Officials Offer Insights on Avoiding Risk, Investigations and Corporate Compliance

Holland & Knight and the Florida Chamber of Commerce on Oct. 17, 2018, hosted the Florida Enforcement Summit, a half-day program that focused on federal and state enforcement priorities and corporate compliance during the Trump Administration.

Guest speakers at the Florida Enforcement Summit included:

• Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida
• Benjamin Greenberg, First Assistant U.S. Attorney for the Southern District of Florida
• Eric Bustillo, Regional Director, U.S. Securities and Exchange Commission
• Victoria Butler, Director, Consumer Protection Division, Florida Attorney General's Office

Panelists from Holland & Knight included:

• Miami Partner Wifredo Ferrer, former U.S. Attorney for the Southern District of Florida
• West Palm Beach Partner William Shepherd, former statewide prosecutor of Florida
• Tampa Partner LT Lafferty, former Assistant U.S. Attorney for the Middle District of Florida
• Miami Partner Cory Eichhorn

Guest Speaker Highlights

Panel I: Federal and State Enforcement Priorities During the Trump Administration

Benjamin Greenberg: First Assistant U.S. Attorney for the Southern District of Florida

Benjamin Greenberg, who has served at the U.S. Attorney's Office for the Southern District of Florida for nearly 20 years, shared his advice about how businesses can best avoid risk and navigate federal investigations.

• Greenberg, in his personal capacity, made clear that the most effective way to ensure that a business does not run afoul of federal laws and regulations is to institute a culture of compliance.
• From the company's inception, its executives must convey the importance of compliance to all employees.
• It is not enough that a corporation's attorneys and executives understand the standards for compliance. Its employees must understand and internalize those standards as well.

Greenberg also shed some light on what today's U.S. Department of Justice (DOJ) will demand in exchange for cooperation credit.

• To begin, DOJ policy, as expressed in the 2015 memorandum on Individual Accountability for Corporate Wrongdoing, now requires that where there is individual culpability, corporations must identify the individuals responsible for wrongdoing in order to receive any cooperation credit at all.
• Greenberg went on to add that early disclosure of violations of law and full cooperation in investigating those violations are essential, but do not, in and of themselves, entitle a corporation to cooperation credit.
• The Department expects that corporations seeking cooperation credit will provide as much truthful information as they can throughout the course of an investigation. Indeed, full transparency is the expectation.
• In the end, the Department is interested in uncovering and understanding the facts of a case and anything that a corporation can do to assist in that process will be looked upon favorably by the DOJ.

Victoria Butler: Director, Consumer Protection Division, Florida Attorney General's Office

Victoria Butler, who has served at the Florida Attorney General's Office for over 20 years, shared her advice about how businesses can best avoid risk and navigate state investigations.

• Butler, in her personal capacity, emphasized that, from the beginning, communication is key.
• The Florida Attorney General's Office is more than willing to hear from, and cooperate with, corporations to ensure compliance with Florida's laws and regulations, whether the corporations are under investigation or not.
• Indeed, businesses are encouraged to approach the Consumer Protection Division of the Florida Attorney General's Office with consumer issues and the Consumer Protection Division can work with those businesses, including by collecting and reviewing documents without issuing a Civil Investigative Demand (CID).

If a business does receive a CID, Butler recommended that it should not assume the worst. The Florida Attorney General's Office—the Consumer Protection Division in particular—often performs investigations with the primary goal of gathering information about a particular industry or business practice. If the aims of the investigation go beyond information gathering, there are strategies that corporations can employ to ensure favorable results.

• First, Butler recommended that businesses self-disclose violations of Florida's laws and regulations as soon as they can confirm that a violation has occurred.
• Second, businesses should conduct internal investigations to determine how the violation occurred and how to prevent similar violations in the future and should share the results of those investigations with the Florida Attorney General's Office.
• Third, to garner credibility and to ensure maximum cooperation credit, businesses should not confine their internal investigations to only those areas where they believe consumer harm is certain or substantial.

Panel II: Corporate Compliance and Enforcement

Eric Bustillo: Regional Director, U.S. Securities and Exchange Commission

Eric Bustillo, who has served as the Director of U.S. Securities and Exchange Commission's (SEC) Miami Regional Office for nearly 10 years, shared his insights into SEC policies and priorities.

• Bustillo, in his personal capacity, began by identifying the enforcement priorities in the Southeast Region.
• He stated that, as in the past, the Miami Regional Office will continue to focus on offering fraud, which is particularly prevalent in the Southeast Region because of the substantial number of retirees.
• In the area of offering fraud and other areas of enforcement, the SEC will also continue to prioritize its examinations based upon the risk that an entity and its activities pose to investors.
• The level of risk will not only determine which entities are investigated, but the extent of the investigations as well.

Bustillo went on to discuss how businesses should conduct themselves in order to avoid SEC examinations and ensure the most favorable result for the business should the SEC decide to institute an examination.

• With regard to compliance programs, the SEC is looking for a self-policing system that effectively alerts the company of risks and ensures that the company appropriately responds to those risks.
• If a business identifies a violation of a federal law or regulation, Bustillo recommends that the business disclose that violation to the SEC.
• He observed that the whistle-blower program created by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act now allows the SEC to identify, and initiate enforcement actions in response to, violations of law that would have gone unnoticed in the past.
• Once a company does come forward, it should still be mindful of precisely what the SEC considers in determining whether to grant leniency in exchange for cooperation. Bustillo stated that the 2001 Report of Investigation Statement commonly referred to as the Seaboard Report, still accurately summarizes the SEC's analytical framework for determining whether a company is entitled to cooperation credit.
• While the Seaboard Report is extensive and detailed, the four factors the SEC looks for are 1) self-policing prior to the discovery of the misconduct, 2) self-reporting of misconduct when it is discovered, 3) remediation, and 4) cooperation with law enforcement authorities.

About Our Teams

If you have questions about any of the topics discussed at either of the panels, Holland & Knight's Global Compliance and Investigations, Consumer Protection Defense and Compliance, and White Collar Defense and Investigations teams can provide additional information. All three teams are comprised of individuals with extensive experience handling DOJ, SEC, Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB), State Attorneys General and other regulatory investigations and can provide advice not just on how to navigate those investigations once they begin but also on how to avoid them in the first place.   

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.