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Lowenstein Sandler LLP

Zarema A. Jaramillo

Zarema A. Jaramillo

Partner

Expertise

  • Litigation
  • Antitrust & Trade Regulation
  • White Collar Criminal Defense
  • Global Trade & Policy

WSG Practice Industries

Activity

WSG Leadership

WSG Coronavirus Task Force Group
Member
Profile

Zarema's practice focuses on complex antitrust matters including government investigations, M&A transactions, and complex litigation, including high-stakes class action defense.  Zarema regularly advises clients on enforcement matters before state and federal agencies, and regularly counsels on competition issues, including refusals to deal, distribution and franchising restraints, tying arrangements, group purchasing, price discrimination, exclusive dealing, leveraging, joint ventures, and trade association activities. She also counsels clients contemplating complex transactions that may be affected by antitrust statutes including Hart-Scott-Rodino. In addition, Zarema advises clients on compliance with U.S. and foreign anti-bribery and anti-corruption regulations, U.S. sanctions and export controls, and foreign investment reporting requirements.

She represents clients in many sectors including financial services, technology, energy, and life sciences. She also counsels and defends clients with respect to regulatory compliance with international laws, including the Foreign Corrupt Practices Act, Export Administration Regulations, and Office of Foreign Assets Control economic sanctions. Her work with financial institutions and their executives centers on securities class actions and investigations by the U.S. Securities and Exchange Commission, the U.S. Department of Justice, the Federal Energy Regulatory Commission, and the Treasury Department.

Zarema's clients benefit from her extensive experience in and understanding of the U.S. government. She served as a trade specialist for the U.S. Department of Commerce's International Trade Administration in the Office of China and as the Acting Director of the U.S. Department of Commerce Corporate Governance Program in the Office of Russia. During her tenure in these roles, she provided guidance to U.S. companies regarding bilateral and unilateral treaties and trade agreements and compliance with international standards.  Throughout her career in the Government and the private sector, Zarema has designed and implemented training programs for business people and legal practitioners in the United States, Russia, and Central Asia to address antitrust, anti-bribery, and other corporate governance issues. 

Zarema is fluent in Russian and proficient in French.

Bar Admissions

    New York
    District of Columbia

Education

American University, Washington College of Law (J.D. 2005)
Baldwin-Wallace University (B.A. 2000)
Areas of Practice

Antitrust & Trade Regulation | Global Trade & Policy | Litigation | White Collar Criminal Defense

Professional Career

Significant Accomplishments

Representing parties to M&A transactions in entertainment, high technology, financial, pharmaceutical and other industries.

Representing international pharmaceutical manufacturer in multiple regulatory and antitrust investigations and antitrust class actions.

Represented various international auto parts manufacturers in multiple Section 1 investigations by the Department of Justice and follow on civil antitrust class actions.

Represented less-than-truckload carrier in federal multidistrict price-fixing class action litigation regarding fuel surcharges.

Represented international rubber hose manufacturer in price-fixing investigation by the Department of Justice and related class action litigation.

Represented international airline in price-fixing investigation by the Department of Justice.

Represented international freight forwarder in price-fixing investigation by the Department of Justice.

Represented generic pharmaceutical company in an antitrust investigation by the Federal Trade Commission.

Representing clients in non-public M&A transactions in high technology, entertainment, and pharmaceutical industries.

Representing pharmaceutical manufacturers in FTC “pay for delay” investigations, mergers, and DOJ price-fixing cases.

Representing international pharmaceutical company in civil antitrust class actions.

Represented multinational gold mining firm in proceedings to secure discovery in the United States for use in international arbitration proceedings. Ruling marked the first time that such discovery was awarded under 28 U.S.C. §1782.

Speaking Engagements

Nikki Adame-Winningham and Zarema Jaramillo will participate in the "Environmental Law at the Boundaries" panel at the Hispanic National Bar Association's Annual Convention. The panel will discuss the need for increased vigilance regarding evolving environmental regulations in global business dealings, highlight potential pitfalls, and provide guidance on how to avoid them. The firm will also serve as a sponsor of the HNBA Annual Convention.

Lowenstein's Zarema A. Jaramillo introduces opening keynote speaker Valerie Jarrett, former Senior Advisor to the Obama Administration, and Lynda A. Bennett and Mary J. Hildebrand are panel moderators at the Women, Influence & Power in Law conference. 

October 4, 2018

9:15 a.m.: Opening Keynote: Fireside Chat | Staying Nimble, Taking Risks, and Empowering Women to Lead With Authenticity and Confidence

  • Introduction of keynote speaker: Zarema A. Jaramillo, Partner, Lowenstein Sandler LLP
  • Keynote speaker: Valerie Jarrett, former Senior Advisor, Obama Administration

Empathy, intuition, and collaboration are the qualities people are looking for in their leaders today. In this session, hear from our keynote speaker on how she has taken risks to breakthrough gender bias with confidence, authenticity, and effectiveness in her professional journey.

11 a.m.-12 p.m.: GDPR: Assessing Your Organizational Competence and Risk in a Data-Driven World 

  • Moderator: Mary J. Hildebrand, Partner; Founder and Chair, Privacy & Cybersecurity, Lowenstein Sandler LLP
  • Panelists:
    • Li Reilly, Vice President & Deputy General Counsel, Fareportal
    • Ilona Levine, Senior Corporate Counsel, Privacy, Data Protection, Cybersecurity and Compliance, OVH US
    • Jo Ann Lengua Davaris, Chief Privacy Officer, Mercer

The implementation of GDPR–and the potential for regulatory enforcement actions, private causes of action and legal challenges from various quarters–exemplifies the uncertainty that permeates the privacy and cybersecurity world. How can you manage your legal, compliance, and business risks to achieve the best outcome for your organization? This panel will discuss the practical implications of managing against the new organizational requirements, such as accountability measures, breach notification requirements, data subject rights, and processing system assessments.

