18, 2024, Racing Performance Maintenance Northwest LLC (“Racing Performance”) and RPM Motors and Sales LLC (“RPM Sales”) entered into separate plea agreements with the U.S. Attorney’s Office for the Western District of Washington to resolve allegations that each company violated the Clean Air Act.[484] According to the agreements, Racing Performance and RPM Sales allegedly removed hundreds of diesel trucks’ pollution control hardware and disabled on-board diagnostic systems that would have detected the removal of the hardware.[485] Specifically, from January 2018 to January 2021, Racing Performance allegedly tampered with approximately 375 trucks, for which it collected fees totaling $536,447. While the plea agreements indicate that the maximum fine Racing Performance and RPM Sales could each face is $500,000, twice the defendants’ pecuniary gain, or twice the victims’ pecuniary loss, and that each entity could be sentenced to probation for up to five years, the parties did not agree to any sentencing recommendation.[486] The agreements also do not impose any form of reporting or monitoring requirement on Racing Performance or RPM Sales.[487] Racing Performance’s and RPM Sales’ individual owners were also indicted for associated conduct.[488] Racing Performance’s and RPM Sales’ individual owners were sentenced on January 13, 2025, to a three-year term of probation and each ordered to pay a $10,000 fine.[489]

Rudy’s Performance Parts Inc. (Guilty Plea)

On July 19, 2024, Rudy’s Performance Parts Inc. (Rudy’s), an automotive parts manufacturer and seller based in North Carolina, entered into a plea agreement with the Environmental Crimes Section of DOJ’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the District of Columbia, resolving charges that, from 2015 to 2018, it violated the Clean Air Act by manufacturing and selling “defeat devices” that remove or disable required emissions controls in vehicles.[490] Pursuant to the agreement, Rudy’s consented to a $2.4 million criminal fine and a three-year probation period, during which period Rudy’s must submit all self-reports pursuant to a parallel civil consent decree (described below) to the criminal prosecutors.[491] Rudy’s’ owner, Aaron Rudolf, who previously pleaded guilty to tampering with emissions monitoring devices on about 300 diesel trucks, received a separate sentence that included three years of probation and a $600,000 fine.[492]

In addition to the criminal case, DOJ filed a civil suit on behalf of the EPA seeking penalties for the extensive sale of these devices, leading to a $7 million civil penalty as part of a consent decree.[493] The decree prohibits Rudy’s and Rudolf from manufacturing, selling, or profiting from defeat devices, mandates compliance with EPA regulations, and requires annual self-reporting until termination of the consent decree. The financial penalties reflect Rudy’s ability to pay capabilities and were meant to underscore the health risks associated with the tampering of diesel emissions controls.[494]

International Developments

As noted in previous updates (see, e.g., our 2021 Year-End Update), several countries outside the United States have developed DPA-like regimes in the past several years, while others have made strides in prosecuting corporate entities. Of countries that have adopted DPA-like agreements, we have previously analyzed Brazil (in our 2019 Year-End Update), Canada (in our 2018 Mid-Year Update), France (see our 2019 Year-End and 2020 Mid-Year Updates for details), Singapore, and the United Kingdom (in our 2014 Year-End Update), as well as their corporate enforcement actions. Notably, this year, Argentina signaled that it may be entering its first DPA-like agreement, and South Africa introduced a DPA-like regime.

United Kingdom

In a first for the UK, UK authorities have initiated an action against an organization for breach of a DPA. On November 21, 2024, the UK’s Serious Fraud Office (“SFO”) informed the court that it believes Güralp Systems Ltd (“Güralp”), a UK-based manufacturer of seismic instrumentation, breached the terms of its 2019 DPA and requested a hearing.[495] As detailed in our 2019 Year-End Update, Güralp entered into a five-year DPA with the SFO to resolve charges of (1) conspiracy to make corrupt payments and (2) failure to prevent bribery by employees, both arising from corrupt payments made to a South Korean public official between 2002 and 2015.[496] The DPA required Güralp to provide the SFO with annual reports regarding implementation of its compliance program and to disgorge gross profits of £2,069,861 (approximately $2.5 million).[497] The SFO has not disclosed how Güralp allegedly breached its DPA. If Güralp is found to have violated the terms of the DPA, criminal prosecution for the underlying offenses may resume.

France

After a quiet first few months of the year, France’s prosecuting agencies entered into multiple DPA-like agreements (known as conventions judiciaires d’intérêt public, or “CJIPs”) in the latter half of 2024.

On May 17, 2024, the Judicial Court of Tours approved the entry of a CJIP to resolve allegations that SARL Gudno (“Gudno”), a construction company in Tours, evaded paying taxes of €110,861 VAT and €50,886 corporate tax.[498] The court acknowledged that Gudno regularized its late tax filings and approved the terms of the CJIP requiring Gudno to pay a fine of €50,000 through monthly installments over 11 months.

Seventeen years after Tracfin, France’s AML authority, first flagged a suspicious payment, on July 10, 2024, the Judicial Court of Paris approved the entry of a CJIP between Sotec, a Gabonese construction and services company, and the Paris Prosecutors’ Office to resolve allegations that Sotec and another Gabonese company facilitated the payment of bribes to Gabonese officials on behalf of a French military clothing company.[499] (The French company was not named in the settlement, but press reporting has identified the company as Marck (known as Marck et Balsan).[500]) According to the CJIP, in 2005, Sotec and another Gabonese company allegedly acted as intermediaries to funnel payments to an official of Gabon’s Ministry of Defense in connection with contracts worth €7.5 million to supply military uniforms and equipment to Gabon’s security forces.[501] The CJIP further alleged that Tracfin flagged in 2007 a suspicious payment of €394,843 by the French company to a Gabonese company for subcontracting that the investigation—initiated in 2015—ultimately determined to have been invoiced to the Ministry of Defense for €2,084,764.[502] The CJIP requires Sotec to pay a €520,000 fine.[503] Prosecutors imposed a reduced fine from the potential maximum of €742,400,000 in light of Sotec’s cooperation during the investigation and the lapse in time since the alleged misconduct.[504] As is true in any CJIP, Sotec did not admit guilt in connection with the settlement.

On August 27, 2024, Danske Bank A/S entered into a CJIP with France’s financial crime prosecutor’s office, the Parquet national financier (“PNF”), to resolve allegations that the bank laundered the proceeds of tax fraud by French residents through corporate accounts at the bank’s Estonian branch.[505] In 2022, Danske Bank resolved a proceeding in the U.S. arising from similar allegations by pleading guilty to one count of conspiracy to commit bank fraud and agreeing to forfeit $2 billion.[506] Under the terms of the CJIP, Danske Bank agreed to pay a fine exceeding €6 million and €300,000 in damages within 30 days.[507] In addition to the financial penalty, Danske Bank committed to enhance its compliance program and to pay expenses incurred by the French corruption regulator Agence française anticorruption (“AFA”) as it monitors the bank’s compliance program for up to three years.[508] The Judicial Court of Paris approved the CJIP on September 18, 2024.[509]

Finally, on December 9, 2024, a Paris court approved a CJIP entered on December 2, 2024, between the PNF and French mining companies, Areva SA and Orano Mining SAS (“Orano”).[516] (According to the CJIP, Orano acquired Areva’s mining operations in 2018.) The CJIP terminates an investigation opened in June 2015, relating to alleged bribery of foreign public officials in connection with mining activities in Mongolia between 2013 and 2017.[517] To resolve the allegations, Areva agreed to pay a fine of €4.8 million, and Orano agreed to implement a compliance program and to pay expenses not to exceed €1.5 million relating to compliance program monitoring by the AFA for three years.[518]

Argentina

In May 2024, Argentina’s national prosecution service, the Ministerio Público Fiscal, confirmed that Securitas Argentina, the former local subsidiary of Sweden-based Securitas (now known as Securion), was negotiating the country’s first-ever corporate negotiated resolution under Argentina’s Corporate Criminal Law.[519] According to the prosecutor’s public statements, Securitas admitted in court to paying millions in bribes to representatives of public organizations to avoid losing contracts with Argentina’s public works and sanitation authority, passport and national identification agency, and arms registration authority, among others.[520] The agreement marks the country’s first “collaboration agreement,” a mechanism introduced in 2018 that allows companies to reduce penalties by cooperating and providing information about individuals responsible for the misconduct.

According to press reports, this case followed an internal investigation by Securitas which began in 2018.[521] Securitas self-disclosed the findings of its investigation to Argentinian authorities, terminated the employees involved, and ultimately sold the Argentinian subsidiary in 2023 due to the challenging business climate in Argentina.[522] The public prosecutor handling the case told the press that the “undue benefit” Securitas obtained from its misconduct, which will affect the company’s fine, is yet to be calculated.[523] Prosecutors have brought bribery-related charges against former employees of the subsidiary, indicted several public officials, and expect to bring more charges.[524]

Brazil

In February, Seatrium, a Singapore-based shipyard and marine engineering operator, reached settlements in principle with Brazilian authorities, including the Attorney General’s Office (“AGU”), the federal Comptroller General (“CGU”), and the federal Public Prosecutor’s Office (“MPF”), that resolve corruption allegations related to its predecessor, Sembcorp Marine, prior to Sembcorp’s 2023 acquisition of Keppel Offshore & Marine (“Keppel O&M”).[525] The allegations stemmed from the sprawling Operation Carwash investigations into alleged bribery linked to public contracts across multiple Brazilian public authorities and entities, aspects of which have recently been overturned or vacated by Brazil’s Supreme Court.[526] Pursuant to the settlement, Seatrium agreed to pay BRL 670.7 million (approximately $130 million).[527] The agreement was subject to approval by Brazil’s court overseeing the public finances, i.e., the Tribunal de Contas da União (“TCU”), and other ministerial bodies.[528]

In April 2024, the CGU imposed a R $2 million fine on Chemtrade Brasil for its involvement in a scheme to illegally sell data from Brazil’s Integrated Foreign Trade System (Siscomex) to companies engaged in export or import activities.[529] This penalty followed administrative proceedings initiated by the Ministry of Development, Industry, Commerce and Services (“MDIC”), based on the findings of the Federal Police’s 2017 “Operation Spy,” which uncovered the illegal practice.[530] (Operation Spy resulted in another, unrelated company’s plea agreement in 2023 and has resulted in penalties for 21 companies.)[531] The order, published in Brazil’s official gazette on April 10, 2024, was made after Chemtrade Brasil requested the penalty, acknowledged its wrongdoing, and agreed to comply with the imposed sanctions.[532] The CGU’s press release acknowledged that Chemtrade Brasil made its request pursuant to CGU Normative Ordinance No. 19/2022, which encourages companies to demonstrate commitment to legal compliance and public integrity, and that the fine was issued under Brazil’s Lei Anticorrupção no. 12846/2013 known in English as the Clean Companies Act.[533]

In November 2024, Freepoint Commodities, a Connecticut-based commodities company, agreed to a leniency agreement with the CGU and AGU over allegations of bribing public officials between 2012 and 2018 to gain an unfair advantage in dealings with Petrobras, the state-owned oil company.[534] The agreement requires Freepoint to pay BRL 131.3 million ($22.6 million), including a fine to be paid to the Brazilian government and reimbursement to Petrobras, and to improve its corporate governance and compliance policies.[535] This agreement followed a joint investigation with U.S. authorities that, as detailed in our 2023 Year-End Update, was resolved when Freepoint entered a three-year DPA with the DOJ, pursuant to which the company agreed to pay a $68 million criminal penalty and forfeit $30.5 million, and a parallel resolution with the Commodity Futures Trading Commission (“CFTC”), pursuant to which it agreed to disgorge more than $7.6 million.[536] In the DPA, the DOJ and Connecticut U.S. Attorney’s Office agreed to credit amounts Freepoint paid to Brazilian authorities within one year, up to $22.4 million.[537]

Finally, state-level prosecutors in Brazil also negotiated a leniency agreement relating to a multinational company that had also been subject to scrutiny by U.S. authorities. On December 3, 2024, announcements by the Public Prosecutor’s Office of the State of Minas Gerais (“MPMG”), Comptroller General of the State of Minas Gerais (“CGE”), and the Attorney General of the State of Minas Gerais (“AGE”) revealed a Leniency Agreement and Damage Compensation Agreement with SAP Brasil Ltda, in connection with an investigation into alleged misconduct in public contracting for an integrated human resources management system.[538] The agreement followed an enforcement proceedings initiated by the CGE in 2022 and, together with MPMG and AGE, a total of 32 rounds of negotiations.[539] Pursuant to the agreement, SAP Brasil admitted to finding evidence of illegal practices, including collusion with other companies and state officials to defraud the bidding process, and agreed to pay approximately BRL 66 million (approximately $ 11 million), encompassing a fine under the Clean Companies Act, disgorgement of illicit profits, and damages to the state of Minas Gerais.[540] As discussed above, in January 2024, parent company SAP SE’s DPA with DOJ and the SEC resolved allegations regarding bribery schemes in multiple countries but did not mention Brazil.

South Africa

Tipping the international scales toward the Southern Hemisphere with a third country, in April 2024, South Africa’s National Prosecuting Authority published guidance regarding a new corporate alternative dispute resolution (“CADR”) mechanism available to companies charged with corruption and corruption-related offenses.[541] Although South Africa has already entered into several corporate resolutions in recent years, this non-trial resolution mechanism adopts elements of DPAs but will not require court approval.[542] According to the guidance, when determining whether a matter is appropriate for pre-trial resolution, the Authority will consider multiple factors, including the company’s timely and voluntary disclosure, of both the alleged violation and evidence; cooperation; willingness to pay restitution; prior history of misconduct, as well as the nature, seriousness, and complexity of the unlawful activities; pervasiveness of the wrongdoing; the existence of an effective compliance program; likelihood of significant negative collateral effect on the company in the event of a conviction; and the interests of any victims.[543]

Appendix

The chart below summarizes the agreements concluded from January through December 2024. The complete text of each publicly available agreement is hyperlinked in the chart.

The figures for “Monetary Recoveries” may include amounts not strictly limited to an NPA, DPA, or guilty plea, such as fines, penalties, forfeitures, and restitution requirements imposed by other regulators and enforcement agencies, as well as amounts from related settlement agreements, all of which may be part of a global resolution in connection with the NPA, DPA, or plea agreement, paid by the named entity and/or subsidiaries. The term “Monitoring & Reporting” includes traditional compliance monitors, self-reporting arrangements, and other monitorship arrangements found in resolution agreements, but does not include probation.

