A recent advisory published by the Commodity Futures Trading Commission’s Division of Enforcement and comments of the division director have highlighted the CFTC’s attention toward investigating potential violations of the Commodity Exchange Act (CEA) that involve foreign corrupt practices. On March 6, CFTC Director of Enforcement James M. McDonald addressed this very issue in remarks before the ABA National Institute on White Collar Crime. At the same time, the division issued an Enforcement Advisory providing guidance on how the CFTC will treat instances of self-reporting and cooperation concerning CEA violations that also involve foreign corrupt practices.
The Federal Energy Regulatory Commission (FERC or the Commission) Office of Enforcement (OE) issued its 2018 Report on Enforcement on November 15. The report provides a review of OE’s activities during fiscal year 2018 (FY 2018), which begins October 1 and ends September 30 annually. Like last year, the report reveals likely areas of focus for FERC enforcement in the coming year, and provides guidance to the industry based on the wide variety of enforcement matters that are otherwise non-public by synthesizing some of the more disparate developments from audits, market surveillance, and other enforcement activities for the benefit of industry stakeholders.
The Commodity Futures Trading Commission (CFTC) announced on September 28 that it has created an Insider Trading & Information Protection Task Force. The new task force is responsible for identifying and charging those who engage in insider trading or otherwise improperly use confidential information in connection with any market regulated by the CFTC. The task force is composed of members from the CFTC’s offices in Chicago, Kansas City, New York, and Washington, DC.
Recent statements by the Antitrust Division at the US Department of Justice (DOJ) confirm that the DOJ is continuing to focus on “no-poaching” and wage-fixing agreements with more enforcement actions expected to be announced in the near future. Recent criminal investigations target the healthcare industry, but all employers should be aware of the application of antitrust laws to human-resource decisions.
The North American Electric Reliability Corporation (NERC) filed a Notice of Penalty summarizing an agreement by an unidentified electric utility to pay a $2.7 million penalty in connection with self-reported violations of the Critical Infrastructure Protection reliability standards related to sensitive data exposure by a vendor. Although the utility did not directly cause the improper data handling—and indeed the violation resulted from vendor noncompliance with utility policies—the Western Electricity Coordinating Council nevertheless concluded that the utility failed to adequately implement its information protection program by not preventing or immediately detecting the vendor’s actions and submitted the settlement to NERC.
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Under a notice of proposed rulemaking to be released today, December 21, the Federal Energy Regulatory Commission (FERC) is proposing to direct the North American Electric Reliability Corporation (NERC) to revise the Critical Infrastructure Protection (CIP) reliability standards to require electric utilities to report all cyberattacks on the electric security perimeters surrounding their key electric infrastructure as well as the associated electronic access control and monitoring devices that protect those perimeters.
Today, the Federal Energy Regulatory Commission (FERC) Office of Enforcement (OE) issued its 2017 Report on Enforcement. The report provides a review of OE’s activities during fiscal year 2017, which begins October 1 and ends September 30 annually, revealing likely areas of focus for FERC enforcement in the coming year.
The report indicates that even though FERC lacked a quorum for much of 2017, OE continued to focus on the same areas of market and operational risk that have traditionally captured its attention, which include (i) fraud and market manipulation; (ii) anticompetitive conduct; (iii) conduct that threatens transparency in regulated markets; and (iv) serious violations of mandatory reliability standards. OE does not anticipate that its priorities will change for fiscal year 2018. FERC also addresses its continued litigation of contested cases in federal courts. Additionally, similar to fiscal year 2016, the report indicates that the vast majority of alleged violations that come to OE’s attention are addressed informally through corrective actions voluntarily implemented by the subject of the investigation, without the need for a formal settlement. But this year, OE provides detailed examples of surveillance inquiries initiated by its Division of Analytics and Surveillance that are closed without referral to the US Department of Justice. Details on the topics in the 2017 Enforcement Report will be further described in a future LawFlash that will be posted as part of Morgan Lewis’s Power & Pipes energy law web postings. These issues will also be discussed in further detail during an upcoming webinar hosted by Morgan Lewis linked below.
On September 12, 2017, FERC and NERC released a joint statement and guidance encouraging ongoing interutility cooperation among all utilities in response to Hurricane Irma, which ravaged areas in Florida and Georgia, neighboring states, Puerto Rico, and US territories in the Caribbean. The statement emphasized that the utility response to Hurricane Irma will likely be among the largest industry restoration efforts in US history. In it, FERC and NERC encourage utilities to lend personnel skilled in vegetation management to those utilities in need as a result of the hurricane.
Earlier this month, the US Supreme Court issued a ruling that imposed a five-year statute of limitations period in which disgorgement could be ordered by an administrative agency penalizing regulatory violations. Although the Court’s decision in Kokesh v. SEC arose in the context of an enforcement action initiated by the Securities and Exchange Commission (SEC), the Court’s decision may well be applied to disgorgement orders issued by either the Federal Energy Regulatory Commission (FERC) or the Commodity Futures Trading Commission (CFTC). However, additional litigation may be required to ensure that the disgorgement boundaries set forth by the Court in Kokesh are equally applied to FERC and CFTC enforcement actions seeking disgorgement from an energy market participant.