October 5, 2018

10-11 a.m.: How to Evaluate Exposure to Personal Liability Arising from Recent Enforcement Actions Against Corporate Counsel

  • Moderator: Lynda A. Bennett, Partner; Chair, Insurance Recovery Group, Lowenstein Sandler LLP
  • Panelists:
    • Patricia Barbieri, Senior Vice President, General Counsel and Secretary, Daiichi Sankyo, Inc.
    • Lynn Feldman, EVP and General Counsel, Clear Channel Outdoor
    • Shirin Saks, Assistant General Counsel, Litigation and Employment, Dun & Bradstreet

Corporate counsels are an organization's ethics watchdogs, yet they are often asked to give strategic business advice. This can put in-house lawyers in awkward positions, jeopardize attorney-client privilege, and potentially expose the company and its leaders to liability. This session will provide an ethical framework and best practices to help navigate this dual role, and focus on how to protect corporate counsel and other executives against potential liability risks through insurance coverage and other innovative risk management techniques.

Lowenstein Sandler is a sponsor of the A.C.E.S. Compliance Summit. Partners Doreen M. Edelman and Zarema A. Jaramillo will serve as moderators on two separate panels throughout the conference.

April 16, 2019

11 a.m.: Policy in Action-The Modernization of the Committee on Foreign Investment in the United States (CFIUS): Dissecting the Foreign Investment Risk Review Modernization Act (FIRRMA) and the Implications on Compliance Operations

On August 13, 2018, President Trump signed FIRRMA into law, the first reform of the screening process for CFIUS in over a decade. A lively panel of industry experts will shed light onto the key provisions of FIRRMA and explore the targets and significance of the initial pilot program.

Moderator: Doreen M. Edelman, Partner, Chair, Global Trade & Policy, Lowenstein Sandler. 

Panelists:

  • Tyrone Brown, Deputy Chief, Foreign Investment Review Staff, U.S. Department of Justice
  • Tatiana Olivia Sullivan, Associate Director, CFIUS Operations & Regulatory Affairs, Office of the Under
    Secretary of Defense A&S Industrial Policy

2:00 p.m.: The Export Control Reform Act (ECRA) of 2018 and How It and Other Recent Events Will Affect Your Compliance Program

Industry leaders dissect ECRA and what it means for U.S Export Controls and trade compliance operations. The panelists will discuss the significant impact of the ECRA on “emerging” and “foundational” technologies that are “essential to the national security of the United States,” the transfer of technology to foreign persons, increased restrictions on export licensing, and increased civil and criminal penalties.

Lowenstein's Zarema A. Jaramillo introduces opening keynote speaker Attorney General Loretta Lynch, former U.S. Attorney General, and Lynda A. Bennett and Doreen M. Edelman are panel moderators at the Women, Influence & Power in Law Conference.

Thursday, October 17, 2019

9:15 a.m.: Opening Keynote: A Conversation with Attorney General Loretta Lynch

Introduction of Keynote Speaker: Zarema A. Jaramillo, Partner, Lowenstein Sandler LLP

Keynote Speaker: Attorney General Loretta Lynch, former U.S. Attorney General

Attorney General Loretta Lynch shares her journey to become the first female African American Attorney General and how businesses can navigate and thrive in a changing global workforce.

1:30-2:30 p.m.: IoT Liability Issues

Moderator: Lynda A. Bennett, Partner, Lowenstein Sandler LLP

Panelists:

  • Carolyn McNerney, Senior Counsel, LG Electronics USA
  • Tamara Snowdon, Esq. CIPP/US, Senior Vice President, Cyber Practice, Marsh JLT Specialty, Marsh USA Inc.
  • Patti Sunar, Assistant General Counsel, Litigation, Verizon

The connectivity allowed by the Internet of Things (IoT) may make our personal and professional lives much easier, but for liability attorneys, it raises some red flags. Plus, with a lack of guidance from federal regulators like the FTC and the FCC, there are often more questions than answers. If a data breach occurs at a business, who is liable? Does liability fall on the business, the manufacturer of the device, or the creator of the software? More cases like this are beginning to arise, and this session will examine liability concerns in the age of connectivity. Topics include:

  • Understanding the differences for the legal department between IoT and other recent tech advancements
  • Review Current guidelines around IoT liability and potential legislation
  • Strategies for protecting your organization

Friday, October 18, 2019

11:20 AM - 12:20 PM: Tariffs, Trade Wars & the Global Supply Chain

Moderator: Doreen M. Edelman, Partner, Lowenstein Sandler LLP

Panelists:

  • Karen Killeen, Vice President and Deputy General Counsel, BASF Corporation
  • Jennifer Morales, Senior Counsel – Litigation, GE Aviation

The recent rise in tariffs affecting global trade is having a huge impact on both local and international businesses–not to mention, there’s been discussion of a renegotiation of NAFTA and proposal of pulling out of the WTO. Other countries have begun to retaliate on the high tariffs imposed by the United States with counter-tariffs on American goods, thus creating a “trade war.” Many local corporations are being affected as the cost continues to rise, which also impacts the cost to the consumer. So what are the options for companies to keep the costs down? Aside from asking for exemptions on certain tariffs, what can GCs and in-house counsel do at this time? And what are the legal implications of these new sanctions for companies with overseas operations? This session will explore how trade wars are impacting the decisions that GCs must make for their businesses, and we will also discuss potential solutions for organizations with global operations.

Washington Marriott Wardman Park
, 2660 Woodley Rd NW, Washington, D.C.

Lowenstein Sandler is committed to the health and well-being of our clients, colleagues, and guests. With this commitment in mind, and due to the increasing spread of and uncertainty surrounding the novel coronavirus, this event has been postponed. 

Thank you for your interest in the program. We look forward to contacting you soon with new dates. In the meantime, please check this page periodically for updated event information.