U.S. DPAs, NPAs, Declinations, and Plea Agreements January-December 2024
Company	Agency	Alleged Violation	Type	Monetary Recoveries	Monitoring & Reporting	Term of Agreement (Months)
AAR Corp.	DOJ Fraud; SEC	FCPA	NPA	$55,599,653	None	18
Advoque Safeguard	D. Mass.	Conspiracy to introduce misbranded devices into interstate commerce with intent to defraud or mislead	Guilty Plea	$700,000	None	12
Akua Mosaics, Inc.	D.P.R.	Smuggling goods into the U.S.; Conspiracy to defraud the U.S.	Guilty Plea	$1,090,000	None	None
Al’s Asphalt Paving Company, Inc.	DOJ Antitrust; DOT OIG; USPS OIG	Sherman Act; Conspiracy to violate the Sherman Act by suppressing and eliminating competition by agreeing to rig bids for contracts	Guilty Plea	$795,662	None	None
All Out Diesel, LLC	E.D. Mo.; EPA	Clean Air Act	Guilty Plea	Pending	None	36
AM/NS Calvert, LLC	S.D. Ala.; DOJ ENRD	Clean Air Act	Guilty Plea	$750,000	None	36
Amigos Mexican Cuisine & Cantina LLC	D. Or.	Public Money Theft (COVID relief fraud)	Guilty Plea	$2,559,100	None	None
AMVAC Chemical Corp.	DOJ ENRD; S.D. Ala.	Transporting unmanifested hazardous waste	Guilty Plea	$400,000	Third-party environmental auditor	36
Asphalt Specialists, LLC	DOJ Antitrust; DOT OIG; USPS OIG	Sherman Act	Guilty Plea	$6,500,000	None	72
Austal USA	DOJ Fraud; S.D. Ala.	Securities Fraud; Obstruction of Fed. Audit	Guilty Plea	$24,000,000	Independent compliance monitor	36
Aventura Technologies, Inc.	E.D.N.Y.; FBI; GSA OIG; DCIS; IRS; CBP; AFOSI; TIGTA; NCIS; Army CID; DOE-IG	Mail and wire fraud conspiracy; illegal importation	Guilty Plea	$3,000,000	None	36
Avin International Ltd & Kriti Ruby Special Maritime Enterprise	D.N.J.; M.D. Fla.; DOJ ENRD	Act to Prevent Pollution from Ships (APPS); Obstruction of Justice	Guilty Plea	$4,501,600	Monitor – Third-Party External Auditor and Court-Appointed Monitor	60
BIT Mining Ltd.	D.N.J.; DOJ Fraud	FCPA	DPA	$10,000,000	Annual Self Reporting	36
BNL Technical Services LLC	E.D. Wash.	Bank Fraud	Guilty Plea	$494,265 (pending sentencing)	None	N/A
Boston Consulting Group, Inc.	DOJ Fraud	FCPA	Declination with Disgorgement	$14,424,000	None	N/A
Boyd Farm LLC	E.D. Va.	Clean Water Act	Guilty Plea	$300,000	None	N/A
Brazos Urethane	W.D. Wis.	Conspiracy to defraud the BOP	DPA	$300,000	Annual self-reporting	36
Cambridge International Systems	S.D. Cal.	Bribery	Guilty Plea	$3,922,102	None	24
CBM	S.D.N.Y.; DOT-OIG; MTA-IG	Defraud U.S. transit authority customers	NPA	$2,402,103 minimum; $3,963,243 maximum (depending on restitution)	None	24
Cerebral, Inc.	E.D.N.Y.	Distribution of controlled substances	NPA	$6,574,000	None	30
Clancy Logistics Inc.	D. Or.; EPA	Clean Air Act	Guilty Plea	$101,910	Annual self-reporting	36
Covetrus	W.D. Va.	Criminal Drug Misbranding	Guilty Plea	$23,534,091	Annual self-reporting	12
Cruise, LLC	N.D. Cal.; NHTSA	Falsification of records with intent to impede/obstruct/influence crash investigation.	DPA	$500,000	Annual self-reporting	36
Defyned Brands (d/b/a 5 Star Nutrition LLC)	DOJ CPB; W.D. Tex.	FDCA	Guilty Plea	$4,500,000	Annual self-reporting for three years	90
Diesel & Offroad Authority, LLC	D. Or.	Clean Air Act	Guilty Plea	$150,400	None	36
Dlubak Glass Company	N.D. Tex.; DOJ ENRD	False statements to Texas Commission on Environmental Quality	Guilty Plea	$100,400	None	48
Domermuth Environmental Services, LLC	E.D. Tenn.; EPA	Clean Water Act Violation	Guilty Plea	$50,000	None	36
Eagle Renovations LLC	D. Ohio	Wire Fraud	Guilty Plea	$24,150	Unknown	60
eBay	D. Mass.	Harassment and intimidation; Witness tampering; obstruction of justice	DPA	$3,000,000	Monitor – 3-year compliance monitor	36
Elite Diesel Service	D. Col.	Clean Air Act	Guilty Plea	$50,400	Annual compliance certifications and reporting	60
Endo Health Solutions Inc. (EHSI)	DOJ CPB; S.D.N.Y.	FDCA – Distribution of Misbranded Drugs	Guilty Plea	$1,536,000,000	None	N/A
Envigo RMS LLC & Envigo Global Services, Inc.	W.D. Va. EPA; USDA	Conspiracy to violate the Animal Welfare Act	Guilty Plea	$35,000,000	Compliance monitor to submit reports every six months	60
Environmental Resources Inc.	D. Nev.; EPA CID	Clean Water Act	Guilty Plea	$680,000	None	0
Evans Concrete, LLC	DOJ Antitrust; S.D. Ga.	Sherman Act	Guilty Plea	$2,713,700	None	12
Evoqua Water Technologies	D.R.I.; SEC	Securities fraud	NPA	$8,500,000	None	24
Family Dollar Stores, LLC	DOJ CPB; FDA; E.D. Ark.	Holding food, drugs, medical devices, and cosmetics under unsanitary conditions	Guilty Plea (misdemeanor)	$41,675,125	Annual self-reporting	36
Fidelity Development Group LLC	S.D. Ohio; EPA	Clean Air Act	Guilty Plea	$100,000	Unknown	24
Frame Inc.	N.D.W. Va.	Wire fraud	Guilty Plea	$187,286	None	N/A
Frock Brothers Trucking, Inc.	M.D. Pa.	Clean Air Act	Guilty Plea	$80,400	None	24
Gremex Shipping S.A. de C.V.	DOJ ENRD; N.D. Fl.	Act to Prevent Pollution from Ships (APPS)	Guilty Plea	$1,750,000	Monitor and Auditor	48
Gunvor S.A.	DOJ Fraud; DOJ MLARS, E.D.N.Y.	Conspiracy to violate FCPA anti-bribery provisions	Guilty Plea	$661,698,215	Annual self-reporting	36
Hardway Solutions, LLC	E.D. Wash.; EPA	Clean Air Act	Guilty Plea	$75,400	Annual self-reporting	60
Hexamed Business Solutions	N.D. Tex.	Conspiracy to commit money laundering	Guilty Plea	$19,172	None	Unclear
Highway and Heavy Parts LLC	N.D.N.Y.; EPA	Clean Air Act Conspiracy	Guilty Plea	$25,400	None	None
JDM Supply	D. Mass.	Conspiracy to introduce misbranded devices into interstate commerce with intent to defraud or mislead	Guilty Plea	Pending	Pending	Pending
KBC Capital, LLC	D. Mass.; ATF, DEA, HSI, USPIS	National Firearms Act (NFA)	Guilty Plea	$260,000	None	36
KVK Research Inc.	DOJ CPB; E.D. Penn.	FDCA – Distribution of adulterated narcotics; FCA	Guilty Plea	$1,750,000	None	None
KVK Tech Inc.	DOJ CPB; E.D. Penn.	FDCA – Distribution of adulterated narcotics; FCA	DPA	$3,500,000	Independent compliance monitor	36
Limited Properties, Inc.	D.S.C.	Wire fraud; Money laundering	Guilty Plea	Pending	Pending	Pending
Logsdon Valley Oil	W.D. Ky.; EPA CID	Safe Drinking Water Act violation; Aiding and abetting	Guilty Plea	$100,000	None	36
Magellan Diagnostics, Inc.	D. Mass.	Introducing misbranded device in violation of FDCA	Guilty Plea	$32,700,000	Independent compliance monitor	24
Magellan Diagnostics, Inc.	D. Mass.	Conspiracy to commit wire fraud and conspiracy to defraud the U.S. (DPA charges)	DPA	$9,300,000	Independent compliance monitor	24
MAM Construction	D.P.R.	Fraud – General	Guilty Plea	$194,786	Pending	Pending
Martinez Builders Supply	S.D. Fla.	Conspiring to harbor aliens by means of employment	Guilty Plea	$550,000	None	24
Mary Mahoney’s Old French House, Inc.	S.D. Miss.; FDA OCI	Conspiracy to defraud customers via mislabeled food; Use of interstate wires to facilitate fraud	Guilty Plea	$1,499,000	None	60
McKinsey and Company Africa (Pty) Ltd	S.D.N.Y.; DOJ Fraud	FCPA	DPA	$122,850,000	Annual self-reporting	36
McKinsey & Company Inc.	DOJ CPB; W.D. Va.; D. Mass.	Misbranding of drugs; Obstruction of justice	DPA	$650,000,000	Annual self-reporting	60
MGM Grand Hotel, LLC	C.D. Cal.; DHS HSI; IRS Criminal Investigation	Bank Secrecy Act	NPA	$6,527,728	External compliance reviewer	24
Mold Wranglers, Inc.	D. Mont.	False Claim Act	Guilty Plea	Up to $956,000	None	None
Moody Motor Co., Inc.	D. Neb.; EPA	Clean Air Act	Guilty Plea	$39,867	None	12
Morgan Stanley & Co LLC	S.D.N.Y.	Making false statements in connection with sale of block trades	NPA	$153,431,223	None	36
N. Ali Enterprises Inc.; 21st Century Distribution Inc.	C.D. Cal.	Mail and Wire Fraud	Guilty Plea	$5,919,205	None	36
Northridge Construction Company	DOJ ENRD	Worker Safety Standards; OSHA	Guilty Plea	$100,000	None	60
Pauls Trans LLC	E.D. Wash.; EPA	Clean Air Act	Guilty Plea	Pending	Annual self-reporting	60
Peticub Pharmacy Corporation	C.D. Cal.	Conspiracy to Distribute	Guilty Plea	$5,000	None	60
Prive Overseas Marine LLC; Prive Shipping Denizcilik Ticaret, A.S.	E.D. La.; DOJ ENRD; Coast Guard Investigative Service; EPA	Act to Prevent Pollution from Ships (APPS); Obstruction of justice	Guilty Plea	$2,000,000	Third-party auditor	48
Proterial Cable America, Inc. (f/k/a Hitachi Cable America Inc.)	DOJ Fraud	Fraud – General	Declination with Disgorgement	$15,126,204	None	N/A
PT Express LLC	E.D. Wash.; EPA	Clean Air Act	Guilty Plea	Pending	Annual self-reporting	60
Q Link Wireless	S.D. Fla.	Fraud – General	Guilty Plea	$109,637,057	None	0
Quality Poultry and Seafood, Inc.	S.D. Miss.; FDA	Conspiracy to mislabel seafood; conspiracy to commit wire fraud	Guilty Plea	$1,500,000	None	60
Racing Performance Maintenance Northwest LLC	W.D. Wash.	Clean Air Act	Guilty Plea	Pending	Pending	Pending
Raytheon Company	D. Mass.	AECA; ITAR	DPA	$685,990,981	Independent compliance monitor	36
Raytheon Company	E.D.N.Y.	FCPA	DPA	$371,500,918	Independent compliance monitor	36
RKB Handyman Services, Inc.	E.D. Pa.	Wire fraud	Guilty Plea	$358,181	None	None
RPM Motors and Sales LLC	W.D. Wash.	Clean Air Act	Guilty Plea	Pending	Pending	Pending
Rudy’s Performance Parts Inc.	DOJ ENRD; EPA; D.D.C.	Clean Air Act	Guilty Plea	$9,400,000	Annual self-reports	36
SAP SE	DOJ Fraud; E.D. Va.	FCPA	DPA	$295,057,693	Annual self-reporting	36
Satori Recovery Center LLC	C.D. Cal.	Travel Act	Guilty Plea	Pending	Pending	Pending
Siemens	E.D. Va.	Wire fraud; Conspiracy to commit wire fraud	Guilty Plea	$104,000,000	None	36
Spokane Truck Service LLC	E.D. Wash.; EPA	Clean Air Act	Guilty Plea	Pending	Annual self-reporting	60
Star Enterprises	D.P.R.	Federal Program Theft	Guilty Plea	$206,639	None	None
Taaj Services US LLC	S.D. Cal	Bank Secrecy Act	Guilty Plea	$700,000	None	24
TD Bank N.A.	D.N.J.; DOJ Fraud	Conspiracy to fail to implement an adequate AML program, to fail to file accurate currency transaction reports, and to launder money	Guilty Plea	$1,659,932,702	Independent compliance monitor for three years	60
TD Bank U.S. Holding Company	D.N.J.; DOJ Fraud	Causing TD Bank N.A. to fail to maintain an adequate AML program and to fail to file accurate currency transaction reports	Guilty Plea	$1,434,513,478	Independent compliance monitor for three years	60
TD Securities (USA) LLC	DOJ Fraud	Wire fraud	DPA	$28,161,602	Annual self-reporting	36
Telefónica Venezolana C.A.	S.D.N.Y.; DOJ Fraud	FCPA	DPA	$85,260,000	Self-reporting	36
The Cosmopolitan Las Vegas	C.D. Cal.; DHS HSI; IRS CID	Bank Secrecy Act	NPA	$928,600	None	24
Tip the Scale LLC	DOJ ENRD; CBP	Lacey Act	Guilty Plea	$360,000	External auditor of importer compliance plan	36
TPC Group LLC	DOJ ENRD; EPA; OSHA	Clean Air Act	Guilty Plea	$110,100,000, crediting $212 million paid as restitution – but plea withdrawn	Plea withdrawn	Plea withdrawn
Trafigura Beheer B.V.	DOJ Fraud; S.D. Fl.	FCPA	Guilty Plea	$126,998,697	Annual self-reporting	36
Tribar Technologies, Inc.	E.D. Mich.; DOJ ENRD	Clean Water Act	Guilty Plea	$200,000	External auditor and quarterly self-reporting	Until remediation complete
Trinity Champion Healthcare Partners LLC	N.D. Tex.	Conspiracy to commit money laundering	Guilty Plea	$23,929	None	Unclear
Valley Processing Inc.	DOJ CPB; E.D. Wash.; FDA OCI	Conspiracy to introduce adulterated and misbranded fruit juice into interstate commerce (FDCA)	Guilty Plea	$742,139	None	N/A
Valley Property Partners, LLC	D.N.D.; EPA	Toxic Substances Control Act (misdemeanor)	Guilty Plea	$14,400	None	12
Vitamin Shack and Shakes, LLC	S.D. Tex.; FDA	FDCA	Guilty Plea	$175,000	None	Pending
Vulto Creamery LLC	N.D.N.Y.; DOJ CPB	Adulterated food	Guilty Plea	None	Pending	12
Western Sea, Inc.	D. Maine	Falsification of Records	Guilty Plea	$175,000	None	24
Wynn Las Vegas	S.D. Cal.; DHS HSI; IRS CID; DEA	Unlicensed money transmitting; Bank Secrecy Act	NPA	$130,131,645	External compliance reviewer	24

[1] DOJ, General Policy Regarding Charging, Plea Negotiations, and Sentencing (Feb. 5, 2025), https://www.justice.gov/ag/media/1388541/dl?inline.

[2] DOJ, Total Elimination of Cartels and Transnational Criminal Organizations (Feb. 5, 2025), https://www.justice.gov/ag/media/1388546/dl?inline.

[3] DOJ, General Policy Regarding Charging, Plea Negotiations, and Sentencing (Feb. 5, 2025), https://www.justice.gov/ag/media/1388541/dl?inline.

[4] DOJ, Total Elimination of Cartels and Transnational Criminal Organizations (Feb. 5, 2025), https://www.justice.gov/ag/media/1388546/dl?inline.

[5] Id.

[6] DOJ, General Policy Regarding Charging, Plea Negotiations, and Sentencing (Feb. 5, 2025), https://www.justice.gov/ag/media/1388541/dl?inline.

[7] DOJ, Reinstating the Prohibition on Improper Guidance Documents (Feb. 5, 2025), https://www.justice.gov/ag/media/1388511/dl?inline.

[8] DOJ, Reinstating the Prohibition on Improper Third-Party Settlements (Feb. 5, 2025), https://www.justice.gov/ag/media/1388536/dl?inline.

[9] This update addresses developments and statistics through December 31, 2024. NPAs and DPAs are two kinds of voluntary, pre-trial agreements between a corporation and the government, most commonly used by DOJ. They are standard methods to resolve investigations into corporate criminal misconduct and are designed to avoid the severe consequences, both direct and collateral, that conviction would have on a company, its shareholders, and its employees. Though NPAs and DPAs differ procedurally—a DPA, unlike an NPA, is formally filed with a court along with charging documents—both usually require an admission of wrongdoing, payment of fines and penalties, cooperation with the government during the pendency of the agreement, and remedial efforts, such as enhancing a compliance program or cooperating with a monitor who reports to the government. Although NPAs and DPAs are used by multiple agencies, since Gibson Dunn began tracking corporate NPAs and DPAs in 2000, we have identified more than 700 agreements initiated by DOJ, and 10 initiated by the U.S. Securities and Exchange Commission (“SEC”).

