Enforcement

WHAT’S OLD IS NEW AGAIN: DOJ’S NEW CORPORATE CRIMINAL ENFORCEMENT POLICIES EQUIP PROSECTUORS WITH MORE TOOLS AND INFORMATION

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Matthew Levine and Alicyn Cooley provide some hot takes on DOJ’s new actions and approaches to corporate criminal enforcement on the NYU Program on Corporate Compliance and Enforcement Blog.  Blog post here:   What’s Old Is New Again: DOJ’s New Corporate Criminal Enforcement Policies Equip Prosecutors with More Tools and Information    

DOJ RESCINDS PRIOR GUIDANCE ON MONITORSHIPS — NO LONGER DISFAVORED

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BIG News Out of DOJ Re: Monitorships: “To the extent that prior Justice Department guidance suggested that monitorships are disfavored or are the exception, I am rescinding that guidance. Instead, I am making clear that the department is free to require the imposition of independent monitors whenever it is appropriate to do so in order to satisfy our prosecutors that a company is living up to its compliance and disclosure obligations under the DPA or NPA.” — Deputy AG Lisa Monaco.

Announcement is here:  https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-gives-keynote-address-abas-36th-national-institute

 

 

 

Cyber-Enforcement by NYDFS – Insurance Journal Podcast

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Cyber-enforcement by NYDFS and others is only going to get more intense. I had the good fortune to sit down virtually with journalist Elizabeth Blosfield of the Insurance Journal to discuss ramped up enforcement by NYDFS in cybersecurity on the Insuring Cyber Podcast.

 

The link to the podcast episode can be found here: https://www.insurancejournal.tv/videos/19537/

 

NYDFS Expected to Take Enforcement Action Against Robinhood Financial

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UPDATE ON NYDFS ENFORCEMENT ACTION VS. ROBINHOOD: There is a deal in principle, according to an amended S-1 filing. Expected penalty is $30MM, and there apparently will be appointment of an independent monitor. Robinhood says NYDFS informed it of alleged violations involving cybersecurity and virtual currency (Part 500 and Part 200) requirements, including deficiencies in policies and procedures regarding risk assessment, lack of an adequate incident response and business continuity plan, and deficiencies in application development security.

A Markets Insider article on the matter can be found here: https://markets.businessinsider.com/news/stocks/robinhood-ipo-30-million-fine-crypto-anti-money-laundering-probe-2021-7

A DEFICIENCY LETTER TO (NOT FROM) THE SEC: PLEASE PROVIDE MORE TRANSPARENCY WHEN CHARGING A CHIEF COMPLIANCE OFFICER WITH PERSONAL LIABILITY

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Its time to send a deficiency letter to the SEC — the agency needs to do a better job of providing transparency when issuing an enforcement action against a compliance officer. See my latest post on the NYU Program on Corporate Compliance & Enforcement Blog.   Link is below: A Deficiency Letter to (Not From) The … Read more

CYBERSECURITY ENFORCEMENT ACTIVITY FROM NYDFS FASHIONS REGULATORY EXPECTATIONS AND SUGGESTS MORE ENFORCEMENT TO COME

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Matthew Levine writes in the New York Law Journal article about “Cybersecurity Enforcement Activity From NYDFS Fashions Regulatory Expectations and Suggests More Enforcement Is To Come”, which updates developments in cybersecurity enforcement by NYDFS.   The article may be found here:  NYLJ-DFS-CYBERSECURITY-ENFORCEMENT-LEVINE

Cyberenforcement Continues at NYDFS — The Insurance Industry Remains in Focus

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On May 12, 2021, NYDFS issued another Cybersecurity enforcement action vs. Unum Life and Paul Revere Life. What you need to know from the findings in the Consent Orde (yes, another settlement):
• The companies must pay a $1.8 million penalty, & conduct remediation and an independent third-party audit
• The relevant Cybersecurity Events occurred in September 2018 and October 2019 – both phishing intrusions; dozens of employee email accounts compromised and NPI of New Yorkers and others made accessible
• The companies did not have effective multi-factor authentication (MFA) in place for the e-mail environment until August 2019, long after the Mar 2018 deadline
• The Consent Order specifically finds the companies “falsely certified compliance with the Cybersecurity Regulation for the calendar year 2018.”  Still, there is no suggestion concerning the actual level of intent underlying false certification, or whether any other consequences flow.
• There is no specific finding regarding the number of violations underlying the penalty; NYDFS finds two subsections of the regulation as violations of law.
• ENFORCEMENT TAKEAWAY:  A big focus on MFA is emerging. If an entity did not implement effective MFA by March 2018, a subsequent Cybersecurity Event involving access to non public information (NPI) is a likely enforcement target. Additionally, the insurance industry remains in focus.

 

The Consent Order may be found here: https://www.dfs.ny.gov/system/files/documents/2021/05/ea20210512_first_unum.pdf

NYDFS Issues Its Third Cybersecurity Enforcement Action — What You Need to Know

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NYDFS issued Cybersecurity Enforcement Action No. 3 on April 14, 2021; here’s what you need to know from the Consent Order:


• National Securities, a life insurance/annuity provider, suffered four breaches between 2018 and 2020 exposing NPI – all from phishing.


• Although required to have implemented multi-factor authentication no later than March 2018, the company did not have it in place for its e-mail environment until August 2020.


• While notifying other government agencies of the cyber breaches, the company on two occasions failed to notify NYDFS of the breaches within 72 hours, as required.


• The Order specifically finds that the company “falsely certified compliance with the Cybersecurity Regulation for the calendar year 2018.” The findings do not suggest the level of intent behind this false certification or whether any other consequences are to follow.


• Issued under Financial Services Law Section 408, the company must pay a civil penalty of $3 million and continue to remediate and report to NYDFS. Notably, there is no finding as to the number of violations underlying the penalty; instead there are merely three separate subsections of the regulation that are cited as violations of law.

 

The Consent Order may be found here:   https://www.dfs.ny.gov/system/files/documents/2021/04/ea20210412_national_securities_corp.pdf

NYDFS Issues Enforcement Action Against Deutsche Bank for Anti-Money Laundering Deficiencies Involving Jeffrey Epstein and Eastern European Correspondent Banking Accounts

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The New York Department of Financial Services (“NYDFS”) recently sanctioned Deutsche Bank (“DB”) $150 million for BSA/AML deficiencies.  According to the regulator’s factual findings, the compliance failures arose in connection with the bank’s private wealth relationship with Jeffrey Epstein, and correspondent banking relationships with Danske Bank Estonia (“Danske Estonia”) and FBME Bank (“FBME”), both located in Eastern Europe. This latest enforcement action against DB follows several others issued against the bank by NYDFS since 2015, including for improper conduct arising from LIBOR manipulation, sanctions violations, improper foreign exchange trading practices, and BSA/AML deficiencies in connection with money laundering arising out of equity trades at its London and Moscow branches. More detailed analysis and the Consent Order can be found on my blog post for the NYU Program on Corporate Compliance and Enforcement Blog here: 

Deutsche Bank Sanctioned in Connection with Jeffrey Epstein Banking Relationship: Financial Institutions Must Be Vigilant in BSA/AML Compliance