* * * * 

Doreen M. Edelman and Zarema Jaramillo join a panel addressing Sanctions 2020: What Every Trade Compliance Professional Needs to Know as a part of the Anti-Corruption, Anti-Bribery, Export Controls & Sanctions (A.C.E.S.) Compliance Summit. Divided into two segments, the first segment of the discussion will be dedicated to addressing up to the minute changes to global sanctions regulations, enforcement in key regions, including Iran and Russia, while the second segment of the session will explore how corporate executives are effectively maintaining compliance within those same regions by troubleshooting specific scenarios utilizing real-life facts.

Moderators:

Speakers:

  • Rowan McDaniel, Head of Sanctions, United States, Financial Crimes Compliance, HSBC USA
  • Doreen Edelman, Partner, Lowenstein Sandler

Location: American University Washington College of Law | 4300 Nebraska Ave NW, Washington, DC 20016

 

Companies are facing unprecedented challenges in responding to the coronavirus pandemic. This crisis is having a direct and immediate impact on the workforce, financing, corporate governance, insurance, the supply chain, and data security.

Join us for a webinar to address the issues arising from coronavirus fallout. Our panel of leaders from a broad-range of practices will give an overview of critical points on which corporate leadership needs immediate guidance.

Topics will include:

  • Employees: how should companies handle employment issues such as confidentiality, exempt/non-exempt issues, paid (and unpaid) time off, salary reductions, furlough, and layoffs?
  • Insurance: what coverage is available, and looking around the corner, what renewal considerations should companies be thinking about?
  • Vendors and Suppliers: Force majeure in contracts, and identifying warning signs of a financially distressed customer and risk mitigation tools
  • Credit Facilities: Availability of funds, notification requirements, financial reporting, financial covenant compliance and communicating with lenders
  • IT and Data Security: Possible fraud and cyber threats especially with remote working
  • Corporate governance: What should boards of directors be doing?

Our attorneys are fielding myriad questions from clients and friends of the firm on how to navigate the unprecedented challenges presented by COVID-19. Dealing with work-from-home (WFH), balancing employee confidentiality with protecting workforce health, interacting with lenders, being vigilant against cyber fraud, and making sure our boards of directors are engaged and discharging their duty of care, are among the many topics that the panel will discuss and respond to questions. We are very much looking forward to an interactive discussion and strongly encourage you to submit questions here in advance of our program.

Program timing: 11:30 a.m. - 1:00 p.m. EST

Lowenstein lawyers from a broad array of practice areas address the key legal and business issues arising from the Coronavirus/COVID-19 crisis. Our speaker provide an overview of critical points on which corporate leadership needs immediate guidance.

Topics include:

  • Employment & HR Issues
  • Insurance
  • Customer/Supplier Financial Distress
  • Credit Agreements
  • Data Security
  • Boards of Directors Concerns

 

Doreen M. Edelman and Zarema A. Jaramillo discuss "What Tech Companies and Investors Need to Know About CFIUS’s New Foreign Investment Requirements."

The Committee on Foreign Investment in the United States (CFIUS) reviews foreign investment in U.S. companies for national security purposes. Under recent U.S. Department of Treasury regulations, CFIUS has made changes in how it addresses investment involving critical technologies, critical infrastructure, and sensitive data.

These changes will directly impact both large companies and startup ventures. Global businesses need to understand CFIUS’s new framework so that they know when a transaction requires a mandatory CFIUS filing and whether a voluntary filing might protect the transaction from further government intervention. In the wake of the COVID-19 pandemic, Congress is considering even more restrictions to protect American companies from predatory investment. A new bill was just announced that proposes expansion of CFIUS's mandate over companies doing business with China.

We will discuss these and more relevant factors in the decision to file with CFIUS:

  • a company’s risk tolerance
  • investment needs
  • future exit strategy
  • home country of the investors
  • technologies involved
  • industries served
  • active nature of the investors

Time: 12-1 p.m. EDT

CLE Credit Provided by Lowenstein Sandler

This program is approved for newly-admitted and experienced attorneys.

CA: This program has been approved for 1.0 CA General CLE credit.

NJ: This program has been approved by the Board on Continuing Legal Education of the Supreme Court of New Jersey for 1.2 hours of total CLE credit. Of these, 0.0 qualify as hours of credit for ethics/professionalism, and 0.0 qualify as hours of credit toward certification in civil trial law, criminal trial law, workers compensation law, municipal court law, and/or matrimonial law.

NY: This program has been approved for 1.0 New York credit in the Areas of Professional Practice.

To see our other material related to the pandemic, please visit the Coronavirus/COVID-19: Facts, Insights & Resources page of our website by clicking here.



Professional Associations

Antitrust Section of the American Bar Association Young Lawyers’ Division
  • Vice Chair

Professional Activities and Experience

Accolades
  • Rising Star - Super Lawyers (2014 - 2016) - Jaramillo
  • Corporate INTL Technology Sector Antitrust Law Firm of the Year in Washington D.C. (2020)

Articles

U.S. Government Issues Updated Sanctions Warning
Lowenstein Sandler LLP, June 2020

On May 14, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Department of State, and the U.S. Coast Guard issued a Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities, reflecting increased scrutiny and enforcement attention by U.S. government agencies on curbing illicit shipping practices...

Antitrust Does Not Shelter in Place During a Pandemic, Part 2: Don’t Claim the Failing Firm Defense Unless You’re Really Failing
Lowenstein Sandler LLP, May 2020

The Federal Trade Commission (FTC) has reminded us that the “failing firm defense” is much harder to pull off than might be imagined, and that the antitrust agencies will closely analyze all “failing company” claims even during the coronavirus pandemic. In its May 27 blog post, "On “Failing” Firms — and Miraculous Recoveries,"the FTC emphasized that the defense is difficult to make and, even more to the point, often not true...

U.S. Government Issues Updated Sanctions Warning to Maritime Shipping Community; Recommends Best Practices to Mitigate Risk
Lowenstein Sandler LLP, May 2020

On May 14, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Department of State, and the U.S. Coast Guard issued a Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities, reflecting increased scrutiny and enforcement attention by U.S. government agencies on curbing illicit shipping practices...