[10] Gibson Dunn began tracking corporate guilty pleas in 2022. Our data generally captures information publicly available at the time of the agreement; if sentencing has not occurred by year-end, monetary recoveries may not be included in our data. Following publication of our prior updates, we identified additional plea agreements not originally included in those prior updates. We have adjusted the 2022 and 2023 data here to reflect those additional plea agreements.

[11] DOJ, Reinstating the Prohibition on Improper Guidance Documents (Feb. 5, 2025), https://www.justice.gov/ag/media/1388511/dl?inline.

[12] See DOJ, General Policy Regarding Charging, Plea Negotiations, and Sentencing (Feb. 5, 2025), https://www.justice.gov/ag/media/1388541/dl?inline.

[13] Press Release, DOJ, Principal Associate Deputy Attorney General Marshall Miller Delivers Keynote Address at the Practicing Law Institute’s White Collar Crime 2024 Program (Dec. 6, 2024), https://www.justice.gov/opa/speech/principal-associate-deputy-attorney-general-marshall-miller-delivers-keynote-address.

[14] See infra notes 15-21; U.S. Atty’s Off. D.D.C., District of Columbia Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/usao-dc/media/1367686/dl?inline; U.S. Atty’s Off. W.D. Va., WDVA Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/usao-wdva/media/1372401/dl?inline; U.S. Atty’s Off. E.D.N.C., EDNC Whistleblower Pilot Program, https://www.justice.gov/usao-ednc/media/ednc_whistleblower_program.pdf/dl?inline.

[15] See, e.g., U.S. Atty’s Off. E.D.N.Y., EDNY Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/usao-edny/media/1368306/dl?inline.

[16] U.S. Atty’s Off. C.D. Cal., CDCA Whistleblower Pilot Program, https://www.justice.gov/usao-cdca/media/1365146/dl?inline; U.S. Atty’s Off. N.D. Ill., United States Attorney’s Office Northern District of Illinois Individual Self-Disclosure Program for Organizational Misconduct, https://www.justice.gov/usao-ndil/media/1368056/dl?inline (“N.D. Ill. Whistleblower Program”).

[17] See, e.g., U.S. Atty’s Off. E.D.N.Y, supra note 5; N.D. Ill. Whistleblower Program, supra note 6; U.S. Atty’s Off. S.D. Fla., The United States Attorney’s Office for the Southern District of Florida’s Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/usao-sdfl/media/1367206/dl?inline; U.S. Atty’s Off. E.D. Va., EDVA Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/usao-edva/media/1367986/dl?inline.

[18] U.S. Atty’s Off. S.D. Tex., SDTX Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/usao-sdtx/media/1368031/dl?inline.

[19] See, e.g., U.S. Atty’s Off. C.D. Cal., supra note 6.

[20] U.S. Atty’s Off. D.N.J., DNJ Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/usao-nj/media/1367691/dl?inline; N.D. Ill. Whistleblower Program, supra note 6.

[21] Compare U.S. Atty’s Off. C.D. Cal., supra note 6, and U.S. Atty’s Off. S.D.N.Y., SDNY Whistleblower Non-Prosecution Pilot Program, https://www.justice.gov/d9/2025-01/01.14.2025_wb_policy_for_sdny_website.pdf, with U.S. Atty’s Off. E.D.N.Y., supra note 5, and U.S. Atty’s Off. N.D. Cal., NDCA Whistleblower Pilot Program, https://www.justice.gov/usao-ndca/media/1343691/dl?inline.

[22] DOJ: Antitrust Division, Justice Department and Federal Trade Commission Withdraw Guidelines for Collaboration Among Competitors (Dec. 11, 2024), https://www.justice.gov/atr/media/1380001/dl?inline.

[23] Id.

[24] See generally DOJ: Antitrust Division, Federal Antitrust Crime: A Primer for Law Enforcement Personnel 1 (Oct. 2023), https://www.justice.gov/atr/page/file/1091651/dl.

[25] Non-Prosecution Agreement, AAR CORP. (Dec. 19, 2024), available at https://www.justice.gov/opa/media/1381656/dl.

[26] Statement of Facts, AAR CORP. (Dec. 19, 2024), available at https://www.justice.gov/opa/media/1381656/dl.

[27] Id. at A-5.

[28] Non-Prosecution Agreement, AAR CORP. (Dec. 19, 2024), available at https://www.justice.gov/opa/media/1381656/dl.

[29] Id. at 1–2.

[30] Id. at 1.

[31] Press Release, DOJ, AAR CORP to Pay Over $55M To Resolve Foreign Corrupt Practices Act Investigation (Dec. 19, 2024), https://www.justice.gov/opa/pr/aar-corp-pay-over-55m-resolve-foreign-corrupt-practices-act-investigation.

[32] Non-Prosecution Agreement, at 3.

[33] Plea Agreement, United States v. Advoque Safeguard, LLC, 24-cr-10329 (D. Mass. Oct. 24, 2024).

[34] Information, United States v. Advoque Safeguard, LLC, 24-cr-10329 (D. Mass. Oct. 29, 2024)

[35] Plea Agreement, United States v. Advoque Safeguard, LLC, 24-cr-10329 (D. Mass. Oct. 24, 2024).

[36] Plea Agreement, United States v. Akua Mosaics, Inc., No. 3:23-cr-00105-ADC (D.P.R. Mar. 19, 2024) (“Akua Mosaics Plea Agreement”); Press Release, DOJ, Akua Mosaics, Inc. and its President Plead Guilty to a Conspiracy to Smuggle Goods into the United States to Avoid Paying Over $1 Million in Duties and Tariffs (May 3, 2023), https://www.justice.gov/usao-pr/pr/akua-mosaics-inc-and-its-president-plead-guilty-conspiracy-smuggle-goods-united-states (“Akua Mosaics Press Release”).

[37] Akua Mosaics Plea Agreement at 1-2, 14.

[38] Id. at 2.

[39] Press Release, DOJ, HSI Investigation Leads to Indictment of Chinese National Circumventing Antidumping and Countervailing Duties in Puerto Rico (May 3, 2023), https://www.justice.gov/usao-pr/pr/hsi-investigation-leads-indictment-chinese-national-circumventing-antidumping-and; Judgment, United States v. Mo, 23-cr-171 (N.D. Cal. Sept. 1, 2023).

[40] Plea Agreement, United States v. Al’s Asphalt Paving Company, Inc., No. 2:23-cr-20699-GAD-DRG (E.D. Mich. Jan. 31, 2024).

[41] Information, United States v. Al’s Asphalt Paving Company, Inc., No. 2:23-cr-20699-GAD-DRG (E.D. Mich. Jan. 31, 2024).

[42] Press Release, DOJ, Vice President of Asphalt Paving Company Pleads Guilty to Bid Rigging (Oct. 2, 2024), https://www.justice.gov/opa/pr/vice-president-asphalt-paving-company-pleads-guilty-bid-rigging-0.

[43] Plea Agreement, United States v. Al’s Asphalt Paving Company, Inc., No. 2:23-cr-20699-GAD-DRG (E.D. Mich. Jan. 31, 2024).

[44] Judgment in a Criminal Case, United States v. Al’s Asphalt Company, Inc., No. 2:23-cr-20699-GAD-DRG (E.D. Mich. July 31, 2024).

[45] Plea Agreement, United States v. AM/NS Calvert, LLC, No. 24-cr-00117 (S.D. Ala. July 23, 2024) (“AM/NS Plea Agreement”).

[46] Id. at 12.

[47] Judgment, United States v. AM/NS Calvert, LLC, No. 24-cr-00117 (S.D. Ala. July 23, 2024).

[48] AM/NS Plea Agreement at 4–5.

[49] Plea Agreement, United States v. Amigos Mexican Cuisine & Cantina LLC, No. 3:24-cr-00155-IM (D. Or. Apr. 29, 2024).

[50] Id. at 2–4.

[51] Id. at 5–6.

[52] See Press Release, DOJ, Southern Oregon Restaurant Sentenced in Federal Court for Stealing Covid Relief Program Funds (Aug. 16, 2024), https://www.justice.gov/usao-or/pr/southern-oregon-restaurant-sentenced-federal-court-stealing-covid-relief-program-funds.

[53] See Case Summary, DOJ, United States v. AMVAC Chemical Corporation (May 24, 2024), https://www.justice.gov/enrd/case/united-states-v-amvac-chemical-corporation-et-al.

[54] Id.

[55] Id.

[56] Judgment, United States v. AMVAC Chemical Corp., No. 24-cr-00043 (S.D. Ala. Oct. 28, 2024); see also Plea Agreement, United States v. AMVAC Chemical Corporation, No. 24-CR-00043 (S.D. Ala. May, 24, 2024).

[57] Press Release, DOJ, Company Sentenced to Pay $6.5M Criminal Fine for Bid Rigging in Michigan Asphalt Industry (Aug. 15, 2024), https://www.justice.gov/opa/pr/company-sentenced-pay-65m-criminal-fine-bid-rigging-michigan-asphalt-industry.

[58] Press Release, DOJ, Vice President of Asphalt Paving Company Pleads Guilty to Bid Rigging (Oct. 2, 2024), https://www.justice.gov/opa/pr/vice-president-asphalt-paving-company-pleads-guilty-bid-rigging-0.

[59] Plea Agreement, United States v. Asphalt Specialists LLC, No. 2:23-cr-20700-GAD-DRG (E.D. Mich. Jan. 30, 2024).

[60] Id.

[61] Judgment in a Criminal Case, United States v. Asphalt Specialists LLC, No. 2:23-cr-20700-GAD-DRG (E.D. Mich. Jan. 30, 2024).

[62] Plea Agreement, United States v. Austal USA, LLC, No. 24-cr-00131 (S.D. Ala. Aug. 26, 2024).

[63] Press Release, DOJ, U.S. Navy Shipbuilder Pleads Guilty to Financial Accounting Fraud Scheme and Obstructing a Defense Department Audit (Aug. 27, 2024), https://www.justice.gov/opa/pr/us-navy-shipbuilder-pleads-guilty-financial-accounting-fraud-scheme-and-obstructing-defense.

[64] Id.

[65] Plea Agreement, United States v. Austal USA, LLC, No. 24-cr-00131 (S.D. Ala. Aug. 26, 2024) (“Austal USA Please Agreement”).

[66] Austal Plea Agreement at 21; see also SEC v. Austal Limited and Austal USA, LLC, No. 24-cv-307 (S.D. Ala. December 2, 2024).

[67] Austal USA Plea Agreement at 1.

[68] Press Release, Aventura Techs., Inc. Pleads Guilty to Wire Fraud and Illegal Importation for Reselling Chinese Goods as U.S.-Made (Mar. 19, 2024), https://www.justice.gov/usao-edny/pr/aventura-technologies-inc-pleads-guilty-wire-fraud-and-illegal-importation-reselling (“Aventura Press Release”); Complaint, United States v. Aventura Techs., Inc., No. 19-MJ-1035 (E.D.N.Y. Nov. 6, 2019) (“Aventura Compl.”) at 2–4 .

[69] Aventura Press Release; see also Transcript of Change of Plea Hearing at 20–26, United States v. Aventura Techs., Inc., No. 2:19-cr-00582-JMA-ARL, (E.D.N.Y. Mar. 19, 2024) (“Aventura Plea Tr.”).

[70] Aventura Press Release; Aventura Plea Tr. at 23–25.

[71] Aventura Press Release; Aventura Plea Tr. at 24, 26–28.

[72] Aventura Press Release; Aventura Plea Tr. at 23, 25.

[73] Aventura Plea Tr. at 7.

[74] Aventura Press Release; Aventura Plea Tr. at 8.

[75] Id.

[76] Plea Agreement, United States v. Avin International Ltd & Kriti Ruby Special Maritime Enter., No. 2:24-cr-00836 (D.N.J. Dec. 23, 2024).

[77] Id., Attach. 1, at 1-3.

[78] Id., Attach. 1, at 3-4.

[79] Judgment, United States v. Avin International Ltd & Kriti Ruby Special Maritime Enter., No. 2:24-cr-00836 (D.N.J. Dec. 26, 2024), at 5.

[80] Id. at 2.

[81] Deferred Prosecution Agreement, United States v. BIT Mining Ltd. (f/k/a 500.com Ltd.), No. 2:24-cr-00744-EP (D.N.J. Nov. 18, 2024) (“BIT Mining DPA”).

[82] Id. at 1.

[83] Id., Attach. A, at 4.

[84] Press Release, DOJ, Former CEO Indicted for Role in Bribing Japanese Officials and BIT Mining Ltd. Resolves Foreign Bribery Investigation (Nov. 18, 2024), https://www.justice.gov/opa/pr/former-ceo-500com-now-bit-mining-ltd-indicted-role-bribing-japanese-officials-and-bit-mining.

[85] BIT Mining DPA at 10.

[86] Id. at 11.

[87] Id. at 7-9, 13-14

[88] Press Release, SEC, SEC Charges BIT Mining with FCPA Violations in Connection with Bribery Scheme to Influence Members of Japanese Parliament (Nov. 18, 2024), https://www.sec.gov/newsroom/press-releases/2024-180.

[89] Plea Agreement, United States v. BNL Technical Services, LLC, No. 4:23-CR-6014-SAB (E.D. Wash. Oct. 22, 2024).

[90] Id. at 11-14.

[91] Id.

[92] Id. at 15-16.

[93] Id. at 14.

[94] Press Release, DOJ, Hanford Site Subcontractor Pleads Guilty to Stealing COVID-19 Relief Funding, Owner Agrees to Pay $1.1 Million in Restitution and Penalties (Oct. 22, 2024), https://www.justice.gov/usao-edwa/pr/hanford-site-subcontractor-pleads-guilty-stealing-covid-19-relief-funding-owner-agrees.

[95] Letter from DOJ re Boston Consulting Group, Inc. (August 27, 2024), https://www.justice.gov/criminal/media/1365431/dl?inline.

[96] Id. at 2.

[97] Id.

[98] Id.

[99] Plea Agreement, United States v. Boyd Farm, LLC, No. 3:24-cr-91-DJN (E.D. Va. June 27, 2024) (“Boyd Farm Plea Agreement”), ECF No. 12.

[100] Press Release, DOJ, Virginia Company and Owner Sentenced for Criminally Filling Wetlands (June 27, 2024), https://www.justice.gov/opa/pr/virginia-company-and-owner-sentenced-criminally-filling-wetlands.

[101] Boyd Farm Plea Agreement, at 3; see also Judgment, United States v. Boyd Farm, LLC, Case No. 3:24-cr-00091 (E.D. Va. July 1, 2024), ECF No. 15.

[102] Deferred Prosecution Agreement at 1, United States v. Brazos Urethane, Inc., No. 24-cr-17-jdp (W.D. Wis. Feb. 7, 2024), ECF No. 3.

[103] Id., Attach. A, at 1-2.

[104] Id., Attach. A, at 1-3.

[105] Id., Attach. A, at 4.

[106] Id. at 4.

[107] Id. at 9-11.

[108] Id. at 9.

[109] First Addendum to Deferred Prosecution Agreement at 1, United States v. Brazos Urethane, Inc., No. 24-cr-17-jdp (W.D. Wis. May 6, 2024), ECF No. 9-1.

[110] Order, United States v. Brazos Urethane, Inc., No. 24-cr-17-jdp (W.D. Wis. May 20, 2024), ECF No. 10.

[111] Plea Agreement at 2-3, 20, United States v. Cambridge Int’l Sys., Inc., No. 3:24-cr-00759-TWR (S.D. Cal. Apr. 16, 2024) (“Cambridge Plea Agreement”).

