Risk Alerts

The practice of using forced arbitration agreements in employment contracts has been historically controversial due to being perceived as depriving employees of their rights and violating NLRA. While the recent sexual harassment claim against Fox News and Roger Ailes shined the largest spotlight on the usage of forced arbitration agreements, Uber and Dish are 2 additional big fish (in a pond of many) that are/were recently in court over such employment related clauses.

A great paper by Davis Polk answers the question on the minds of many public companies when it comes to disclosing cyber risk. What should we disclose? Among the list of information that should be disclosed: overall cyber-security risk, security incidents that expose any data or may trigger notification obligations and those incidents that may become news-worthy. Notably omitted are smaller “insignificant” breaches (which can be very difficult to determine).

In 2009 Boehringer entered into a "pay-for-delay" deal with Barr Pharmaceuitcals, asking them to delay the sales of a particular medication. Upon learning of the deal, the FTC launched an investigation deeming the activity anti-competitive. During the investigation the FTC requested that Boehringer clarify the role of their (then) GC at the time of the incident, who was deemed to be wearing 2 hats: business and legal. Boehringer however believes such a request will undermine attorney-client privileges as well as the work-product doctrine.

Holders of Daimlers' US ADR’s filed a claim against the company following a decline in value due to alleged disclosure failures regarding their diesel engine emissions. Despite having their ADR delisted and trading over-the-counter, they were ultimately subject to US securities laws (under 10b) due to being registered with the SEC and marketed in compliance with SEC laws. In response to the growing trend of foreign companies being subject to US securities claims, foreign companies should pay careful attention to their global D&O program.

The highly contended DOL Fiduciary rule is now live. The new rule expands the definition of "fiduciaries" under the ERISA Act to include all professionals who sell or advise on retirement accounts (vs the previous definition which limited fiduciaries to those engaged in fee based agreements). As opposed to simply locating a suitable product, the new rule effectively requires professionals to locate the most suitable product, with the clients' best interests in mind. Among other compliance requirements, this entails increased disclosures of fees and commissions.

In a recent ruling the US Supreme Court has somewhat reduced the ability of the SEC to recover ill gotten gains by considering disgorgement a penalty, effectively applying a 5 years statute of limitations. This will require the SEC to more expeditiously detect insider trading schemes and pursue faster investigations. As noted in the below article, there are still however tools the agency can use to circumvent the 5 years statute – including evidence of continued cover-up.

Following a recent lawsuit by civil rights groups, the BART transportation system is facing additional litigation in an important class action case involving government surveillance and unlawful data collection. The lawsuit accuses their mobile application of unlawful collection of “private data” in the form of a unique mobile ID and periodic collection of gps coordinates. The lawsuit also additionally goes on to include the software developer as a defendant in the suit.

In an effort to help assist Fintech companies innovate (while remaining compliant) and advance the sector as a whole, the CFTC has launched LabCFTC. Through participation in research studies, community engagement, feedback collection and more, it aims to serve as an educational and compliance resource tool as well as an information sharing and communication hub. The CFTC has also made it a point to highlight that one of its main goals of this program is to ensure that their regulatory framework “supports – and does not impeded” technological innovation.

The real estate software company Zillow is facing lawsuits over their online estimate feature “Zestimates” which has historically proven to be a successful advertising tool for the company. Homeowners and builders are claiming the estimates are inaccurate and damaging, by undervaluing the “true” real estate values of the properties.

The SEC recently announced charges against a former government employee: David Balszczak who obtained and provided inside non-public information to a healthcare focused hedge fund in a scheme from 2012 to 2014 that is said to have generated 3.5 Mill in illegal profits. The inside information included confidential information obtained from Department Of Health (where Balszczak used to work) related to medicare and medicaid regulation/policy changes.