Additional Articles

Should antitrust regulations govern how big tech companies collect large amounts of consumer data? That’s a question that’s been getting increased attention recently, with growing pressure from state regulators and legislators for antitrust action against big tech companies. While the U.S. still has a long debate ahead on this issue, European regulators have already been investigating, and in some cases fining, large tech companies for their data practices. Part of the debate in the U.S. centers on whether the control of big data is an antitrust issue, a consumer protection issue, or both. But there are indications that the FTC, the U.S. Department of Justice’s Antitrust Division, and state regulators will not sit idly while the debate continues.

Last month’s announcement that the U.S. Federal Trade Commission has created a new Technology Task Force to more closely monitor tech companies signals that enforcement by U.S. antitrust regulators could be on the way.

The FTC’s Technology Task Force will focus on “examining industry practices and conducting law enforcement investigations . . . on technology-related matters, including prospective merger reviews in the technology sector and reviews of consummated technology mergers.” The Task Force will be comprised of agency attorneys who will coordinate with the agency’s Consumer Protection Bureau as well as agency technologists. This new federal enforcement tool is the latest effort by the FTC to monitor the impact of technology markets on competition and is also the most significant of several steps U.S. federal and state regulators have taken to date on this front.

One particular concern regulators have is that anticompetitive behavior could negatively impact consumer privacy. Last September, the DOJ, including Assistant Attorney General for Antirust Makan Delrahim, hosted a meeting with attorneys general from eight states and the District of Columbia and law enforcement representatives from five other states. The DOJ stated, and several state AGs confirmed, that the purpose of the meeting was to discuss whether technology companies “may be hurting competition and intentionally stifling the free exchange of ideas on their platforms” and to ensure that consumers’ personal information is protected as much as possible.

Unlike regulators in Europe, neither the DOJ nor the FTC has had any real cases yet that address these issues. While U.S. regulators have commented on the potential overlap between consumer privacy and antitrust concerns, neither the DOJ nor the FTC has had a concrete case to decide tied to anticompetitive issues related to consumer data.

One challenge U.S. regulators face is that it may be difficult to articulate the theory of harm. Generally, harm to a group of consumers as a whole would be best addressed through antitrust laws, while harm to individual consumers is best resolved by consumer protection laws. Some have theorized that big data could allow a big tech company to raise prices and exploit consumers, or that the accumulation and control of data has an impact on privacy and data security, thus lessening the quality of a product or service offered to consumers. But antitrust laws do not make it illegal to charge high prices. And competition theories should not be based on unfairness, which does not constitute harm to competition. In addition, if a tech company’s platform serves two markets, e.g., consumers and merchants, and if transactions on each side are bound to one another (the so called “two-sided market”), a viable antitrust claim would have to involve harm to both sides of the platform.

When it comes to mergers, there is an argument that combining big datasets could pose potential barriers to entry. But any company can begin collecting consumer data, and that data is not unique in any way that would constitute a single product market. This means the focus of any merger analysis would likely be on whether the combination will reduce the incentives of merging entities to protect data. To date, the FTC has not challenged a merger on the basis of a reduction in non-price competition over privacy protections, but it noted as far back as June 2015 that it has “explicitly recognized that privacy can be a non-price dimension of competition.”

At the FTC hearings on Competition and Consumer Protection in the 21st Century held in the fall of 2018, panelists explained that it would be hard to prove a company’s data collection practices violate any antitrust rules. What was evident from the hearings is that no one yet can point to conduct and results that would make a case of monopolization or exclusionary conduct due to data aggregation. Indeed, there seems to be a consensus among economists and antitrust practitioners that acquiring or possessing big data, on its own, is not enough for regulators to show any violation.

Nonetheless, state regulators and legislators are pressuring the FTC to pursue such cases. In an October 2018 letter to the FTC, attorneys general from 11 states and the District of Columbia asked the FTC to aggressively enforce the antitrust law at the “intersection between privacy, big data, and competition.” The state AGs argued that there can be “possible long-term anticompetitive harms arising from the aggregation of big data by a small number of dominant platforms,” including the possibility that data aggregation can become a barrier to entry. The state AGs argued that dominant firms could stifle competition in “new lines of business, and perhaps particularly in the context of new services” and asked for “[c]reative and vigorous enforcement efforts.”  In particular, the state AGs criticized the “misguided application of the consumer welfare standard” and indicated that they thought it may be applied “too narrowly” in some circumstances.

Notably, federal and state regulators do not list what specific statutes or regulations they should be enforcing or how the accumulation of big data by tech companies may violate those statutes and regulations. Unlike the EU’s competition laws, U.S. antitrust laws do not punish dominant market power unless there is also some anticompetitive behavior that has enabled the target to maintain or extend its monopoly. In the United States, the acquisition and collection of consumer data, while certainly valuable and competitively significant, may not raise exclusionary concerns. And the growth of tech companies that focus on gathering information on internet users and consumers does not necessarily indicate a violation of antitrust laws. Indeed, if a firm is gaining market power through legal means, there is no violation of U.S. antitrust laws. To that end, none of the literature on the antitrust concerns over big data lays a roadmap for how an enforcement action would be handled in the U.S.

Despite the ongoing debate, scrutiny of technology companies — and big tech in particular — will continue to grow. The European Commission and other European competition authorities have laid the groundwork for future antitrust investigations and have been trying test antitrust theories by bringing enforcement actions against tech companies in Europe. The creation of the FTC Tech Task Force signals that U.S. regulators intend to take a similar approach — especially when it comes to data aggregation. It also means the FTC has now dedicated personnel and resources to investigate potential misconduct and test antitrust theories. To the extent a tech company accumulates and maintains large volumes of consumer data but has not yet evaluated how regulators may perceive its business model and data-related practices, now is the time. While the debate continues and there are significant doubts about whether regulators, both federal and state, would be able to frame data practices as an antitrust issue, the very risk of being embroiled in a lengthy and costly investigation deserves careful consideration.