[112] Id. at 20-27; Press Release, DOJ, Virginia-Based Defense Contractor Pleads Guilty to Bribery Conspiracy Involving Government Contracts Worth More Than $100 Million (Apr. 16, 2024), https://www.justice.gov/usao-sdca/pr/virginia-based-defense-contractor-pleads-guilty-bribery-conspiracy-involving.

[113] Cambridge Plea Agreement at 8.

[114] Id. at 9.

[115] Judgment at 2, 5, United States v. Cambridge Int’l Sys., Inc., No. 3:24-cr-00759-TWR (S.D. Cal. Sept. 24, 2024).

[116] Id. at 4.

[117] Non-Prosecution Agreement, CBM SAS, CBM NA, and CBM US, at 1 (July 8, 2024) (“CBM NPA”); Press Release, U.S. Attorney Announces Non-Prosecution Agreement With International Bus Parts Supplier CBM (July 22, 2024), https://www.justice.gov/usao-sdny/pr/us-attorney-announces-non-prosecution-agreement-international-bus-parts-supplier-cbm (“CBM Press Release”).

[118] CBM NPA, Attach. A., at 1-4.

[119] CBM NPA at 3.

[120] Id. at 2-3.

[121] Id. at 3.

[122] Id.

[123] Id. at 3-4.

[124] Non-Prosecution Agreement, Cerebral, Inc., at 1-2 (Nov. 1, 2024) (“Cerebral NPA”).

[125] Id. at 2.

[126] Cerebral NPA, Attach. A, at 3-12.

[127] Id. at 13-15.

[128] Cerebral NPA at 1-2 & 2 n.1.

[129] Id. at 3.

[130] Id. at 2-3.

[131] Plea Agreement at 1, United States v. Covetrus N. Am., No. 1:24-mj-00009-PMS (W.D. Va. Feb. 9, 2024) (“Covetrus Plea Agreement”), ECF No. 6; see also Judgment at 2-5, United States v. Covetrus N. Am., No. 1:24-mj-00009-PMS (W.D. Va. May 8, 2024), ECF No. 27 (“Covetrus Judgment”).

[132] Covetrus Plea Agreement at 2-3.

[133] Covetrus Judgment at 2-4.

[134] Covetrus Plea Agreement, Attach. B, at 1-4.

[135] Deferred Prosecution Agreement as to Cruise, LLC, United States v. Cruise, LLC, No. 3:24-cr-00572-SI (N.D. Cal. Nov. 15, 2024) (“Cruise Deferred Prosecution Agreement”).

[136] Cruise Deferred Prosecution Agreement at 15-23.

[137] Cruise Deferred Prosecution Agreement at 4-7.

[138] Press Release, FDA, Texas Company Pleads Guilty to Distributing Misbranded Dietary Supplements and Agrees to $4.5 Million Forfeiture (Jan. 12, 2024) https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/press-releases/texas-company-pleads-guilty-distributing-misbranded-dietary-supplements-and-agrees-45-million.

[139] Id.

[140] Id.

[141] Plea Agreement at 5-7, United States v. Defyned Brands a/k/a 5 Star Nutrition, LLC, No. 1:23-cr-00213-DH (W.D. Tex. Dec. 15, 2023), ECF No. 3.

[142] Plea Agreement, United States v. Dlubak Glass Co., No. 3-24cr-533 (N.D. Tex. Dec. 2, 2024), ECF No. 3.

[143] Id. at 5; Information, United States v. Dlubak Glass Co., No. 3-24cr-533 (N.D. Tex. Dec. 2, 2024), ECF No. 1.

[144] Information, United States v. Dlubak Glass Co., No. 3-24cr-533 (N.D. Tex. Dec. 2, 2024), ECF No. 1.

[145] Plea Agreement, United States v. Dlubak Glass Co., at 2–3.

[146] Plea Agreement, United States v. Domermuth Env’t Servs., LLC, No. 3:24-cr-75 (E.D. Tenn. July 16, 2024), ECF No. 2.

[147] Id. at 2.

[148] Id. at 2–3.

[149] Id. at 5.

[150] Judgment, United States v. Domermuth Env’t Servs., LLC, No. 3:24-cr-75 (E.D. Tenn. Dec. 12, 2024), ECF No. 21.

[151] Josh Sweigart, Second company facing federal charges following DDN investigation of rental assistance program, Dayton Daily News (Aug. 15, 2024), https://www.daytondailynews.com/local/second-company-facing-federal-charges-following-ddn-investigation-of-rental-assistance-program/KQ6IBEZHAFHMTII66DKBY6K5WQ/; see also Plea Agreement, United States v. Eagle Renovations LLC, No. 3:23-CR032 (S.D. Ohio April 18, 2024), ECF No. 3 (under seal at time of publication).

[152] Id.

[153] Id.

[154] Id.

[155] Judgment, United States v. Eagle Renovations LLC, No. 3:23-cr-00032 (S.D. Ohio Aug. 26, 2024), ECF No. 12.

[156] Press Release, DOJ, eBay Inc. to Pay $3 Million in Connection with Corporate Cyberstalking Campaign Targeting Massachusetts Couple (Jan. 10. 2024), https://www.justice.gov/usao-ma/pr/ebay-inc-pay-3-million-connection-corporate-cyberstalking-campaign-targeting; Deferred Prosecution Agreement, eBay Inc. (“eBay DPA”).

[157] eBay DPA.

[158] See Press Release, DOJ, Opioid Manufacturer Endo Health Solutions Inc. Agrees to Global Resolution of Criminal and Civil Investigations into Sales and Marketing of Branded Opioid Drug (Feb. 29, 2024), https://www.justice.gov/opa/pr/opioid-manufacturer-endo-health-solutions-inc-agrees-global-resolution-criminal-and-civil.

[159] Plea Agreement, United States v. Endo Health Solutions Inc., No. 2:24-cr-20159-LVP-APP (E.D. Mich. Feb. 28, 2024).

[160] Plea Agreement, United States v. Envigo RMS, LLC and Envigo Global Services, Inc., No. 6:24-CR-00016 (W.D. Va. June 3, 2024).

[161] Criminal Information at 1, 26, 40, United States v. Envigo RMS, LLC and Envigo Global Services, Inc., No. 6:24-CR-00016 (W.D. Ky. June 3, 2024).

[162] Plea Agreement at 9-10, United States v. Envigo RMS, LLC and Envigo Global Services, Inc., No. 6:24-CR-00016 (W.D. Va. June 3, 2024).

[163] Press Release, DOJ, Animal Breeder Sentenced in Animal Welfare and Water Pollution Crimes, Will Pay More than $35M, Including Record Fine in Animal Welfare Case (Oct. 24, 2024), https://www.justice.gov/usao-wdva/pr/animal-breeder-sentenced-animal-welfare-and-water-pollution-crimes-will-pay-more-35m.

[164] See Plea Agreement, United States v. Thurman and Environmental Resources Inc., DBA Easy Rooter Plumbing, 3:24-cr-00014-HDM-CLB (D. Nev. Aug. 15, 2024) (“Environmental Resources Plea Agreement”).

[165] Id. at 8.

[166] Judgment, United States v. Thurman and Environmental Resources Inc., DBA Easy Rooter Plumbing, 3:24-cr-00014-HDM-CLB-2 (D. Nev. Dec. 13, 2024), ECF No. 54.

[167] See Press Release, DOJ, Nevada Man Sentenced for Dumping Waste into Cities’ Wastewater System and Lying to Investigators (Dec. 10, 2024), https://www.justice.gov/opa/pr/nevada-man-sentenced-dumping-waste-cities-wastewater-system-and-lying-investigators.

[168] See Plea Agreement, United States v. Evans Concrete, LLC, No. 20-CR-00081 (S.D. Ga Sept. 6, 2024).

[169] Id. at 2-3.

[170] Id.

[171] See Gibson Dunn, 2021 Mid-Year Update on Corporate Non-Prosecution Agreements and Deferred Prosecution Agreements (July 22, 2021), https://www.gibsondunn.com/2021-mid-year-update-on-corporate-non-prosecution-agreements-and-deferred-prosecution-agreements/.

[172] Judgment, United States v. Evans Concrete, LLC, No. 20-CR-00081 (S.D. Ga Sept. 6, 2024).

[173] NPA, Evoqua Water Technologies Corporation (May 13, 2024) (“Evoqua NPA”); Press Release, DOJ, Evoqua Water Technologies Corp. Agrees to Pay $8.5 Million Criminal Penalty for Fraudulent Revenue Recognition (May 14, 2024), https://www.justice.gov/usao-ri/pr/evoqua-water-technologies-corp-agrees-pay-85-million-criminal-penalty-fraudulent-revenue.

[174] Evoqua NPA, Attachment A at 2.

[175] Id. at 1-2.

[176] Evoqua NPA, at 2-3.

[177] Id.

[178] Press Release, SEC, Securities and Exchange Commission v. Evoqua Water Technologies Corp. and Imran Parekh Case No. 1:23-cv-00105-MSM-PAS (D.R.I.), https://www.sec.gov/enforcement-litigation/distributions-harmed-investors/evoqua-water-technologies-corp.

[179] Plea Agreement at 1, United States v. Family Dollar Stores, LLC, No. 2:24-CR-00001-LPR (E.D. Ark. Feb. 26, 2024) (“Family Dollar Plea Agreement”).

[180] Family Dollar Plea Agreement at 2.

[181] Id. at 9–10.

[182] Id. at 5–6.

[183] Id.

[184] Press Release, DOJ, United States v. Fidelity Development Group LLC (Sept. 16, 2024), https://www.justice.gov/enrd/case/united-states-v-fidelity-development-group-llc.

[185] Id.

[186] Id.

[187] Press Release, DOJ, United States v. Fidelity Development Group LLC (Jan. 16, 2025), https://www.justice.gov/enrd/case/united-states-v-fidelity-development-group-llc-0.

[188] Cornelius Frolik, Fidelity building redeveloper in downtown Dayton guilty of asbestos violation, Dayton Daily News (Oct. 2, 2024), https://www.daytondailynews.com/local/fidelity-building-redeveloper-in-downtown-dayton-guilty-of-asbestos-violation/OWDJTVUDONB3BABMSI4NARDTGE/.

[189] Press Release, DOJ, United States v. Fidelity Development Group LLC (January 16, 2025), https://www.justice.gov/enrd/case/united-states-v-fidelity-development-group-llc-0.

[190] Plea Agreement at 1, United States v. Frame Inc., No. 3:24-cr-00018-GMG-RWT (N.D.W.Va. May 6, 2024), ECF No. 12 (“Frame Plea Agreement”).

[191] Press Release, DOJ, West Virginia Business Defrauds, Pays the United States Postal Service (Sept. 11, 2024), https://www.justice.gov/usao-ndwv/pr/west-virginia-business-defrauds-pays-united-states-postal-service; see also Criminal Information at 3, United States v. Frame Inc., No. 3:24-cr-00018-GMG-RWT (N.D.W.Va. Mar. 6, 2024), ECF No. 1.

[192] Criminal Information, United States v. Frame Inc., No. 3:24-cr-00018-GMG-RWT (Mar. 6, 2024), at 3.

[193] Id. at 6–8.

[194] Frame Plea Agreement at 1.

[195] Press Release, DOJ, West Virginia Business Defrauds, Pays the United States Postal Service (Sept. 11, 2024), https://www.justice.gov/usao-ndwv/pr/west-virginia-business-defrauds-pays-united-states-postal-service.

[196] See Judgment, United States v. Frame Inc., No. 3:24-cr-00018-GMG-RWT (Sept. 16, 2024).

[197] Plea Agreement at 1, United States v. Gremex Shipping S.A. de C.V., 3:24-cr-00101-TKW (N.D. Fla Oct. 30, 2024) (“Gremex Plea Agreement”).

[198] Gremex Plea Agreement at 2; Press Release, DOJ, Ship Management Company Fined $1.75M for Failing to Maintain an Accurate Oil Record Book that Concealed Unauthorized Discharges at Sea (Oct. 30, 2024), https://www.justice.gov/opa/pr/ship-management-company-fined-175m-failing-maintain-accurate-oil-record-book-concealed (“Gremex Press Release”).

[199] Gremex Press Release.

[200] Id.

[201] Gremex Plea Agreement at 5–7.

[202] Id. at 11.

[203] Plea Agreement, United States v. Gunvor S.A., No. 1:24-cr-00085-ENV (E.D.N.Y. Mar. 1, 2024) (“Gunvor Plea Agreement”).

[204] Id. at A-5.

[205] Id. at A-6.

[206] Press Release, Commodities Trading Company Will Pay Over $661M to Resolve Foreign Bribery Case (Mar. 1, 2024), https://www.justice.gov/opa/pr/commodities-trading-company-will-pay-over-661m-resolve-foreign-bribery-case.

[207] Id.

[208] Id.

[209] Ana de Liz, Ecuador reaches bribery settlement with Gunvor following US, Swiss penalties, Glob. Investigations Rev. (Jun. 12, 2024), https://globalinvestigationsreview.com/just-anti-corruption/article/ecuador-reaches-bribery-settlement-gunvor-following-us-swiss-penalties.

[210] Id.

[211] Gunvor Plea Agreement at 7.

[212] Id. at 6.

[213] Plea Agreement, United States v. Hexamed Business Solutions, LLC, No. 3:24-CR-049-S (N.D. Tex. Apr. 3, 2024) (“Hexamed Plea”), ECF No. 123; Plea Agreement, United States v. Trinity Champion Healthcare Partners, LLC, No. 3:24-CR-049-S (N.D. Tex. Apr. 3, 2024) (“Trinity Champion Plea”), ECF No. 120.

[214] Press Release, DOJ, Fourteen Indicted in Pharmaceutical Kickback Case, (Feb. 22, 2024), https://www.justice.gov/usao-ndtx/pr/fourteen-indicted-pharmaceutical-kickback-case.

[215] Indictment, United States v. Mortazavi et al, No. 3:24-CR-00049 (N.D. Tex. Feb. 1, 2024); Factual Resumes, United States v. Mortazavi et al., No. 3:24-CR-00049 (N.D. Tex. April 3, 2024), ECF Nos. 122, 125.

[216] Id.

[217] Id.

[218] Id.

[219] Id.

[220] Id.

[221] Id.

[222] Hexamed Plea at 2; Trinity Champion Plea at 2.

[223] Hexamed Plea at 3; Trinity Champion Plea at 3.

[224] Orders Accepting Reports and Recommendations on Guilty Pleas, United States v. Mortazavi et al., No. 3:24-CR-00049 (N.D. Tex. Nov. 14, 2024), ECF Nos. 177, 178.

[225] Plea Agreement, United v. States JDM Supply LLC, 24-cr-10309 (D. Mass Oct. 2, 2024).

[226] Press Release, DOJ, California Company Charged with Conspiring to Sell Misbranded N95 Masks to Hospital in Early Months of COVID-19 Pandemic (Oct. 29, 2024), https://www.justice.gov/usao-ma/pr/california-company-charged-conspiring-sell-misbranded-n95-masks-hospital-early-months.

[227] Plea Agreement, United v. States JDM Supply LLC, 24-cr-10309 (D. Mass Oct. 2, 2024).

[228] Procedural Order, United v. States JDM Supply LLC, 24-cr-10309 (D. Mass. Oct. 29, 2024).

[229] Plea Agreement, United States v. KBC Capital LLC, No. 1:24-cr-10226-FDS (D. Mass Jul. 31, 2024) (“KBC Capital Plea Agreement”).

[230] KBC Capital Plea Agreement at 9-13; Press Release, DOJ, After-Market Firearm Accessory Manufacturer and Distributor Agrees to Plead Guilty to Illegal Distribution of Firearm Silencers (Aug. 1, 2024), https://www.justice.gov/usao-ma/pr/after-market-firearm-accessory-manufacturer-and-distributor-agrees-plead-guilty-illegal.

