Posts in Compliance.
Blogs
Clock 5 minute read

As the dietary supplement industry continues to draw attention from Congress, state attorneys general, and class action lawyers, now comes another state law trying to prohibit the sale of over-the-counter (“OTC”) dietary supplements that target weight loss and muscle building to minors – this time, in New Jersey.

On October 28, 2024, by a majority vote of 56 to 17, with four abstentions, the New Jersey General Assembly passed Assembly Bill No. 1848, which, if it goes into effect, will prohibit the sale or delivery of OTC diet pills, weight loss, and muscle building supplements to minors, unless the minor is accompanied by a parent or guardian. Bill No 1848 is an exemplar of efforts intended to combat the misuse and abuse of these products and the potential causal relationship between these dietary supplements and eating disorders. Violators, including employees of retail establishments, may face a civil penalty of not more than $750.

The legislation sets forth that:

“no person, firm, corporation, partnership, association, limited liability company, or other entity shall sell, offer to sell, or offer for promotional purposes, either directly or indirectly by an agent or an employee, any over-the-counter diet pull or dietary supplement for weight loss or muscle building to a minor under 18 years of age, unless the minor is accompanied by a parent or guardian.”

Blogs
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On October 30, 2024, in Alternative Global One, LLC v. Feingold, the New Jersey Appellate Division affirmed a trial court’s orders denying a New Jersey litigant’s motion to quash a subpoena for his deposition in underlying Florida litigation to which he was not a party. This decision illustrates that a litigant, even a non-party, must do more than assert blanket, unsubstantiated objections to a subpoena ad testificandum.

The appeal arose from a Florida litigation. In Alternative Global One, LLC v. Feingold, No. 2023-000688-CA-01 (Fla. Cir. Ct. filed Jan. 17, 2023), plaintiffs Alternative Global Companies filed suit against defendants David Feingold and Michael Dazzo, alleging breach of fiduciary duty, civil theft, conversion, replevin, tortious interference, civil conspiracy, accounting, and unjust enrichment. Along with Richard Cardinale, defendants served as co-managing members of the Alternative Global Companies. But after their resignation, defendants allegedly “attempt[ed] to convert [certain investments] from the Alternative Global Companies to their own benefit” and refused to surrender corporate books and records that they maintained. Pursuant to Rule 4:11-4(b), plaintiffs served a subpoena ad testificandum on appellant Daniel W. Amaniera, who was not a party to the litigation, seeking only to depose him in New Jersey.

Blogs
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On August 22, 2024, the United States Department of Justice (“DOJ”) filed a complaint-in-intervention in a whistleblower lawsuit brought against Georgia Institute of Technology (“Georgia Tech”) and Georgia Tech Research Corporation (“GTRC”) asserting claims under the False Claims Act (“FCA”) and federal common law based on allegations that Georgia Tech and GTRC failed to meet cybersecurity requirements mandated by U.S. Department of Defense (“DoD”) contracts and DoD regulations.

In United States ex rel. Craig v. Georgia Tech Research Corp, et al., which is pending in the United States District Court for the Northern District of Georgia, the DOJ alleges that, from as early as May 2019, Georgia Tech and GTRC, an affiliate of Georgia Tech that contracts with government agencies for work to be performed at Georgia Tech, failed to enforce cybersecurity regulations in order to allegedly “accommodate ‘researchers [who were] pushing back’ on cybersecurity compliance because they found it burdensome.” The complaint-in-intervention further alleges that, until at least February 2020, “Georgia Tech failed to enforce basic cybersecurity at the Astrolavos Lab” despite the lab possessing “nonpublic and sensitive DoD information.” It is also alleged that, even after Astrolavos Lab implemented a system security plan, Georgia Tech and GTRC “failed to: (1) assess the system on which the Astrolavos Lab processed, stored or transmitted sensitive DoD data using DoD’s prescribed assessment methodology; and (2) provide to DoD an accurate summary level score for Astrolavos Lab to demonstrate the state of the lab’s compliance with applicable cybersecurity regulations.” The submission of a summary level score is a “condition of contract” for most DoD contracts.

Blogs
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On September 23, 2024, Principal Deputy Assistant Attorney General Nicole M. Argentieri announced updates to the U.S. Department of Justice’s (“DOJ”) guidance relative to its Principles of Federal Prosecution of Business Organizations through the Evaluation of Corporate Compliance Programs (“ECCP”). The ECCP is “meant to assist prosecutors in making informed decisions as to whether, and to what extent, the corporation’s compliance program was effective at the time of [an offense under investigation], and is effective at the time of a charging decision or resolution, for purposes of determining the appropriate (1) form of any resolution or prosecution; (2) monetary penalty, if any; and (3) compliance obligations contained in any corporate criminal resolution (e.g., monitorship or reporting obligations)” with DOJ.

The ECCP was updated last year with new policies relating to a corporation’s access to and retention of employee electronic communications as well as a company’s compensation structure for executives and employees. This year’s updates focus on three new policies regarding evaluations of:

  1. How companies are assessing and managing risk related to the use of new technology such as artificial intelligence (“AI”);
  2. Companies’ “speak up” cultures; and
  3. Compliance programs’ appropriate access to data, including to assess their own effectiveness.
Blogs
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The Corporate Transparency Act (“CTA”), which became law as part of the National Defense Authorization Act in 2021, is aimed at enhancing corporate transparency and combating money laundering and other financial crimes.