This article originally appeared on VentureBeat on March 16, 2019.

This practice note discusses the monetary relief available to plaintiffs in civil antitrust actions, and includes a discussion of the types of damages available, requirements for award of monetary damages, treble damages, and joint and several liability.

(subscription required to access full practice guide)

U.S. regulators are making one thing crystal clear to companies—or at least to companies that are paying attention: There are no longer any excuses for not having an effective and comprehensive compliance policy and program.

The government’s stance is sweeping, and it showed up in three recent moves. All of them signal how important it is for companies to adopt and implement broad policies and programs that are detailed and comprehensive enough to incorporate compliance with:

  • U.S. antitrust laws
  • Department of Treasury Office of Foreign Assets Control (OFAC) sanctions policies
  • the U.S. Foreign Corrupt Practices Act (FCPA)

 

(subscription required to access article)

The Office of Foreign Assets Control (OFAC) introduced an interim rule that expands mandatory reporting requirements for all U.S. persons. The rule requires all U.S. persons to file reports with OFAC when a transaction is rejected because the transaction would have resulted in an OFAC violation. The interim rule will remain in effect until OFAC considers the comments received and issues a final rule.

The reporting requirement expands OFAC’s jurisdiction in two key ways.

First, proactive reporting requirements are extended to U.S. persons selling goods and services. Second, the reporting requirement applies to all rejected transactions based on sanctions compliance, not just incidents of rejected fund transfers.

U.S. regulators are making one thing crystal clear to companies–or at least to companies that are paying attention: There are no longer any excuses for not having an effective and comprehensive compliance policy and program.

The government’s stance is sweeping, and it showed up in three recent moves. All of them signal how important it is for companies to adopt and implement broad policies and programs that are detailed and comprehensive enough to incorporate compliance with:

  • U.S. antitrust laws
  • Department of Treasury Office of Foreign Assets Control (OFAC) sanctions policies
  • The U.S. Foreign Corrupt Practices Act (FCPA)

While some companies, particularly those in more regulated industries, have taken notice, too many simply have not. Whether it’s a large financial institution accustomed to dealing with regulations, a small startup with a cloud-based platform, or an acquiring company or private equity fund conducting due diligence on a target’s business, now is the time to identify and address any potential gaps.

DOJ and OFAC: The Incentivized Compliance Framework

Just a few months ago, the Assistant Attorney General of the Department of Justice’s Antitrust Division, Makan Delrahim, announced plans to incentivize compliance, noting that it will now be considered at the charging stage in criminal antitrust investigations.

The division also updated its manual to address evaluating compliance programs during charging and sentencing, as well as processes for recommending indictments, reaching plea agreements, and selecting monitors. Finally, the division published a guide explaining prosecutors’ evaluation of corporate compliance programs at the charging and sentencing stages.

Two months earlier, OFAC released guidance encouraging organizations subject to U.S. jurisdiction (as well as entities that conduct business with those subject to U.S. jurisdiction) to “employ a risk-based approach to sanctions compliance.”

Importantly, the OFAC guidance recommended that compliance programs be predicated on at least five essential components of compliance: management commitment, risk assessment, internal controls, testing and auditing, and training.

OFAC will consider favorably subjects with effective sanctions compliance programs at the time of an apparent violation and may mitigate a civil monetary penalty accordingly.

Subjects with an effective sanctions compliance program may also benefit from further mitigation of a penalty when the sanctions compliance program results in remedial steps being taken. Finally, OFAC may consider the existence of an effective program at the time of an apparent violation as a factor in its analysis as to whether a case is deemed “egregious.”

OFAC’s move came on the heels of the DOJ’s revised FCPA Corporate Enforcement Policy in March. If a criminal resolution is warranted for a company that has voluntarily self-disclosed misconduct, fully cooperated, and timely and appropriately remediated, it is presumed the company will not be prosecuted absent aggravating circumstances involving the nature of the offense or the offender.

If a company takes these steps, the DOJ generally will not require appointment of a monitor if a company has, at the time of resolution, implemented an effective compliance program, which is described here.

A month later, in April, the DOJ also issued updated guidance on evaluation of corporate compliance programs. The update provides a framework for prosecutors to decide whether, and to what extent, a company’s compliance program was effective at the time of the alleged offense, a charging decision, or a resolution, for purposes of deciding how to proceed with respect to resolution and any penalties.

Additionally and significantly–especially for companies that expect to buy, be sold to, or merge with another company–the DOJ now recognizes the potential benefits of corporate mergers and acquisitions. That’s particularly so when the acquirer has a robust compliance program and implements it for the merged or acquired entity.

That means that when a company uncovers misconduct by the target entity or its executives or employees through due diligence or through post-acquisition audits or compliance assessments, and voluntarily self-discloses the misconduct and takes other action consistent with the FCPA Corporate Enforcement Policy (including the timely implementation of an effective compliance program at the merged or acquired entity), there is a rebuttable presumption that the DOJ will decline to prosecute the company criminally.

Similarly, acquirers should closely evaluate the target’s OFAC- and antitrust-related compliance policies and programs, identify any gaps, and address them as quickly as possible post-closing to ensure added protection in the event of a regulatory inquiry or investigation.

What Should Your Company Know?

The actions listed above make plain that there are significant potential benefits for companies with robust and comprehensive compliance programs. And if one isn’t in place, the sooner such a program is developed and implemented, the better.

An effective program must incorporate internal controls, including written policies and procedures, to identify, interdict, escalate, report, and keep records pertaining to activity that may fall under applicable regulations and laws.

This will ensure that an organization outlines clear expectations, defines procedures and processes pertaining to OFAC compliance (including reporting and escalation chains), and minimizes overall risks.

Policies and procedures should be enforced, weaknesses should be identified (including through root cause analysis of any compliance breaches) and remediated, and internal and/or independent external audits should be conducted by subject matter experts.

Compliance programs should also include a comprehensive, independent, and objective testing or audit function to ensure that entities are aware of where and how their programs are performing. Programs also should be kept up to date in light of constantly changing regulatory and business environments.

