The Compliance Gap

Compliance and Regulatory Information for Growing Companies

In the ongoing legal battle over the alleged theft of American trade secrets by Chinese telecom giant Huawei, one curious aspect is the lack of charges filed against any individual Huawei employees. On February 28, Huawei pled not guilty to charges of trade secret theft in federal court in Washington. This has been one of the most publicized trade secret cases since the DOJ announced the China Initiative in November 2018, prioritizing the quick and…
Two United States congressmen introduced legislation in late December that would exclude certain digital currencies from being defined as securities – a bill that, if enacted, may finally provide the cryptocurrency industry with regulatory clarity regarding when the offer and sale of digital tokens must comply with federal securities laws. The Token Taxonomy Act of 2018 – introduced on December 20, 2018 by Reps. Warren Davidson (R-Ohio) and Darren Soto (D-Florida) – would, among other…
The attorney-client privilege, which prohibits the compelled disclosure of confidential communications between an attorney and their client, is enshrined in common law and statutory codes across the country. See, e.g., Cal. Evid. Code § 950 et seq.; Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) (the fundamental purpose of the attorney-client privilege “is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance…
New cryptocurrencies and tokens have been popping up all over the place, leading the SEC to set up an initial coin offering (ICO) section on its website and to promote recent enforcement actions in the digital currency space. The proliferation of new tokens offers a growing opportunity for cross-over and cooperation between different federal agencies. The SEC representative at a recent Bar Association of San Francisco panel last week noted that the SEC’s cyber unit…
It always comes when you least expect it – a government inquiry to investigate your business. While it may instill a sense of panic, there are steps you can take to make sure you’re in the best position possible when the investigation begins. This blog series developed by Chrysty Esperanza, Litigation Counsel at Square, Inc., will address this main question: When you receive a subpoena, CID, or informal request from the government, how should you…
It always comes when you least expect it – a government inquiry to investigate your business. While it may instill a sense of panic, there are steps you can take to make sure you’re in the best position possible when the investigation begins. This blog series by Chrysty Esperanza, Litigation Counsel at Square, Inc., will address this main question: When you receive a subpoena, CID, or informal request from the government, how should you…
It always comes when you least expect it – a government inquiry to investigate your business. While it may instill a sense of panic, there are steps you can take to make sure you’re in the best position possible when the investigation begins. This blog series developed by Chrysty Esperanza, Litigation Counsel at Square, Inc., will address this main question: When you receive a subpoena, CID, or informal request from the government, how should…
At a recent panel organized by San Francisco’s Federal Bar Association, the San Francisco Regional Director of the Securities and Exchange Commission (SEC), Jina Choi, confirmed that the agency continues to focus on investor fraud in the pre-IPO private market space. Highlighting enforcement actions against the non-public Zenefits, Credit Karma, and Theranos[1], Ms. Choi reiterated the SEC’s commitment to aggressive oversight over “unicorns,” or privately-held companies valued over $1 billion. The…
Next week marks the 40th anniversary of the Foreign Corrupt Practices Act – it became effective December 19, 1977. Deputy Attorney General Rod Rosenstein marked the occasion this month by providing an update on the FCPA Pilot Program announced in spring 2016 and detailed in this Compliance Gap blogpost. Bottom line: the FCPA policy now provides for a presumed declination of prosecution for companies that complete a fulsome self-disclosure disgorgement, and remediation program.…
Last week the SEC announced it had reached an agreement with privately-held company Zenefits, and its co-founder and former CEO Parker Conrad, to settle allegations that Zenefits materially misled Series B and C investors. The parties agreed to settle for over a combined $980,000 (Zenefits agreed to pay $450,000, with Conrad responsible for the balance). This appears to be a first-of-its-kind SEC enforcement action against a privately-held company, reflecting this ongoing enforcement priority for