Beginning in January, the CTA will require many small businesses to file a beneficial owner report for their companies’ LLC or corporation with the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). Non-compliance with the reporting requirements can result in civil and criminal penalties. The information collected ...

Blogs
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Building on attempts in recent years to strengthen the Department of Justice’s (DOJ’s) white collar criminal enforcement, on September 15, 2022, Deputy Attorney General Lisa Monaco announced revisions to DOJ’s corporate criminal enforcement policies. The new policies, and those that are in development, further attempt to put pressure on companies to implement effective compliance policies and to self-report if there are problems. Notably, the new DOJ policies set forth changes to existing DOJ policies through a “combination of carrots and sticks – with a mix of incentives and deterrence,” with the goal of “giving general counsels and chief compliance officers the tools they need to make a business case for responsible corporate behavior” through seven key areas:

Blogs
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Over the past 15 years, chief compliance officers (“CCOs”) for financial services firms have come under increased scrutiny as the Securities and Exchange Commission (“SEC”) and Financial Industry Regulatory Authority (“FINRA”) have brought more frequent enforcement actions seeking to hold CCOs personally liable. CCOs understandably have been concerned about this trend and financial service firms have focused on the chilling effect that the enforcement actions may have on the vital role CCOs play in their organizations and the quality of the COO applicant pool.

Blogs
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Last week, the Securities and Exchange Commission’s Division of Examinations (the “Division”) released its 2021 examination priorities.  The priorities reflect the impact of the COVID-19 pandemic, including how it has increased risks related to cybersecurity; a new focus on climate change; and appear to recognize concerns raised by the recent trading in GameStop stock.

Impact of COVID-19

The onset of the work-from-home environment arising from the COVID-19 pandemic, has, among other things, increased the SEC’s concerns about “endpoint security, data loss, remote ...

Blogs
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In September 2020, the U.S. Department of Justice (“DOJ”) and the U.S. Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) announced its annual healthcare-related “takedown.” The takedown, which involved enforcement actions that actually occurred over numerous months preceding the press event (and as such, the reference to a “takedown” is a misnomer”) targeted alleged schemes that related to opioid distribution, substance abuse treatment facilities (“sober homes”), and telehealth providers, the latter of ...

Blogs
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We are pleased to present Commercial Litigation Update, the newest blog from law firm Epstein Becker Green (EBG), which will offer engaging content about emerging trends and important developments in commercial and business litigation.

Commercial Litigation Update will feature thought leadership from EBG litigation attorneys and provide insightful and practical commentary and analysis on a wide range of timely litigation issues that affect businesses. Areas of interest will include trends and developments in antitrust, contract, defamation and product disparagement ...

Blogs
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Consumer complaints regarding alleged price gouging have been increasing as the COVID-19 pandemic continues. Generally, price gouging occurs when there unreasonable increase the price of a consumer good (or service) during a public emergency. Although we are facing a national emergency, except for a March 23, 2020, executive order issued by President Trump prohibiting hoarding and price gouging of certain critical supplies, there is no federal price gouging law. Although there are proposal pending in Congress to more broadly prohibit price gouging, currently, the issue is ...

Blogs
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Recently, the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert to provide broker-dealers with guidance on examinations regarding regulation Best Interest (“Reg BI”).  Reg BI requires that when broker-dealers make a recommendation regarding securities to a retail customer it must act in the best interest of the customer, without placing its own financial or other interest ahead of the retail customer’s interest.  The Financial Industry Regulatory Authority (“FINRA”) also ...

Blogs
Clock less than a minute

On Monday March 23, 2020, President Donald Trump signed an executive order aimed at preventing hoarding and price gouging.  Attorney General William H. Barr indicated that the order is authorized under the Defense Protection Act, which allows the United States to compel private industry to assist in meeting national defense needs in response to national emergencies.

The new executive order empowers the Health and Human Services Secretary to designate supplies as “critical.”  Hoarding – accumulating quantities beyond those reasonable to satisfy personal or business needs ...

Blogs
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At the time of publication, at least twenty four states, plus Washington D.C. have declared states of emergency related to the novel coronavirus (“COVID-19”), with that number growing by the hour.  In addition to making more resources available to residents, in many cases, the declarations also trigger additional protections to consumers in the form of anti-price gouging laws. These laws, which automatically go into effect, are intended to prevent merchants from significantly increasing the cost of consumer goods and services during a crisis.

For instance, in New Jersey a ten ...

Blogs
Clock 7 minute read

Broker-dealers (“BDs”) should be aware that, on June 5, 2019, the SEC adopted “Regulation Best Interest” (“Reg BI”), which requires BDs and their registered representatives (“RRs”) to “act in the best interest of the retail customer,” when “making a recommendation” regarding “a securities transaction or investment strategy.” In addition, the SEC’s new rules require BDs to deliver Form CRS relationship summaries (“Form CRS”) to retail customers. BDs will need to be in compliance with Reg BI and Form CRS, which were accompanied by more than ...

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