Testing and auditing, whether conducted on a specific element of a compliance program or at the enterprise-wide level, are central tools to ensure the program is working as designed and to identify weaknesses and deficiencies.

At the same time, compliance training must deliver to all appropriate personnel, on a periodic basis (at least annually), a comprehensive landscape of the enforcement, regulatory, and legal environments. This should include all cumulative changes since the previous training session.

Written training materials as well as written records of the training agenda, training materials used, and attendance must be provided to the regulator to establish that recent and relevant training in fact was provided to an employee who may be drawn into a problematic transaction.

By following the above guidance and keeping a close eye on further moves in Washington, a company can ensure it has an effective program.

Both are important at a time when global conflicts surrounding trade and other matters, combined with a fluid political environment, have prompted regulators to take action on a variety of fronts when it comes to compliance.

Up until about a year ago, it was a challenge for in-house compliance officers and outside counsel to explain why having a comprehensive and effective compliance policy that covered antitrust, anti-bribery and anti-corruption, and trade was a must, regardless of a company’s size or industry. Not any more.

U.S. regulators have made it clear that having such policies and programs can save companies millions of dollars and potentially help avoid prosecution of some violations of applicable laws. The government’s move to formalize the importance of compliance programs showed up in three recent moves.

All of them signal how important it is for companies to adopt and implement broad policies and programs that are detailed and comprehensive enough to incorporate compliance with:

  • U.S. antitrust laws
  • Department of Treasury Office of Foreign Assets Control (OFAC) sanctions policies
  • The U.S. Foreign Corrupt Practices Act (FCPA)

If there is one takeaway from regulators’ recent moves, it is that having an effective and comprehensive compliance policy is not only a risk mitigation measure, but it also is a positive value proposition for most companies.

Whether it’s a large financial institution accustomed to dealing with regulations, a small startup with a cloud-based platform, or an acquiring company or private equity fund conducting due diligence on a target’s business, now is the time to identify and address any potential gaps.

The Incentivized Compliance Framework; What it Means for Your Company or Clients

Antitrust: Just a few months ago, Makan Delrahim, the assistant attorney general of the Department of Justice’s Antitrust Division, announced plans to incentivize compliance, noting that it now will be considered at the charging stage in criminal antitrust investigations.

The antitrust division also updated its manual to address evaluating compliance programs during charging and sentencing as well as processes for recommending indictments, reaching plea agreements, and selecting monitors. Finally, the division published a guide explaining prosecutors’ evaluation of corporate compliance programs at the charging and sentencing stages.

The guide, “Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations,” lists nine factors prosecutors should consider when evaluating the efficacy of an antitrust compliance program, including but not limited to program design and comprehensiveness, culture of compliance within the company, compliance training, monitoring and auditing techniques, reporting mechanisms, and remediation methods.

To help evaluate these factors, the guide also sets out nearly 150 issues prosecutors will explore throughout the antitrust investigation in order to judge a compliance program.

Trade and Sanctions: Two months earlier, OFAC released guidance encouraging organizations subject to U.S. jurisdiction (as well as entities that conduct business with those subject to U.S. jurisdiction) to “employ a risk-based approach to sanctions compliance.”

Importantly, the OFAC guidance recommended that compliance programs be predicated on at least five essential components of compliance: management commitment, risk assessment, internal controls, testing and auditing, and training.

OFAC will give favorable consideration to subjects with effective sanctions compliance programs at the time of an apparent violation and accordingly may mitigate a civil monetary penalty.

Subjects with an effective sanctions compliance program may also benefit from further mitigation of a penalty when the sanctions compliance program results in taking remedial steps. Finally, OFAC may consider the existence of an effective program at the time of an apparent violation as a factor in its analysis as to whether a case is deemed “egregious.”

Anti-Bribery and Anti-Corruption: In March, the DOJ issued a revised FCPA Corporate Enforcement Policy. If a criminal resolution is warranted for a company that has voluntarily self-disclosed misconduct, fully cooperated, and timely and appropriately remediated, it is presumed the company will not be prosecuted, absent aggravating circumstances involving the nature of the offense or the offender.

If a company takes these steps, the DOJ generally will not require appointment of a monitor if a company has, at the time of resolution, implemented an effective compliance program, which is described here.

Earlier this year, the DOJ also issued updated guidance on evaluation of corporate compliance programs. The update provides, for purposes of deciding how to proceed with respect to resolution and any penalties, a framework for prosecutors to decide whether and to what extent a company’s compliance program was effective at the time of the alleged offense, a charging decision, or a resolution.

Additionally, the DOJ now recognizes the potential benefits of corporate mergers and acquisitions, particularly when the acquirer has a robust compliance program and implements it for the merged or acquired entity.

Recommendations for Ensuring Compliance, Mitigating Risk

The actions listed above make plain that there are significant potential benefits for companies with robust and comprehensive compliance programs. And if one isn’t in place, the sooner such a program is developed and implemented, the better.

An effective program must incorporate internal controls, including written policies and procedures, to identify, interdict, escalate, report, and keep records pertaining to activity that may fall under applicable regulations and laws.

Compliance programs should also include a comprehensive, independent, and objective testing or audit function to ensure that entities are aware of where and how their programs are performing. Programs also should be kept up to date in light of constantly changing regulatory and business environments.

At the same time, compliance training must be delivered to all appropriate personnel on a periodic basis (at least annually). Written training materials as well as written records of the training agenda, training materials used, and attendance must be provided to the regulator to establish that recent and relevant training in fact was provided to an employee who may be drawn into a problematic transaction.

The importance of post-deal in addition to pre-deal due diligence cannot be stressed enough. When a company uncovers or suspects misconduct by the target entity, its executives, or employees as part of pre-deal due diligence, there must be a follow-on assessment after closing.