[231] KBC Capital Plea Agreement at 2-4.

[232] Plea Agreement, United States v. KVK Research, 24-CR-00069 (E.D. Pa. Mar. 6, 2024) (“KVK Plea”).

[233] KVK Plea at 7.

[234] KVK Plea at 2-5.

[235] KVK Plea at 7-10.

[236] Deferred Prosecution Agreement, United States v. KVK Tech Inc., 24-0069 (E.D. Pa. Feb. 26, 2024) (“KVK Tech DPA”).

[237] KVK Tech DPA at 1-3.

[238] KVK Tech DPA at 9-13.

[239] Press Release, DOJ, Generic Pharmaceuticals Manufacturer Pleads Guilty, Agrees to $1.5 Million Criminal Penalty for Distributing Adulterated Drugs and $2 Million to Resolve Civil Liability under the False Claims Act (Mar. 6, 2024), https://www.justice.gov/opa/pr/generic-pharmaceuticals-manufacturer-pleads-guilty-agrees-15-million-criminal-penalty.

[240] Id.

[241] Plea Agreement, United States v. Limited Properties, Inc., No. 6:24-cr-00032-TMC (D.S.C. July 23, 2024), ECF No. 118.

[242] Superseding Indictment, United States v. Randy Scott Cannon et al., No. 6:24-cr-00032 (D.S.C. Feb. 13, 2024).

[243] Plea Agreement, United States v. Limited Properties, Inc., No. 6:24-cr-00032-TMC (D.S.C. July 23, 2024).

[244] Plea Agreement, United States v. Stinson et al., No. 1:21-cr-00044 (W.D. Ky. Jan. 18, 2024), ECF No. 42.

[245] Id. at 2.

[246] Judgment, United States v. Stinson et al., No. 1:21-cr-00044 (W.D. Ky. Aug. 19, 2024), ECF No. 54.

[247] Plea Agreement, United States v. Magellan Diagnostics, Inc., No. 1:24-cr-10144-PBS (D. Mass. May 21, 2024) (“Magellan Plea Agreement”); Deferred Prosecution Agreement, United States v. Magellan Diagnostics, Inc., No. 1:24-cr-10144-PBS (D. Mass. May 21, 2024) (“Magellan DPA”); see also Press Release, Magellan Diagnostics Pleads Guilty to Criminal FDCA Charges (Jun. 27, 2024), https://www.justice.gov/usao-ma/pr/magellan-diagnostics-pleads-guilty-criminal-fdca-charges.

[248] Press Release, DOJ, Magellan Diagnostics Pleads Guilty to Criminal FDCA Charges (Jun. 27, 2024), https://www.justice.gov/usao-ma/pr/magellan-diagnostics-pleads-guilty-criminal-fdca-charges (“Magellan Press Release”).

[249] Magellan Plea Agreement at 10.

[250] Magellan Press Release.

[251] Magellan Plea at 11-12.

[252] Magellan DPA at 1.

[253] Magellan Press Release; Magellan Plea Agreement at 2-3.; Magellan DPA at 4.

[254] Magellan DPA at 9.

[255] Plea Agreement, United States v. MAM Construction, No. 23-cr-423 (D.P.R. Oct. 16, 2024)

[256] Plea Agreement, United States v. Martinez Builders Supply, LLC, No. 24-cr-14035 (S.D. Fla Oct. 28, 2024).

[257] Press Release, DOJ, Florida Company and Former Employee Plead Guilty to Conspiring to Harbor Aliens by Means of Employment (Oct. 28, 2024), https://www.justice.gov/usao-sdfl/pr/florida-company-and-former-employee-plead-guilty-conspiring-harbor-aliens-means.

[258] Judgment, United States v. Martinez Builders Supply, LLC, No. 24-cr-14035 (S.D. Fla Jan. 24, 2025).

[259] See Plea Agreement, United States v. Mary Mahoney’s Old French House, Inc., No. 1:24-cr-00045 (S.D. Miss. May 30, 2024), ECF No. 12.

[260] Id. at 5.

[261] Press Release, DOJ, Mary Mahoney’s Old French House and Manager Sentenced for Conspiracy and Misbranding of Seafood, (Nov. 18, 2024), https://www.justice.gov/usao-sdms/pr/mary-mahoneys-old-french-house-and-manager-sentenced-conspiracy-and-misbranding.

[262] See Amended Judgment, United States v. Mary Mahoney’s Old French House, Inc., No. 1:24-cr-00045 (S.D. Miss. Nov. 21, 2024), ECF No. 25.

[263] See Press Release, DOJ, Mary Mahoney’s Old French House and Manager Sentenced for Conspiracy and Misbranding of Seafood (Nov. 18, 2024), https://www.justice.gov/usao-sdms/pr/mary-mahoneys-old-french-house-and-manager-sentenced-conspiracy-and-misbranding.

[264] Deferred Prosecution Agreement, United States v. McKinsey and Company Africa (Pty) LTD, No. 1:24-cr-00669-CM (S.D.N.Y. Dec. 5, 2024), https://www.justice.gov/media/1379421/dl.

[265] See Press Release, DOJ, McKinsey & Company Africa to Pay Over $122M in Connection with Bribery of South African Government Officials (Dec. 5, 2024), https://www.justice.gov/opa/pr/mckinsey-company-africa-pay-over-122m-connection-bribery-south-african-government-officials.

[266] Id.

[267] Press Release, DOJ, Justice Department Announces Resolution of Criminal and Civil Investigations into McKinsey & Company’s Work with Purdue Pharma L.P.; Former McKinsey Senior Partner Charged with Obstruction of Justice (Dec. 13, 2024), https://www.justice.gov/usao-ma/pr/justice-department-announces-resolution-criminal-and-civil-investigations-mckinsey (“McKinsey MA Press Release”); Deferred Prosecution Agreement, United States v. McKinsey & Company, Inc. United States, No. 1:24-CR-00046 (W.D. Va Dec. 13, 2024), ECF No. 2 (“McKinsey DPA”).

[268] Agreed Order Compelling Compliance, In re: McKinsey & Company, Inc., No. 1:24-MC-00013-RSB (W.D. Va. Dec. 13, 2024), ECF No. 2.

[269] See McKinsey MA Press Release; McKinsey DPA.

[270] See id.

[271] See 21 U.S.C. § 333(a)(1).

[272] McKinsey DPA, Attachment 3 at 59-64.

[273] Plea Agreement, United States v. Martin Elling, 1:24-cr-00045-RSB-PMS (W. D. Va Dec. 13, 2024).

[274] McKinsey DPA, Attachment 6.

[275] McKinsey DPA, Attachments 9A-9D; see United States v. McKinsey & Company, Inc. United States, No. 1:24-CV-00063 (W.D. Va.).

[276] McKinsey DPA, at 2.

[277] Id. at 13.

[278] McKinsey DPA, Attachment 2A.

[279] Settlement Agreement, available at https://www.justice.gov/opa/pr/justice-department-announces-resolution-criminal-and-civil-investigations-mckinsey-companys.

[280] NPA, MGM Grand Hotel, LLC (C.D. Cal. Jan. 9, 2024) (“MGM NPA”); NPA, The Cosmopolitan of Las Vegas (C.D. Cal. Jan. 11, 2024) (“Cosmopolitan NPA”).

[281] Id.

[282] Press Release, DOJ, U.S. Atty’s Office for the C.D. Cal., Former President of MGM Grand Pleads Guilty to Violating the Bank Secrecy Act for Allowing Man Involved in Criminal Conduct to Gamble (Jan. 25, 2024), https://www.justice.gov/usao-cdca/pr/former-president-mgm-grand-pleads-guilty-violating-bank-secrecy-act-allowing-man

[284] Id.

[285] See MGM NPA; see also Cosmopolitan NPA.

[286] Id.

[287] Plea Agreement, United States v. Mold Wranglers, Inc., No. 6:24-cr-00025-MTD (D. Mont. Oct. 24, 2024) (“Mold Wranglers Plea Agreement”).

[288] Press Release, DOJ, Kalispell company admits filing false claims for payment to federal agency claiming an abatement of lead paint in veterans housing at Fort Harrison (Nov. 5, 2024), https://www.justice.gov/usao-mt/pr/kalispell-company-admits-filing-false-claims-payment-federal-agency-claiming-abatement.

[289] Id.

[290] NPA, United States v. Morgan Stanley & Co. LLC (Jan. 12, 2024) (“Morgan Stanley NPA”); Press Release, DOJ, Morgan Stanley & Co. LLC To Enter into a Non-Prosecution Agreement and to Pay $153 Million in Financial Penalties (Jan. 12, 2024), https://www.justice.gov/usao-sdny/pr/us-attorney-announces-agreements-morgan-stanley-and-former-senior-employee-pawan-passi.

[291] Morgan Stanley NPA.

[292] Morgan Stanley NPA.

[293] Press Release, DOJ, Morgan Stanley & Co. LLC To Enter into a Non-Prosecution Agreement and to Pay $153 Million in Financial Penalties (Jan. 12, 2024), https://www.justice.gov/usao-sdny/pr/us-attorney-announces-agreements-morgan-stanley-and-former-senior-employee-pawan-passi.

[294] Morgan Stanley NPA at 2.

[295] Morgan Stanley NPA at 3.

[296] Press Release, DOJ, U.S. Attorney Announces Agreements With Morgan Stanley And Former Senior Employee, Pawan Passi, In Connection With Deceptive Practices In Block Trades Business (Jan. 12, 2024), https://www.justice.gov/usao-sdny/pr/us-attorney-announces-agreements-morgan-stanley-and-former-senior-employee-pawan-passi.

[297] Order Instituting Administrative and Cease-and-Desist Proceedings, In the matter of Morgan Stanley & Co. LLC, Exchange Release No. 99336 (Jan. 12, 2024).

[298] Id.

[299] Plea Agreement, United States v. N. Ali Enterprises, Inc., No. 2:18-cr-257-DJC (E.D. Cal. Jan. 11, 2024) (“N. Ali Enterprises Plea Agreement”); Plea Agreement, United States v. 21st Century Distribution, Inc., No. 2:18-cr-257-DJC (E.D. Cal. Jan. 11, 2024) (“21st Century Distribution Plea Agreement”).

[300] Press Release, U.S. Atty.’s Office for the E.D. of Ca., Corporate President and Two Corporations Plead Guilty to 20 Counts of Mail and Wire Fraud in Multimillion Dollar California Excise Tax Scheme (Jan. 12, 2024), https://www.justice.gov/usao-edca/pr/corporate-president-and-two-corporations-plead-guilty-20-counts-mail-and-wire-fraud.

[301] See N. Ali Enterprises Plea Agreement; 21st Century Distribution Plea Agreement.

[302] Press Release, U.S. Atty’s Office for the E.D. of Ca., Corporate President Sentenced to Prison for Multimillion Dollar California Excise Tax Scheme (Aug. 1, 2024), https://www.justice.gov/usao-edca/pr/corporate-president-sentenced-prison-multimillion-dollar-california-excise-tax-scheme.

[303] See N. Ali Enterprises Plea Agreement; 21st Century Distribution Plea Agreement.

[304] Press Release, DOJ, Long Island Construction Company Pleads Guilty to Worker Safety Violation Causing Death of an Employee (Jan. 5, 2024), https://www.justice.gov/opa/pr/long-island-construction-company-pleads-guilty-worker-safety-violation-causing-death.

[305] Id.

[306] Id.

[307] Id.

[308] Plea Agreement, United States v. Peticub Pharmacy Corp., No. 2:23-cr-00375-DMG-2 (C.D. Cal. Mar. 11, 2024), ECF No. 47 (“Peticub Plea Agreement”).

[309] See Peticub Plea Agreement; Sentencing Memorandum, United States v. Shaoulian, et al., No. 2:23-cr-00375-DMG-2 (C.D. Cal. Jul.17, 2024).

[310] Peticub Plea Agreement at 3.

[311] Judgment and Commitment Order, United States v. Peticub Pharmacy Corp., No. 2:23-cr-00375-DMG-2 (C.D. Cal. Aug. 7, 2024).

[312] Plea Agreement, United States v. Prive Overseas Marine, LLC and Prive Shipping Denizcilik Ticaret, A.S., No. 2:24-CR-00074 (E.D. La., May 21, 2024).

[313] Criminal Information at 5, United States v. Prive Overseas Marine, LLC and Prive Shipping Denizcilik Ticaret, A.S., No. 2:24-CR-00074 (E.D. La., Apr. 1, 2024).

[314] Id. at 7, 8.

[315] Judgment, United States v. Prive Overseas Marine, LLC and Prive Shipping Denizcilik Ticaret, A.S., No. 2:24-CR-00074 (E.D. La., Oct. 1, 2024).

[316] Id.

[317] Letter from DOJ regarding Proterial Cable America, Inc. (f/k/a Hitachi Cable America Inc.) (Apr. 12, 2024), https://www.justice.gov/criminal/media/1348111/dl?inline.

[318] Id.

[319] Id.

[320] Plea Agreement, United States v. Q Link Wireless, LLC, No. 24-cr-20363 (S.D. Fla. Oct. 15, 2024) (“Q Link Plea Agreement”).

[321] Information, United States v. Q Link Wireless, LLC, No. 24-cr-20363 (S.D. Fla. Aug. 22, 2024).

[322] Id.

[323] Q Link Plea Agreement at 3.

[324] Q Link Plea Agreement at 5

[325] Plea Agreement, United States v. Quality Poultry and Seafood, Inc., No. 1:24-cr-00089 (S.D. Miss. Aug. 27, 2024), ECF No. 15.

[326] Press Release, DOJ, United States v. Quality Poultry and Seafood, et al. (Sept. 3, 2024), https://www.justice.gov/enrd/case/united-states-v-quality-poultry-and-seafood-et-al. (“QPS Press Release”).

[327] QPS Press Release.

[328] Judgment, United States v. Quality Poultry and Seafood, Inc., No. 1:24-cr-00089 (S.D. Miss. Dec. 17, 2024), ECF No. 21.

[329] Id.

[330] DPA, United States v. Raytheon Company, No. 1:24-cr-10319-NMG (D. Mass. Oct. 16, 2024) (“Raytheon D. Mass. DPA”); DPA, United States v. Raytheon Company, No. 1:24-cr-00399-RER (E.D.N.Y. Oct. 16, 2024) (“Raytheon E.D.N.Y. DPA”); Order Instituting Cease-and-Desist Proceedings, In the matter of RTX Corp., Exchange Act Release No. 101353 (Oct. 16, 2024).

[331] Order Instituting Cease-and-Desist Proceedings, In the matter of RTX Corp., Exchange Act Release No. 101353 (Oct. 16, 2024).

[332] Settlement Agreement (Oct. 16, 2024), available at https://www.justice.gov/opa/pr/raytheon-company-pay-over-950m-connection-defective-pricing-foreign-bribery-and-export.

[333] Raytheon D. Mass DPA; Raytheon E.D.N.Y. DPA.

[334] See Plea Agreement, United States of America v. RKB Handyman Services, Inc., No. 24-cr-00109 (June 21, 2024).

[335] See Information, United States of America v. RKB Handyman Services, Inc., No. 24-cr-00109 (E.D. Pa. Mar. 20, 2024); Guilty Plea Memorandum, United States of America v. RKB Handyman Services, Inc., No. 24-cr-00109 (E.D. Pa. June 21, 2024).

[336] See id.

[337] See Judgment, United States of America v. RKB Handyman Services, Inc., No. 24-cr-00109 (E.D. Pa. June 21, 2024).

[338] Deferred Prosecution Agreement, United States of America vs. SAP SE, 1:23-cr-00202 (E.D. Va. Jan. 10, 2024), available at https://www.justice.gov/opa/media/1332661/dl?inline.

[339] Id. at 4-6.

[340] Id. at 7.

[341] Id. at 7-8.

[342] Order Instituting Cease-and-Desist Proceedings, In the matter of SAP SE, Exchange Act Release No. 99308 (Jan. 10, 2024).

