“As the DOJ considers further policy guidance, companies would be well advised to take proactive steps to implement or strengthen policies governing the use of encrypted or ephemeral messaging applications.”
— Jimmy Fokas and Johnathan New, BakerHostetler
This week, we explore the rise of off-channel communication use and how the Department of Justice (DOJ) is considering new guidance on secret messaging applications and executive clawback policies. We also look at minimizing the cost of ‘regulation creep’ and learn the critical considerations for employers on a DOJ memo regarding corporate criminal enforcement.
DOJ Considers New Guidance on Secret Messaging Apps and Executive Clawback Policies
Following recent revisions to the DOJ’s corporate criminal enforcement policy, an official with the Criminal Division announced that the Department might issue further guidance on evaluating compliance policies. Specifically, the Department is considering whether it will issue new guidance on policies governing employee use of encrypted and ephemeral messaging applications, which allow the automatic deletion of messages after they have been viewed. Additionally, the DOJ is exploring the need for further guidance on evaluating corporate compensation clawback policies, urging companies to adopt compensation structures that promote compliance, including policies that deter misconduct through financial penalties.
Minimizing the Cost of ‘Regulation Creep’
General counsels and their teams know that each year brings more regulations with which they must comply. In an era of frozen or shrinking law department budgets, hiring freezes, and demands to ‘do more with less,’ the certainty of ever-more regulations seems bound to increase non-discretionary law department spending further. So what are law department leaders to do to ensure compliance while controlling costs? At first glance, regulatory compliance – such matters as data breach notification, subpoena response, and handling DSAR requests – seems like an unlikely activity for savings, especially as the scope of regulations seems to expand endlessly. However, several factors militate against this stance. Rather than be resigned to cost increases for regulatory compliance, law departments should view them as a prime opportunity to trim non-discretionary spending for these five reasons.
Are Your Employees Talking Business on Their Personal Devices?
In September 2022, the U.S. Securities and Exchange Commission (SEC) reached settlements with 16 financial services firms totaling over a billion dollars related to investigations of off-channel communications, a term for business communications by employees, including the use of their personal devices that their firm’s established archiving platforms do not capture. This article briefly summarizes the rise of off-channel communication use and the resulting settlements. It also provides practical recommendations to help proactively address any potential regulatory inquiries in this area.
Recent DOJ Memo on Corporate Criminal Enforcement Highlights Critical Considerations for Employers
The DOJ’s recent memo contains helpful guidance for employers, outlining critical considerations for minimizing liability and protecting employers from potential government investigations of alleged corporate criminal activity. Specifically, the DOJ notes that prosecutors would consider the remediation employers have undertaken to address the root causes of any prior employee misconduct. This includes employee discipline, compensation clawback provisions, and compliance program upgrades, including prohibiting employees from using select third-party messaging applications. Learn about the key considerations outlined in the memo for employers.