Post-acquisition audits or compliance assessments may lead to voluntary self-disclosures of misconduct. To obtain a declination of criminal prosecution, an acquirer must then take action consistent with the FCPA Corporate Enforcement Policy (including the timely implementation of an effective compliance program at the merged or acquired entity).

Taking into account potential successor liability, acquirers also should evaluate the target’s compliance policies and programs, identify any gaps, and address them as quickly as possible after closing to ensure added protection in the event of a regulatory inquiry or investigation.

Now, more than ever, companies must take preventative measures to ensure compliance, mitigate risk, and provide some cover for potential violations. As the saying goes, one can be penny wise and pound foolish.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

2020 Board Room Conversation Topics:

  • Overview of 2019 Trends and Hot Topics
  • An Effective Board-Level Compliance System is Essential
  • Investors Care about Environmental, Social and Corporate Governance (ESG) Considerations
  • You May Need to Focus on a Broader Set of “Stakeholders”
  • Cybersecurity & Risk Assessment
  • Regulatory Compliance Framework
  • Tabletop Exercises to Schedule for 2020

Over the past few years, U.S. regulators have made it clear that having comprehensive and effective compliance policies covering trade is a must, regardless of the company size, location or industry. The government’s move to formalize the importance of compliance programs is a clear signal of what it expects and a harbinger of what is to come.

Why Is Trade Compliance Important Regardless of the Company’s Location?

Trade compliance should be the goal of every global company, in particular as a risk mitigation measure and a positive value proposition. A compliance program serves as a security blanket for large financial institutions accustomed to dealing with regulations, small startups with a cloud-based platform, and even companies with no physical presence in the United States. A trade compliance program lays the groundwork for international companies on how to conduct business in or with the United States.

With changing industry regulations, it is critical to keep up to date and have a compliance program that is effective. Failure to have a strong compliance program could result in increased legal exposure, potentially leading to fines and penalties as well as negative publicity associated with an enforcement action. Maintaining an effective trade compliance program could help companies mitigate penalties for potential violations, and is ultimately cost-effective. For example, last year, the U.S. government imposed $1.3 billion in penalties on cargo firms, penalties that could have been mitigated with robust compliance programs.

Avoiding U.S. Sanctions

Engaging in the complex global supply chain may be a financial win, but it requires formalized diligence procedures to ensure your company does not run afoul of the law. The Department of Treasury’s Office of Foreign Assets Control (OFAC) has released guidance encouraging organizations to employ a risk-based approach to sanctions compliance and focus on five essential components: senior management commitment, risk assessments, internal controls, testing and auditing, and training. To incentivize companies to engage in international transactions, OFAC also provides that in the case of a violation, it will give favorable consideration to companies with effective sanctions compliance programs and that the existence of such a program may mitigate a civil monetary penalty.

OFAC is not just issuing guidance, it is increasing its enforcement efforts involving both U.S. and foreign entities. It continues to designate more non-U.S. entities that have helped evade U.S. sanctions. For example, several Chinese shipping companies were found to have violated North Korean sanctions, and as a result, were blocked from doing business in the U.S. or with U.S. parties. In January 2020, Eagle Shipping, a Marshall Islands ship management company with headquarters in Stamford, Connecticut, agreed to pay $1,125,000 to settle its potential civil liability for 36 apparent violations of the Burmese Sanctions Regulations. The violations involved Eagle Shipping’s affiliate in Singapore entering into a chartering agreement with Myawaddy—an entity identified on OFAC’s List of Specially Designated Nationals and Blocked Persons. Eagle filed an application with OFAC requesting a license authorizing it to carry sand cargoes purchased from Myawaddy but continued its dealings while the OFAC application was pending. OFAC ultimately denied the license, but Eagle resumed its dealings with Myawaddy, carrying cargo from Burma to Singapore.

Among the aggravating factors, OFAC considered Eagle’s status as a sophisticated shipping company, which should have had expertise in international trade and global shipping transactions. Among the mitigating factors, OFAC considered Eagle’s efforts to develop and implement a formal sanctions compliance program with specific policies and procedures for compliance screening, transaction checklists, and red-flag identification tools.

Compliance Under Commercial Export Laws

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS), which administers U.S. commercial export control regulations, also has published comprehensive guidance for companies working to develop or shore up compliance materials. In its guidance, BIS identified the following elements as foundational in creating an effective Export Compliance Program (ECP): management commitment, completing regular risk assessments, obtaining proper export authorization, record-keeping, training, compliance audits, addressing export violations and taking corrective actions, and maintaining your ECP. Like OFAC, BIS emphasizes the importance of tailoring your ECP to your organization and business based on size, volume of exports, geographic location, and other relevant factors. Companies that fail to comply with regulations that govern export controls have experienced significant penalties.

The U.S. export control laws govern not only U.S. companies, but also certain export activities of foreign companies dealing with the export of certain products, technology, or services from the United States to a foreign country. For example, most recently, BIS imposed substantial export and reexport restrictions on Huawei, a Chinese company, and its 68 non-U.S. affiliates in connection with Huawei’s violations of U.S. export laws specific to the Iranian Transactions and Sanctions Regulations. As part of that action, BIS restricted any export, re-export, or transfer of U.S.-origin technology, commodity, or software to Huawei and its entities without an export license.

This enforcement action ultimately impacted both the U.S. and non-U.S. businesses, including big and small tech companies, suppliers, importers, shippers, and financial institutions. Separately, in 2017, the U.S. government imposed a $1.2 billion criminal fine against ZTE, a Chinese telecom equipment company, for shipping U.S.-origin telecommunications equipment to Iran and North Korea. These two cases have affected how U.S. and foreign companies view their compliance programs; they also have incentivized the development and implementation of more robust compliance programs, including vetting procedures and sanctions checks that ensure adherence to the U.S. export control regulations.