[343] Plea Agreement, United States v. Satori Recovery Center LLC, 8:24-cr-00106-DMG (C.D. Cal. Sept. 5, 2024).

[344] Id.

[345] Id.

[346] ECF No. 9, Plea Agreement, United States v. Siemens Energy, Inc., No. 3:24-cr-141 (E.D. Va. Sept. 30, 2024) (“Siemens Plea Agreement”).

[347] Press Release, DOJ, Siemens Energy, Inc. pleads guilty to stealing confidential competitor information in $104M resolution after former corporate executive and others were sentenced (Sept. 30, 2024), https://www.justice.gov/usao-edva/pr/siemens-energy-inc-pleads-guilty-stealing-confidential-competitor-information-104m (“Siemens Press Release”).

[348] Siemens Press Release.

[349] Siemens Plea Agreement at 3, 5-6.

[350] Judgment as to Siemens, United States v. Siemens Energy Inc., No. 3:24-cr-00141-DJN (E.D. Va. Dec. 5, 2024), ECF No. 24.

[351] Siemens Press Release.

[352] Plea Agreement, United States v. Star Enterprises, 24-CR-00039 (D.P.R. February 14, 2024).

[353] Id.

[354] See id.

[355] Judgment, United States v. Star Enterprises Inc., 24-CR-00039 (D.P.R. July 2, 2024).

[356] Plea Agreement, United States v. Taaj Services US LLC, No. 3:24-cr-01322-BAS (C.D. Cal. May 20, 2024).

[357] Id.

[358] Id. at 3.

[359] Id.; see Press Release, U.S. Atty.’s Office for the S.D. of Cal., Money Transmitting Business Pleads Guilty to Failing to Report Transactions; Agrees to Forfeit $700,000 (Jun. 26, 2024), https://www.justice.gov/usao-sdca/pr/money-transmitting-business-pleads-guilty-failing-report-transactions-agrees-forfeit.

[360] Plea Agreement, United States v. TD Bank, N.A., No. 2:24-cr-00667-ES (D.N.J. Oct. 10, 2024) (“TDBNA Plea Agreement”); Plea Agreement, United States v. TD Bank US Holding Company, No. 2:24-cr-00668-ES (D.N.J. Oct. 10, 2024) (“TDBUSH Plea Agreement”).

[361] Press Release, DOJ, TD Bank Pleads Guilty to Bank Secrecy Act and Money Laundering Conspiracy Violations in $1.8B Resolution (Oct. 10, 2024), https://www.justice.gov/opa/pr/td-bank-pleads-guilty-bank-secrecy-act-and-money-laundering-conspiracy-violations-18b (“TD Bank Press Release”).

[362] TDBNA Plea Agreement at 2; TDBUSH Plea Agreement at 2.

[363] Id.

[364] Id.

[365] TD Bank Press Release.

[366] TDBUSH Plea Agreement at 21.

[367] Deferred Prosecution Agreement, United States v. TD Securities (USA) LLC, No. 2:24-cr-00623 (D.N.J. Sept. 30, 2024) (“TD Securities DPA”).

[368] See Press Release, DOJ, TD Securities to Pay $15.5M in Connection with Scheme to Defraud U.S. Treasuries Markets (Sept. 30, 2024), https://www.justice.gov/opa/pr/td-securities-pay-155m-connection-scheme-defraud-us-treasuries-markets (“TD Securities Press Release”); Order Instituting Cease-and-Desist Proceedings, In the matter of TD Securities (USA) LLC, Exchange Act Release No. 101221 (Sept. 30, 2024).

[369] TD Securities DPA at 34-35.

[370] TD Securities Press Release.

[371] TD Securities DPA at 6.

[372] TD Securities DPA at 4.

[373] TD Securities DPA at 5.

[374] See DPA, United States v. Telefónica Venezolana C.A., No. 1:24-cr-00633-DEH-1 (S.D.N.Y. Nov. 8, 2024), https://www.justice.gov/media/1376656/dl (“Telefónica Venezolana DPA”).

[375] Press Release, DOJ, Telefónica Venezolana to Pay Over $85M to Resolve Foreign Bribery Investigation (Nov. 8, 2024), https://www.justice.gov/opa/pr/telefonica-venezolana-pay-over-85m-resolve-foreign-bribery-investigation.

[376] Telefónica Venezolana DPA at 10.

[377] Id. at 7–8, 12–13.

[378] Plea Agreement, United States v. Tip the Scale, LLC, No. 3:24-cr-05103-BHS (W.D.Wa. June 13, 2024) (“TIP Plea Agreement”).

[379] Id.; Press Release, DOJ, Tacoma Company Pleads Guilty and Sentenced for False Declarations on Timber Imports (June 14, 2024), https://www.justice.gov/opa/pr/tacoma-company-pleads-guilty-and-sentenced-false-declarations-timber-imports

[380] TIP Plea Agreement

[381] Id., Attach. A.

[382] Judgment, United States v. Tip the Scale, LLC, No. 3:24-cr-05103-BHS (W.D.Wa. June 13, 2024).

[383] Press Release, DOJ, Texas Petrochemical Company Pleads Guilty to Clean Air Act Violation and Fined More than $30 Million in Criminal Fines and Civil Penalties Related to Explosions at Its Facility in Port Neches (May 21, 2024), https://www.justice.gov/opa/pr/texas-petrochemical-company-pleads-guilty-clean-air-act-violation-and-fined-more-30-million (“TPC Press Release”).

[384] Criminal Information at 1, 3–4, United States v. TPC Group LLC, No. 1:24-CR-00039 (E.D. Tex Apr. 30, 2024).

[385] TPC Press Release; Sentencing Memorandum, United States v. TPC Group LLC, No. 1:24-CR-00039 (E.D. Tex. Oct. 3, 2024).

[386] Oral Order, United States v. TPC Group LLC, No. 1:24-CR-00039 (E.D. Tex Jan. 10, 2025).

[387] Press Release, Tex. Att’y Gen., Attorney General Ken Paxton Secures Over $100 Million in Environmental Penalties From Company Responsible for 2019 Chemical Manufacturing Plant Explosion, Attorney General of Texas (Nov. 22, 2024), https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-secures-over-100-million-environmental-penalties-company-responsible.

[388] Id.; Kayla Guo, Texas Reaches $12.6 Million Settlement in Connection with 2019 Port Neches Chemical Plant Explosion, Tex. Trib. (Nov. 22, 2024), https://www.texastribune.org/2024/11/22/texas-port-neches-plant-explosion-settlement/.

[389] TPC Press Release.

[390] Plea Agreement at 1, 7, Attachment A at 1, United States v. Trafigura Beheer B.V., No. 1:23-cr-20476-KMW (S.D. Fla. Mar. 28, 2024).

[391] Id., Attachment A at 4.

[392] Id. at 19–20.

[393] Id. at 19.

[394] Id. at 6, 8, Attachment D.

[395] Plea Agreement at 2, 6, United States v. Tribar Technologies, LLC, No. 2:24-cr-20552 (E.D. Mich. Dec. 18, 2024).

[396] Id. at 1.

[397] Id. at 6, 8–9.

[398] Id. at 1–2, App’x A.

[399] Id. at 16.

[400] Plea Agreement at 1–2, 4, United States v. Valley Processing Inc., No. 1:22-cr-02097-SAB (E.D. Wa. Dec. 17, 2024).

[401] Id. at 12–19.

[402] Id. at 17.

[403] Press Release, DOJ, Fruit Juice Manufacturing Company and Its Former President Plead Guilty to Food Safety Crimes (Dec. 19, 2024), www.justice.gov/opa/pr/fruit-juice-manufacturing-company-and-its-former-president-plead-guilty-food-safety-crimes (“VPI Press Release”).

[404] Id.; Plea Agreement at 30–31.

[405] VPI Press Release.

[406] Plea Agreement at 1, United States v. Valley Property Partners LLC, No. 3:24-CR-00117-ARS (D.N.D. Aug. 30, 2024) (“VPP Plea Agreement”).

[407] Id. at 2; Press Release, DOJ, Moorhead, Minnesota, Real Estate Company Sentenced for Failing to Provide Lead-Based Paint Disclosure (Dec. 3, 2024), https://www.justice.gov/usao-nd/pr/moorhead-minnesota-real-estate-company-sentenced-failing-provide-lead-based-paint (“VPP Press Release”).

[408] VPP Plea Agreement at 2.

[409] Id. at 1, 7–8.

[410] VPP Press Release.

[411] Plea Agreement at 1, United States v. Vitamin Shack and Shakes, LLC, No. 4:23-CR-00195 (S.D. Tex. Dec. 6, 2024).

[412] Id.

[413] Id. at 6-7.

[414] Id. at 2, 9.

[415] Id. at 10.

[416] Id. at 9.

[417] Plea Agreement at 1–2, United States v. Vulto Creamery LLC, No. 3:24-CR-62 (N.D.N.Y Mar. 5, 2024).

[418] Id. at 6–9; Criminal Information, United States v. Vulto Creamery LLC, No. 3:24-CR-62 (N.D.N.Y Jan. 30, 2024).

[419] Id. at 5-9.

[420] Id. at 9.

[421] Id.

[422] Judgment, United States v. Vulto Creamery LLC, No. 3:24-CR-62 (N.D.N.Y Jul. 17, 2024).

[423] Plea Agreement, United States v. Western Sea, Inc., No. 22-CR-00012 (D. Me. Mar. 11, 2024).

[424] Indictment, United States v. Western Sea, Inc., No. 22-CR-00012 (D. Me. Mar. 11, 2024).

[425] Id.; Press Release, DOJ, Sentences Handed Down for Multi-Year Scheme to Subvert Commercial Fishing Regulations (July 11, 2024), https://www.justice.gov/usao-me/pr/sentences-handed-down-multi-year-scheme-subvert-commercial-fishing-regulations.

[426] Judgment, United States v. Western Sea, Inc., No. 22-CR-00012 (D. Me. Mar. 11, 2024).

[427] NPA, Wynn Las Vegas (S.D. Cal. Sept, 6, 2024) (“Wynn NPA”); see also Wynn Resorts, Ltd., Current Report (Form 8-K) (Sept. 6, 2024), https://wynnresortslimited.gcs-web.com/static-files/c71048b4-e1db-4f80-883f-fa1771e833a4.

[428] See Wynn NPA, Attachment A at iii.

[429] Wynn NPA at 1–2.

[430] Wynn NPA, Attachment B at i.

[431] See Press Release, DOJ, Wynn Las Vegas Forfeits $130 Million for Illegally Conspiring with Unlicensed Money Transmitting Businesses (Sept. 6, 2024), https://www.justice.gov/usao-sdca/pr/wynn-las-vegas-forfeits-130-million-illegally-conspiring-unlicensed-money-transmitting.

[432] Plea Agreement, United States v. Easter, No. 4:24-CR-00626-SEP (E.D. Mo. Dec. 4, 2024), ECF No. 10 (All Out Diesel, LLC), ECF No. 9 (Joseph Easter).

[433] Id. at 2.

[434] Id. at 3.

[435] Id. at 5–6.

[436] Scheduling Order, United States v. Easter, No. 4:24-CR-00626-SEP, ECF No. 6 (E.D. Mo. Dec. 4, 2024).

[437] Plea Agreement, United States v. Clancy Logistics, Inc., No. 3:24-cr-00344-AN-1 (D. Or. Sept. 18, 2024), ECF No. 14 (“Clancy Logistics Plea Agreement”).

[438] Id. at 3–4.

[439] Id. at 4.

[440] Clancy Logistics Plea Agreement, Attachment A, at 2.

[441] Clancy Logistics Plea Agreement at 4.

[442] Plea Agreement, United States v. Clancy Logistics, No. 3:24-cr-00344-AN-2 (D. Or. Sept. 18, 2024), ECF No. 16 (“Timothy Clancy Plea Agreement”).

[443] Clancy Logistics Plea Agreement, Attachment A, at 2.

[444] Scheduling Order, United States v. Clancy Logistics, Inc., No. 3:24-cr-00344-AN-1 (D. Or. Jan. 8, 2025), ECF No. 19.

[445] Plea Agreement, United States v. Diesel & Offroad Authority, LLC, 6:24-cr-00092-MC (D. Or. Apr. 10, 2024), ECF No. 16.

[446] Id. at 2–3.

[447] Id. at 3.

[448] Id.

[449] Judgment, United States v. Diesel & Offroad Authority, LLC, No. 6:24-cr-00092-MC (D. Or. Sept. 6, 2024), ECF No. 32.

[450] Plea Agreement, United States v. Elite Diesel Service, Inc., No. 24-cr-00118 (D. Colo. June 12, 2024), ECF No. 21.

[451] Id. at 5.

[452] Id. at 8–10.

[453] Judgment at 6, United States v. Elite Diesel Service, Inc., No. 24-cr-00118 (D. Colo. Dec. 16, 2024), ECF No. 54 (“Elite Diesel Judgment”).

[454] Elite Diesel Judgment at 6; Press Release, DOJ, Windsor, Colorado Business Owner and Company Sentenced for Conspiring to Delete Emissions Controls on Hundreds of Heavy Duty Diesel Trucks in Violation of the Clean Air Act (Dec. 9, 2024), https://www.justice.gov/usao-co/pr/windsor-colorado-business-owner-and-company-sentenced-conspiring-delete-emissions.

[455] Plea Agreement, Attachments B & C, United States v. Elite Diesel Service, Inc., No. 24-cr-00118 (D. Colo. June 12, 2024), ECF No. 21.

[456] Plea Agreement, United States v. Frock Brothers Trucking, Inc., No. 24-cr-00250-JKM, ECF No. 8 (D. Pa. Oct. 1, 2024) (“Frock Amended Plea Agreement”).

[457] Information at 6–7, United States v. Frock Brothers Trucking, Inc., No. 24-cr-00250-JKM (M.D. Pa. Sept. 19, 2024), ECF No. 1.

[458] Frock Amended Plea Agreement at 9.

[459] Id. at 5.

[460] Rescheduling Order, United States v. Frock Brothers Trucking, Inc., No. 24-CR-00250-JKM (M.D. Pa. Jan. 2, 2025), ECF No. 18.

[461] Plea Agreement as to Hardway Solutions LLC, United States v. Turlak, No. 2:24-cr-00057-TOR-06 (E.D. Wash. Oct. 24, 2024), ECF No. 78 (“Hardway Solutions Plea Agreement”).

[462] Plea Agreement as to Spokane Truck Service LLC, United States v. Turlak, No. 2:24-cr-00057-TOR-3 (E.D. Wash. Dec. 12, 2024), ECF No. 84 (“Spokane Truck Service Plea Agreement”); Plea Agreement as to Pauls Trans LLC, United States v. Turlak, No. 2:24-cr-00057-TOR-4 (E.D. Wash. Dec. 12, 2024), ECF No. 85 (“Pauls Trans Plea Agreement”); Plea Agreement as to PT Express LLC, United States v. Turlak, No. 2:24-cr-00057-TOR-2 (E.D. Wash. Dec. 12, 2024), ECF No. 86 (“PT Express Plea Agreement”); Plea Agreement, United States v. Turlak, No. 2:24-cr-00057-TOR-1, ECF No. 83 (E.D. Wash. Dec. 12, 2024) (“Ivanovich Plea Agreement”).

[463] E.g., Hardway Solutions Plea Agreement at 16; Spokane Truck Service Plea Agreement at 13; Pauls Trans Plea Agreement at 11; PT Express Plea Agreement at 14.

[464] See Spokane Truck Service Plea Agreement at 14–15; Pauls Trans Plea Agreement at 11–12; PT Express Plea Agreement at 14–15.

[465] Hardway Solutions Plea Agreement at 17; Spokane Truck Service Plea Agreement at 16–17; Pauls Trans Plea Agreement at 14; PT Express Plea Agreement at 17.

