May 14, 2021
May 2021 - Consero Virtual Litigation Forum
I moderated a session at yesterday’s Consero virtual forum. The title of the panel was “ Predicting the Future: How will the Enforcement and Litigation Profile Change over the Next Four Years.” My two panelists were two senior in house lawyers: Erika Engelson of Deutsche Bank and Brendan Gibbon of Societe Generale. Here are some highlights of the discussion.
The Banks are expecting to see an uptick in enforcement activity from the Biden Administration.
A precursor to regulatory enforcement activity are often “sweeps” (industry-wide requests for information) from the regulators, where the inspectors seek to learn more about current business practices. The large banks have recently received a sweep on SPACs, for example.
A continuing priority will be Bank Secrecy Act and AML-related investigations, as well as market manipulation activity and insider trading matters.
Both the SEC and the CFTC will be clearing out their current case dockets to allow for greater scrutiny on new regulatory priorities.
The DOJ tends to be more reactive than the civil regulators, responding to conduct that is often discovered through regulatory inspections and subpoenas, but everyone believes they will be aggressive in the coming months and years.
The banks are cautiously optimistic that the spate of antitrust matters has run its course, but the flip side to this is that the DOJ has developed an expertise in ferreting out anti-competitive activity in the banking industry and that the remote working environment this past year has increased the risks for the banks because compliance controls may be easier to evade in such an environment.
The banks across the board have improved their control environments since the ‘08 financial crisis, so they should at least be able to mount defenses to any new regulatory actions or litigations.
Both the regulators and plaintiff attorneys have become way more sophisticated in terms of using analytics to detect patterns indicative of potential civil or criminal activities.