Recommended Steps for Ensuring Compliance and Mitigating Risk

  • The benefits of having a compliance program in place when a mistake happens are significant. When creating your tailored trade compliance policies and procedures, remember the following:
  • Compliance programs should include a comprehensive, independent, and objective testing or audit function to ensure that your business is aware of how its programs are performing.
  • Programs should be updated regularly in light of constantly changing regulatory and business environments.
  • Ensure that your compliance program has comprehensive coverage to track all parties involved in import and export transactions.
  • Even products that seem harmless can be used in ways that companies do not intend. As an organization, you are responsible for knowing how your products will be used and for avoiding government-prohibited end uses.
  • Watch for red flags on BIS’s published list.
  • Watch for “deemed” exports, which are released in the United States of technology or source code to a foreign person. Such a release is deemed to be an export to the foreign person’s most recent country of citizenship or permanent residency, which may require a license or even be prohibited.

Now more than ever, government offices and agencies are providing the industry with guidance on how best to comply with trade regulations. However, this also means that companies can no longer claim ignorance of trade regulations. Today, companies participating in the global marketplace must take proactive preventive measures to ensure compliance, mitigate risk, and minimize potential penalties.

Reprinted with permission from the March 24, 2020, issue of Global Trade. © 2020 Global Trade. All Rights Reserved. Further duplication without permission is prohibited.

The coronavirus pandemic has affected international trade in a number of ways, from supply chain disruptions, calls to reduce tariffs on U.S. imports, pressure to relax economic sanctions to stem the spread of the virus and increased scrutiny of foreign investments.

To best position themselves during this time, companies need to focus on adapting supply chain vulnerabilities, examining and leveraging tariff modifications, scrutinizing export controls and sanctions, and maintaining awareness of the jurisdiction of the Committee on Foreign Investments in the United States.

Address supply chain vulnerabilities.

Between labor shortages, border restrictions and government bans on exports in efforts to secure domestic supplies, the coronavirus is reshaping global trade, with important implications for companies, including on their supply chain.

Companies should creatively consider alternative production and assembly sites, as well as suppliers (reviewing and renegotiating supplier contracts, if necessary) to be sufficiently agile to adapt to these tumultuous times.

Assess applicability of tariffs.

In the context of tariffs, the U.S. Trade Representative has excluded critical items relating to the pandemic from the China Section 301 tariffs. While excluding tariffs necessary to fight the pandemic provides some benefits, the USTR could consider removing duties on items that would help buoy the economy and help the American people, such as products to maintain their homes, farms, animals and pets.

A group of U.S. senators recently urged President Donald Trump to use his authority over trade policy, including tariffs and sanctions to reduce some of the economic stress on the U.S. caused by the virus. The request specifically pointed to Section 301 tariff relief on health, safety, and medical devices and products, and the temporary deferral of duty collection.

The senators also petitioned for broader exclusions to ensure that industries affected by the pandemic can seek and obtain exclusions, even if previously denied, concluding with a request that the president consider a moratorium on new tariffs and tariff increases.

U.S. Customs and Border Protection recently rescinded a notice that it would provide temporary delays on for customs duties on a case by case basis. Subsequently, however, the government began considering suspending the collection of import tariffs for three months.

The removal, exclusion, exemption or deferral of import duties could significantly affect U.S. companies’ revenues. For some companies, this will keep them afloat, avoiding layoffs and closings. For other companies, the cash flow will boost profit and improve quarterly earnings reports which will in turn help Wall Street when earnings are released. These earnings in the retail sector could limit the downward spiral in the market.  

The duties are significant and are paid directly by U.S. importers and U.S. consumers. The positive news will echo through the supply chain, particularly where the importer has no U.S. alternative supply.

Consider sanctions and export controls.

The pandemic is also affecting the export landscape, and companies should be aware of developments affecting trade sanctions, particularly if they are considering alternative supply chain options. As the virus spreads, the U.S. and other countries have been asked to relax economic sanctions to allow for the provision of medical and humanitarian support to sanctioned countries, including Iran and North Korea.

For now, however, sanctions against Iran and North Korea severely restrict U.S. companies’ activities involving those and other embargoed countries. Companies need to monitor any changes in the U.S. sanctions regime and be mindful of the restrictions so as to avoid potential severe financial and criminal penalties for any violations.

Importantly though, not all transactions and services involving sanctioned countries are prohibited. For instance, the U.S. Department of the Treasury’s Office of Foreign Assets Control has issued a general license that authorizes the export to Iran of certain medicines and medical devices. OFAC has also issued a general license authorizing emergency medical services to North Korea.

Specific licenses may be available upon approval from OFAC. Each license, however, includes restrictions on the items authorized, so each situation needs to be considered carefully.

Moreover, although there have been calls to relax sanctions for humanitarian purposes to support these countries’ efforts to slow the spread of the virus and treat infected people, OFAC has not taken any actions to relax existing export restrictions or licenses. Indeed there appears to be consideration for extending export controls on biotechnology items.

Keep CFIUS jurisdiction in mind.

Some companies may be in a position to make valuable investments during the market shifts caused by the pandemic. While doing so, it is important to maintain awareness of potential CFIUS jurisdiction.

Recent regulations, in effect since February, expand CFIUS jurisdiction beyond its previous remit to oversee transactions that led to foreign control of a U.S. company.

CFIUS' broader jurisdiction now includes direct or indirect noncontrolling investments in U.S. companies producing or developing critical technology, owning or operating critical infrastructure, or maintaining or collecting sensitive personal data of U.S. citizens. CFIUS assessments of transactions during the pandemic could focus on health care technology, biotechnology, or data related to those fields.

The rapidly shifting trade regime requires that companies relying on international supply chains and depending on imports or exports of products and services, or seeking to make new acquisitions or investments, keep abreast of the latest developments and work closely with trade counsel to lessen the impact of the coronavirus pandemic on these activities, while ensuring compliance with all applicable trade laws and regulations.

Reprinted with permission from the March 30, 2020, issue of Law360. © 2020 Portfolio Media, Inc. All Rights Reserved. Further duplication without permission is prohibited.

To see our other material related to the pandemic, please visit the Coronavirus/COVID-19: Facts, Insights & Resources page of our website by clicking here.


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