[466] Hardway Solutions Plea Agreement at 18, Attachment A at 2; Spokane Truck Service Plea Agreement at 20, Attachment A at 2; Pauls Trans Plea Agreement at 17–18, Attachment A at 2; PT Express Plea Agreement at 21, Attachment A at 2.

[467] Hardway Solutions Plea Agreement, Attachment A at 2; Spokane Truck Service Plea Agreement Attachment A at 2; Pauls Trans Plea Agreement, Attachment A at 2; PT Express Plea Agreement, Attachment A at 2.

[468] Spokane Truck Service Plea Agreement at 18; Pauls Trans Plea Agreement at 15; PT Express Plea Agreement at 19; Ivanovich Plea Agreement at 26.

[469] Judgment at 2, 4, United States v. Turlak, No. 2:24-cr-00057-TOR (E.D. Wash. Jan. 22, 2025), ECF No. 106.

[470] Order Accepting Guilty Plea and Setting Sentencing as to Spokane Truck Service LLC, United States v. Turlak, No. 2:24-cr-00057-TOR (E.D. Wash. Dec. 12, 2024), ECF No. 84; id. at ECF No. 85 (Order as to Pauls Trans LLC); id. at ECF No. 86 (Order as to PT Express LLC).

[471] Plea Agreement at 1, United States v. Highway & Heavy Parts, LLC, No. 1:24-cr-00124-MAD (N.D.N.Y. Aug. 16, 2024), ECF No. 29 (“HHP Plea Agreement”); see also Judgment, United States v. Highway & Heavy Parts, LLC, No. 1:24-cr-00124-MAD (N.D.N.Y. Dec. 3, 2024), ECF No. 38 (“HHP Judgment”).

[472] HHP Plea Agreement at 4–6.

[473] Id.

[474] Id. at 6.

[475] HHP Judgment at 2.

[476] Id.

[477] Plea Agreement, United States v. Offringa, No. 1:24-cr-124-MAD, ECF No. 31 at 1–3 (N.D.N.Y Sept. 17, 2024).

[478] See Judgment at 2–3, United States v. DAIM Logistics, Inc., No. 1:21-cr-00016-MAD (N.D.N.Y. Nov. 8, 2024), ECF No. 44; Plea Agreement at 2–3, United States v. DAIM Logistics, Inc., No. 1:21-cr-00016-MAD (N.D.N.Y. Aug. 19, 2021), ECF No. 7.

[479] Plea Agreement, United States vs. Moody Motor Co., Inc., No. 8:24-CR-00043-SMB, ECF No. 11 (D. Neb. April 1, 2024).

[480] Id. at 6.

[481] Id.

[482] Id.

[483] Judgment, United States vs. Moody Motor Co., Inc., No. 8:24-CR-00043-SMB, ECF No. 26 at 3, 5–6 (D. Neb. Jul. 31, 2024).

[484] Plea Agreement, United States v. Racing Performance Northwest LLC, No. 21-cr-5184-BHS (W.D. Wash. March 18, 2024) (“Racing Performance Plea Agreement”); Plea Agreement, United States v. RPM Motors and Sales LLC, No. 21-cr-5148-BHS (W.D. Wash. March 18, 2024) (“RPM Sales Plea Agreement”).

[485] Racing Performance Plea Agreement at 5-7; RPM Sales Plea Agreement at 5-7.

[486] Racing Performance Plea Agreement at 2; RPM Sales Plea Agreement at 2.

[487] See Racing Performance Plea Agreement & RPM Sales Plea Agreement.

[488] Second Superseding Indictment, United States v. Coiteux et al., No. 21-cr-5184-BHS (W.D. Wash. Jan. 24, 2024).

[489] Minute Entry for Sentencing, ECF No. 248, United States v. Coiteux et al., No. 21-cr-5184-BHS (W.D. Wash. Jan. 13, 2025).

[490] Plea Agreement, United States v. Rudy’s Performance Parts, Inc., No. 1:24-cr-00336-TNM (D.D.C. Sept. 10, 2024).

[491] Id. at 2.

[492] Id.

[493] Consent Decree, United States v. Rudy’s Performance Parts, Inc., No. 1:22-cv-00495-TDS-LPA (M.D.N.C. Nov. 1, 2024), ECF No. 84; see Press Release, DOJ, North Carolina Auto Parts Seller and Its Owner to Pay $10M for Making, Selling and Installing Emissions Defeat Devices on Motor Vehicles

(Sept. 10, 2024), https://www.justice.gov/opa/pr/north-carolina-auto-parts-seller-and-its-owner-pay-10m-making-selling-and-installing.

[494] Id.

[495] Serious Fraud Office, News Release, Güralp Sytems Ltd (Nov. 29, 2024) https://www.gov.uk/sfo-cases/guralp-sytems-ltd.

[496] Press Release, Serious Fraud Office, Three Individuals Acquitted as SFO Confirms DPA with Güralp Systems Ltd (Dec. 20, 2019), https://www.sfo.gov.uk/2019/12/20/three-individuals-acquittedas-sfo-confirms-dpa-with-guralp-systems-ltd/.

[497] Approved Judgment, In the Matter of s.45 of the Crime and Courts Act 2013 between Serious Fraud Office and Güralp Systems Limited (Oct. 22, 2019), ¶ 39-40.

[498] Cour d’appel [regional court of appeal] Orléans, SARL Gudno Ordonnance de Validation d’une Convention Judiciaire d’Intérêt Public, May 17, 2024, 20161/70, https://www.justice.gouv.fr/sites/default/files/2024-05/CJIP_GUDNO_OV_20240517.pdf.

[499] La Société Sotec Convention Judiciaire d’Intérêt Public, July 8, 2024, https://www.justice.gouv.fr/sites/default/files/2024-07/CJIP_SOTEC_20240708_.pdf (“Sotec CJIP”); Cour d’appel [regional court of appeal] Paris, La Société Sotec Ordonnance de Validation d’Une Convention Judiciaire D’Intérêt Public, July 10, 2024, 07176092030/82-2024, https://www.justice.gouv.fr/sites/default/files/2024-07/CJIP_SOTEC_OV_20240710.pdf.

[500] L’entreprise gabonaise Sotec paye en France une amende de 500 000 euros pour corruption, RFI (Nov. 7, 2024), https://www.rfi.fr/fr/afrique/20240711-l-entreprise-gabonaise-sotec-paye-en-france-une-amende-de-500-000-euros-pour-corruption.

[501] Sotec CJIP.

[502] Id.

[503] Tribunal Judiciaire de Paris, News Release (July 23, 2024), https://www.tribunal-de-paris.justice.fr/sites/default/files/2024-07/2024-07-22%20-%20CP%20CJIP%20SOTEC.pdf

[504] Sotec CJIP.

[505] Danske Bank A/S Convention judiciaire d’intérêt public (Aug. 27, 2024), https://www.justice.gouv.fr/sites/default/files/2024-09/CJIP_DANSKE_BANK_AS_20240827.pdf (“Danske Bank CJIP”)

[506] Press Release, DOJ, Danske Bank Pleads Guilty to Fraud on U.S. Banks in Multi-Billion Dollar Scheme to Access the U.S. Financial System (Dec. 13, 2022), https://www.justice.gov/opa/pr/danske-bank-pleads-guilty-fraud-us-banks-multi-billion-dollar-scheme-access-us-financial.

[507] Danske Bank CJIP.

[508] Cour d’appel [regional court of appeal] Paris, Ordonnance de validation d’une convention judiciare d’intérêt public, Sept. 18, 2024, 14050000347/106-2024, https://www.justice.gouv.fr/sites/default/files/2024-09/CJIP_DANSKE_BANK_AS_OV_20240918.pdf. See News Release, Ministère de la Justice (Sept. 18, 2024), https://files.lbr.cloud/public/2024-09/240918_CP%20CJIP%20Danske%20Bank%20-%20VD.pdf?VersionId=tmuUvOlaLT2wJfDqNT.KRRGvGyIkAIQk.

[509] Id.

[516] Cour d’appel [regional court of appeal] Paris, Ordonnance de validation d’une convention judiciaire d’intérêt public, Dec. 9. 2024, 14107000071/167-2024, https://www.justice.gouv.fr/sites/default/files/2024-12/CJIP_AREVA_%20ORANO_OV_20241209.pdf.

[517] Areva SA and Orano Mining SAS Convention judiciaire d’intérêt public (Dec. 2, 2024), https://www.justice.gouv.fr/sites/default/files/2024-12/CJIP_AREVA_%20ORANO_20241202.pdf

[518] Id.

[519] Press Release, Ministerio Público Fiscal [Argentina], Luego de dos jornadas consecutivas, finalizó el ‘Diálogo técnico regional sobre responsabilidad de las personas jurídicas por la comisión de hechos de corrupción’ (May 9, 2024), https://www.mpf.gob.ar/pia/luego-de-dos-jornadas-consecutivas-finalizo-el-dialogo-tecnico-regional-sobre-responsabilidad-de-las-personas-juridicas-por-la-comision-de-hechos-de-corrupcion/.

[520] Id.

[521] See Ana de Liz, Argentina inches closer to first corporate criminal resolution, Glob. Investigations Rev. (July 4, 2024), https://globalinvestigationsreview.com/article/argentina-inches-closer-first-corporate-criminal-resolution; Mariel Fitz Patrick, Securitas, Kueider, Bordet y las relaciones de poder e irregularidades, Análisis (Dec. 15, 2024), https://www.analisisdigital.com.ar/provinciales/2024/12/15/kueider-por-que-quedo-el-exsenador-implicado-en-el-caso-securitas.

[522] Id.

[523] Id.

[524] Id.

[525] Seatrium in $134 million settlement over Brazil’s Operation Car Wash, Seatrade Mar. News (Feb. 26, 2024), https://www.seatrade-maritime.com/shipyards/seatrium-134-million-settlement-over-brazils-operation-car-wash (“Seatrium Article”).

[526] See Ricardo Brito, Brazil’s Supreme Court confirms decision to annul Lula convictions, Reuters (April 15, 2021), https://www.reuters.com/world/americas/brazils-supreme-court-confirms-decision-annul-lula-convictions-2021-04-15/.

[527] Seatrium Article.

[528] Id.

[529] Press Release, Controladoria-Geral da União [Brazil], Empresa é multada em R$ 2 milhões por comercializar dados do Siscomex [Company fined R$ 2 million for selling Siscomex data] (May 24, 2024), https://www.gov.br/mdic/pt-br/assuntos/noticias/2024/maio/empresa-e-multada-em-r-2-milhoes-por-comercializar-dados-do-siscomex (“CGU Chemtrade Brasil Press Release”).

[530] Id.

[531] Press Release, Controladoria-Geral da União [Brazil], CGU aplica multa a mais uma empresa envolvida na Operação Spy [CGU fines yet another company involved in Operation Spy] (Dec. 22, 2023), https://www.gov.br/cgu/pt-br/assuntos/noticias/2023/12/cgu-aplica-multa-a-mais-uma-empresa-envolvida-na-operacao-spy.

[532] See CGU Chemtrade Brasil Press Release; CGU, Decisão no. 120, processo no. 00190.102408/2022-49, Ministro: Vinícius Marques de Carvalho, 9.8.2024, 69, D.O.U., 10.04.2024, 93, https://www.in.gov.br/web/dou/-/decisao-n-120-de-9-de-agosto-de-2024-553036174.

[533] CGU Chemtrade Brasil Press Release.

[534] Craig Buchan, CGU, AGU fine Freepoint $22.6 million over Petrobras bribery scheme, Glob. Investigations Rev. (Nov. 15, 2024), https://globalinvestigationsreview.com/news-and-features/investigators-guides/brazil/article/cgu-agu-fine-freepoint-over-petrobras-bribery-scheme.

[535] Id.

[536] Deferred Prosecution Agreement, United States v. Freepoint Commodities LLC, No. 3:23-cr-00224 (D. Conn. Dec. 14, 2023), at 6-8 (“Freepoint DPA”), https://www.justice.gov/opa/media/‌1329266‌‌/dl?inline.

[537] Id. at 6; see also Press Release, DOJ, Commodities Trading Company Agrees to Pay Over $98M to Resolve Foreign Bribery Case (Dec. 14, 2023), https://www.justice.gov/opa/pr/commodities-trading-company-agrees-pay-over-98m-resolve-foreign-bribery-case.

[538] Press Release, Controladoria-Geral do Estado de Minas Gerais [Controller-General of the State of Minas Gerais], CGE, AGE e MPMG assinam acordo de leniência com a empresa SAP Brasil Ltda. [CGE, AGE, and MPMG sign leniency agreement with company SAP Brasil Ltda.] (Dec. 5, 2024), https://cge.mg.gov.br/noticias-artigos/1381-cge-age-e-mpmg-assinam-acordo-de-leniencia-com-a-empresa-sap-brasil-ltda?_sm_au_=iVVLWNR2qPL4sMTsFcVTvKQkcK8MG; Press Release, Advocacia-Geral do Estado de Minas Gerais [Attorney General of the State of Minas Gerais], CGE, AGE e MPMG assinam acordo de leniência com a empresa SAP Brasil Ltda. [AGE, CGE, and MPMG sign leniency agreement with company SAP Brasil Ltda.] (Dec. 4, 2024), https://advocaciageral.mg.gov.br/cge-age-e-mpmg-assinam-acordo-de-leniencia-com-a-empresa-sap-brasil-ltda/; Press Release, Ministério Público do Estado de Minas Gerais [Public Prosecutor of the State of Minas Gerais], CGE, AGE e MPMG assinam acordo de leniência com a empresa SAP Brasil Ltda. [AGE, CGE, and MPMG sign leniency agreement with company SAP Brasil Ltda.] (Dec. 4, 2024), https://www.mpmg.mp.br/portal/menu/comunicacao/noticias/mpmg-cge-e-age-celebram-acordo-de-leniencia-com-a-sap-brasil-ltda.shtml.

[539] Associação dos Procuradores do Estado de Minas Gerais [Association of Minas Gerais State Prosecutors], Após 32 rodadas de negociações, a AGE e a CGE celebram Acordo de Leniência com a empresa SAP Brasil Ltda e mais de R$ 66 milhões recuperados [After 32 rounds of negotiation, AGE and CGE enter a Leniency Agreement with company SAP Brasil Ltda and recover more than R$66 million] (Dec. 6, 2024), https://apeminas.org.br/noticias/apos-32-rodadas-de-negociacoes-a-age-e-a-cge-celebram-acordo-de-leniencia-com-a-empresa-sap-brasil-ltda-e-mais-de-r-66-milhoes-recuperados/

[540] Ana de Liz, SAP fined $11m by Brazilian state agency, Glob. Investigations Rev. (Dec. 4, 2024), https://globalinvestigationsreview.com/article/sap-fined-11m-brazillian-state-agency

[541] Corporate ADRM, National Prosecuting Authority of South Africa (April 19, 2024), https://www.npa.gov.za/media/annexure-part-51-corporate-adrm (“Corporate ADRM”).

[542] Alice Johnson, South Africa expands anti-corruption tool kit, Glob. Investigations Rev. (July 25, 2024), https://globalinvestigationsreview.com/article/south-africa-expands-anti-corruption-tool-kit

[543] Corporate ADRM.

The following Gibson Dunn lawyers prepared this client alert: F. Joseph Warin, Stephanie Brooker, M. Kendall Day, Courtney Brown, Melissa Farrar, Bryan Parr, Justin Accomando, Cordelia Achen, Jackson Akselrad, Alex Buettner, Daniel Carvalho, Douglas Colby, Michael Dziuban, Gus Eyler Betsy Goodwin, Sarah Hafeez, Erika Suh Holmberg, Rachel Jackson, Teddy Kristek, Madelyn La France, Hayley Lawrence, Wynne Leahy, Allison Lewis, Jake McGee, Alex Ogren, Sarah Pongrace, David Reck, Kelly Skowera, Shannon Summer, Yixian Sun, Eric Thompson, Lorena Toussaint, Todd Truesdale, Alyse Ullery-Glod, Mike Ulmer, Blair Watler, Robert Blake Watson, and Matt Weiner.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of Gibson Dunn’s White Collar Defense and Investigations or Anti-Corruption and FCPA practice groups:

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Upon her swearing in, Attorney General Pamela Bondi issued a flurry of memoranda seeking to deploy Department of Justice enforcement resources in service of the Trump Administration’s priorities. AG Bondi issued 14 memoranda in total; we survey them below, focusing on those that should be of greatest interest to corporate clients and white collar practitioners.

On their face, the memoranda herald a seismic shift in enforcement priorities for the next four years. AG Bondi has directed Departmental resources toward immigration enforcement, prosecution of human trafficking and smuggling, and disruption of criminal gangs and drug cartels, and away from prior corporate enforcement priorities such as Foreign Corrupt Practices Act (“FCPA”) and Foreign Agents Registration Act (“FARA”) prosecutions against corporations and lobbyists, respectively. In addition, the directives announced the disbanding of three kleptocracy-related programs and the National Security Division’s (“NSD’s”) Corporate Enforcement Unit, along with the elevation of two gang-related Joint Task Forces to the Office of the Attorney General.

The memoranda also indicate a less eye-catching—but nonetheless critical—development: namely, “decentralization” from Main Justice to United States Attorney’s Offices (“USAOs”) of prosecutorial decisions in certain matters. To remove “bureaucratic impediments” to “aggressive” prosecutions of gangs and cartels, AG Bondi has —for now—suspended certain approvals USAOs previously needed from Main Justice components. It is possible that this move could be the first step in a broader reduction of oversight and approvals from Main Justice and a delegation of decision-making authority to local prosecutors, but it is too early to tell just two days into AG Bondi’s tenure.

Significant questions raised by the Attorney General’s memoranda remain, including how profound the changes in DOJ’s enforcement activity ultimately will be, how quickly any such changes will manifest themselves, and whether AG Bondi’s directive that prosecutors seek to bring “the most serious readily provable offense” will offset for corporate defendants the apparent shift in resources away from corporate prosecutions. Notably, the memoranda are forward-looking and remain silent on what to do with pending cases in which DOJ has already invested significant time and resources.

I. The “Total Elimination” Memorandum

For corporate entities, perhaps the most significant memorandum will turn out to be the one calling for a “fundamental change in mindset and approach” to “pursue total elimination” of cartels and transnational criminal organizations (“TCOs”) (emphasis in original). The memorandum seeks to refocus DOJ resources onto cartels and TCOs and to streamline the process of bringing charges against them. To do so, the FCPA Unit and the Money Laundering and Asset Recovery Section (“MLARS”) have been instructed to prioritize cases that relate to cartels and TCOs, with the FCPA Unit directed to shift focus away from cases that lack such a connection. As examples of priority cases, the memorandum cites bribery of foreign officials to facilitate human smuggling or drug trafficking. The memorandum also disbands Task Force KleptoCapture; DOJ’s Kleptocracy Team; and MLARS’s Kleptocracy Asset Recovery Initiative. Attorneys working on those initiatives are to return to their “prior posts.”

It is unclear how much of the FCPA Unit’s “focus” will be redirected towards cartel and TCO-related cases, whether this new “focus” will materially impact already-running FCPA investigations, and whether the FCPA Unit’s corporate enforcement activity will change materially or at the margins. We note that in the coming months, other DOJ sections are likely also to receive guidance instructing them to shift their own priorities, and that the cumulative effect of these shifts may be difficult to predict as a result.

Practitioners should also note that the recent guidance speaks to DOJ’s FCPA enforcement priorities, but the U.S. Securities and Exchange Commission (“SEC”)—which has civil FCPA enforcement authority over U.S. issuers but not private companies—has not yet weighed in. To date, the SEC has not announced any changes to its FCPA enforcement program, although further guidance on that front may be coming. It is possible that in the long run these changes are intended to shift the center of gravity for FCPA enforcement from DOJ to the SEC.

A cautious approach is particularly prudent as the announced changes are—at present—in place for 90 days and subject to renewal. They appear under a section titled “Removing Bureaucratic Impediments to Aggressive Prosecutions,” suggesting that the goal is to increase overall enforcement activity, with a particular focus on cartels and TCOs. The guidance does not necessarily portend an abandonment of corporate FCPA enforcement or a lack of focus on existing FCPA prosecutions and investigations. It is hard to know precisely how the FCPA could fit into an “America First” agenda, but it is worth noting that the majority of major FCPA enforcement actions over the past decade have been of non-U.S. corporations.

The memorandum indicates a clear focus on drug cartels—citing MS-13 and Tren De Aragua. The guidance could encourage prosecutors to use FCPA and related charges more often insofar as they can be marshalled in furtherance of “aggressive” prosecutions of foreign officials who can be tied to TCOs. Investigative activity regarding cartels and TCOs thus could have a spillover effect in the FCPA space. Furthermore, prosecutors may be inclined to take decisive action where bribery is alleged to support—perhaps even indirectly—regimes that facilitate cartel and TCO activity. In this respect, it is worth recalling that Venezuela’s President Nicolas Maduro—whose regime has been the subject of very aggressive FCPA enforcement activity—is himself still under indictment for charges related to corruption and narco-trafficking.

In furtherance of “aggressive” prosecutions, the memorandum sets forth significant (and again, for the moment, temporary) changes to existing processes for charging decisions related to cartels and TCOs. The memorandum suspends approval requirements from Main Justice components before USAOs can proceed with a wide swath of charges, provided those charges are cartel- or TCO-related. For instance, the guidance suspends requirements that NSD approve most terrorism and International Emergency Economic Powers Act (“IEEPA”) charges. Nevertheless, USAOs are still “encouraged” to consult with NSD and the Office of International Affairs and required to provide 24-hour notice of the intention to seek such charges. The guidance likewise suspends the requirement that the FCPA Unit authorize investigations or charges that relate to cartels or TCOs. USAOs are to provide the FCPA Unit with just 24-hours’ notice if they intend to seek FCPA charges, with the FCPA Unit entitled to review charging memoranda but not authorized to require any “new or additional paperwork” from USAOs.

The memorandum also contains a directive for DOJ to advocate for a number of legislative reforms that would make it easier to prosecute conduct associated with the manufacturing and distribution of counterfeit drugs containing fentanyl. These reforms include scheduling certain drugs and broadening provisions of the Controlled Substances Act and Federal Food Drug and Cosmetic Act to “cover manufacturing and other conduct” related to fentanyl, counterfeit pills, and pill-press machines. The sought reforms closely relate to an initiative that DOJ’s Consumer Protection Branch has been advancing related to corporate conduct that facilitates the manufacturing or distribution of counterfeit pills. Relevant to that initiative, the Branch recently stated in a publication that, “given the sharp rise in overdose deaths from counterfeit pills laced with fentanyl, the Branch has broadened its efforts to pursue corporate bad actors facilitating the manufacture, distribution, or sale of counterfeit pills. This includes investigating e-commerce sites and social media platforms that may be allowing traffickers to sell counterfeit pills to teens and young adults. Further, the Branch is investigating companies that may be allowing precursor chemicals and equipment to get into the hands of drug trafficking organizations.” (See the April 2024 Recent Highlights issued by the Consumer Protection Branch.)

II. General Policy Regarding Charging, Plea Negotiations, and Sentencing

In addition to restating some high-level policies on charging, plea bargaining, and sentencing, this memorandum restores a “core principle” of the first Trump Administration that, “in the absence of unusual facts, prosecutors should charge and pursue the most serious, readily provable offense.” Any prosecutorial decision to deviate from this “core principle” must be approved by a U.S. Attorney or Assistant Attorney General (or their designee), with the reasons for the deviation to be documented. The memorandum cites to President Trump’s Executive Order 14147 (Ending the Weaponization of the Federal Government) and instructs that charging decisions must not be influenced by prosecutors’ personal or professional “animosity or careerism.”

The memorandum also instructs that plea bargaining is “governed by the same fundamental considerations” applied in charging decisions, namely pursuing the most serious, readily provable offense. The memorandum directs that prosecutors cannot “abandon pending charges” in favor of a plea that is inconsistent with the “seriousness of the defendant’s conduct at the time the charges were filed.” As to sentencing, the memorandum advises that “[i]n most cases,” sentences within the applicable Sentencing Guidelines will be appropriate.

Finally, the memorandum lists several specific “investigative and charging priorities,” noting that “[f]urther detailed guidance regarding these priorities, and others, will follow.” These “priority” enforcement areas are: (1) immigration enforcement; (2) human trafficking and smuggling; (3) transnational organized crime, cartels, and gangs; (4) protecting law enforcement personnel; (5) shifting resources in NSD; and (6) shifting Bureau of Alcohol, Tobacco and Firearms (“ATF”) resources from alcohol and tobacco-related enforcement programs to “more pressing priorities.” Notably, the FCPA, which was among the Biden Administration’s priorities under its 2021 Strategy on Countering Corruption, is absent from this list.

Of particular note for corporate enforcement are changes at NSD. Citing concerns about “weaponization,” the memorandum instructs that charges under FARA are to be “limited” to “conduct similar to more traditional espionage by foreign government actors.” The memorandum also disbands NSD’s Corporate Enforcement Unit. Although that Unit was already thinly staffed, this directive is consistent with a broader effort to shift enforcement priorities away from corporate investigations and prosecutions.

III. Reinstating the Prohibition on Improper Guidance Documents

AG Bondi moved to reimplement guidance from the first Trump Administration that the Biden Administration had later rescinded. She rescinded former AG Garland’s July 1, 2021 memorandum, Issuance and Use of Guidance Documents by the Department of Justice. That July 2021 memorandum had itself rescinded two DOJ memoranda issued during the first Trump Administration, Prohibition on Improper Guidance Documents (Nov. 16, 2017) and Limiting Use of Agency Guidance Documents in Affirmative Civil Enforcement Cases (Jan. 25, 2018). This move is the latest in a back-and-forth between recent administrations regarding use of DOJ guidance documents.

The memorandum appears to signal the Department’s preparations to rescind memoranda issued under the Biden Administration, which could include, for example, previous guidance on corporate enforcement and compliance.

IV. Reinstating the Prohibition on Improper Third-Party Settlements

As above, AG Bondi moved to restore since-rescinded guidance from the first Trump Administration. AG Bondi rescinded two Biden Administration memoranda related to payments to third parties under DOJ-secured settlements, effectively reimplementing AG Sessions’s June 5, 2017 memorandum, Prohibition on Settlement Payments to Third Parties.

In doing so, the memorandum cites the risk of “improper use of settlements to funnel payments” to third parties, and instructs that, absent special circumstances, settlements—including civil settlements, NPAs, and DPAs—should “not be used to require payments to non-governmental, third-party organizations that were neither victims nor parties” to the proceeding.

V. Other Memoranda and Directives

AG Bondi issued a slate of other memoranda, including documents seeking to implement government-wide Trump Administration priorities such as abolishing Diversity, Equity, and Inclusion (“DEI”) programs and implementing return to work requirements. The memoranda related to DEI programs are the subject of a separate Gibson Dunn client alert.

Restoring the Integrity and Credibility of the Department of Justice: Establishes the Weaponization Working Group to review instances where DOJ’s or other agencies’ actions may have been politically motivated or improper over the last four years. The newly created group will examine various issues, including the conduct of Special Counsel Jack Smith, the Manhattan District Attorney, and the New York Attorney General in targeting President Trump, his family, and businesses. DOJ will update the White House quarterly on the progress of the group’s review.
Ending Illegal DEI and DEIA Discrimination and Preferences: Announces that DOJ’s Civil Rights Division, in line with President Trump’s E.O. 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025), will “investigate, eliminate, and penalize” DEI programming in private sector and educational institutions that receive federal funds. The memorandum instructs the Civil Rights Division and the Office of Legal Policy to submit a joint memorandum to the Associate Attorney General by March 1, 2025, that contains recommendations on how to accomplish that goal. Notably, this memorandum contemplates proposals for criminal investigations and potential civil compliance investigations of entities with DEI programs.
Eliminating Internal Discriminatory Practices: Instructs all DOJ components to implement the directive of President Trump’s E.O. 14173 by “thoroughly evaluat[ing]” consent decrees, settlement agreements, litigation positions, grants and funding mechanisms, procurements, internal policies and guidance, and contracting arrangements. The memorandum also directs all DOJ components to submit a report to the Attorney General’s Office by March 15, 2025, that details its findings from that evaluation process.
General Policy Regarding Zealous Advocacy on Behalf of the United States: Instructs DOJ attorneys that their responsibilities include “vigorously defending presidential policies and actions against legal challenges on behalf of the United States.” Advises that prosecutorial discretion “does not include latitude to substitute personal political views or judgments for those that prevailed in the election.” The memorandum warns that any attorney who—based on their “personal political views or judgments”—refuses to sign briefs or appear in court, or “otherwise delays or impedes the Department’s mission” will be subject to discipline up to termination.
Return to Full-Time In-Person Work at the Department of Justice: Mandates a return to full-time, in-person work for all DOJ employees by February 24, 2025.
Restoring a Measure of Justice to the Families of Victims of Commuted Murderers: Aims to provide support and justice to families affected by commutations of death sentences and authorizes USAOs to assist local prosecutors in bringing capital cases under state law against those whose federal death sentences were commuted.
Reviving the Federal Death Penalty and Lifting the Moratorium on Federal Executions: Rescinds AG Garland’s Moratorium on Federal Executions Pending Review of Policies and Procedures and instructs that DOJ will instead “swiftly implement[]” death sentences.
Sanctuary Jurisdiction Directives: Addresses policies related to “[s]o-called ‘sanctuary jurisdictions’” and their compliance with federal immigration laws and prohibits DOJ grants to such jurisdictions.
Establishment of Joint Task Force October 7: Establishes Joint Task Force October 7 (“JTF 10-7”) within the Office of the Deputy Attorney General. Supported by related initiatives, JTF 10-7 will focus on “seeking justice for victims of the October 7, 2023, terrorist attack in Israel,” and “combatting antisemitic acts of terrorism and civil rights violations in the homeland.”
Rescinding Environmental Justice Memorandum: Rescinds two Biden Administration memoranda titled Actions to Advance Environmental Justice and Comprehensive Environmental Justice Enforcement Strategy and rescinds “any other” guidance that “implement[s] the prior administration’s ‘environmental justice’ agenda.”

The following Gibson Dunn lawyers prepared this update: F. Joseph Warin, Stephanie Brooker, Stuart Delery, Michael Diamant, Gus Eyler, David Burns, Amy Feagles, Patrick Stokes, Oleh Vretsona, Kendall Day, Winston Chan, Debra Yang Wong, Nicola Hanna, Michael Bopp, Melissa Farrar, David Ware, José Madrid, Bryan Parr, Erika Suh Holmberg, and Michael Jaskiw.

Gibson Dunn’s White Collar Defense and Investigations Practice Group successfully defends corporations and senior corporate executives in a wide range of federal and state investigations and prosecutions, and conducts sensitive internal investigations for leading companies and their boards of directors in almost every business sector. The Group has members across the globe and in every domestic office of the Firm and draws on more than 125 attorneys with deep government experience, including more than 50 former federal and state prosecutors and officials, many of whom served at high levels within the Department of Justice and the Securities and Exchange Commission, as well as former non-U.S. enforcers. Joe Warin, a former federal prosecutor, is co-chair of the Group and served as the U.S. counsel for the compliance monitor for Siemens and as the FCPA compliance monitor for Alliance One International. He previously served as the monitor for Statoil pursuant to a DOJ and SEC enforcement action. He co-authored the seminal law review article on NPAs and DPAs in 2007. M. Kendall Day is a partner in the Group and a former white collar federal prosecutor who spent 15 years at the Department of Justice, rising to the highest career position in the DOJ’s Criminal Division as an Acting Deputy Assistant Attorney General.

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