Weinberg & Company

Best Practice Newsletter – November 2022

By November 21, 2022 No Comments

DOJ Targets Board Conflicts-

The US Department of Justice’s Antitrust Division is targeting directors who sit on boards of competing companies as part of its stepped-up enforcement of Section 8 of the Clayton Antitrust Act.

Recently, the DOJ issued a press release announcing the resignation of seven directors from five companies “in response to concerns by the Antitrust Division that their roles violated the Clayton Act’s prohibition on interlocking directorates.”

DOJ’s renewed interest in Section 8 comes a year after President Biden signed an Executive Order aimed at boosting US competition through vigorous enforcement of existing antitrust laws by government agencies, including the Department of Justice.

The Executive Order, signed July 9, 2021, cited that “federal government inaction” and “decades of industry consolidation have often led to excessive market concentration.” It continued that “this order reaffirms that the United States retains the authority to challenge transactions whose previous consummation was in violation of the Sherman Antitrust Act [and] the Clayton Antitrust Act.

In doing its part to enforce provisions of Clayton, the DOJ is targeting Board Members. “Competitors sharing officers or directors further concentrates power and creates the opportunity to exchange competitively sensitive information and facilitate coordination – all to the detriment of the economy and the American public,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The Antitrust Division is undertaking an extensive review of interlocking directorates across the entire economy and will enforce the law.”

“Over the last several months, the Division announced its intent to reinvigorate Section 8 enforcement. This announcement is the first in a broader review of potentially unlawful interlocking directorates,” according to the DOJ announcement, adding, “By eliminating the opportunity to coordinate – explicitly or implicitly – through interlocking directorates, Section 8 is also intended to prevent other violations of the antitrust laws before they occur.”

DOJ noted that companies, officers, and board members should expect that enforcement of Section 8 will continue to be a priority for the Antitrust Division.

Crypto Asset Communications Targeted

Financial Industry Regulatory Authority (FINRA) has announced that it will conduct a targeted exam of broker-dealer practices regarding all retail communications involving crypto asset products and services.

The action comes days after the collapse of crypto giant FTX and will be conducted on communications which occurred in July 2022.

In its November announcement, FINRA said its action will target all crypto assets, not just crypto securities, and will include all retail communications that were distributed or made available by a broker-dealer’s affiliate on its behalf.

In addition, FINRA will be reviewing broker-dealer practices and supervisory processes related to crypto-related communications with the public.

FINRA defines a Retail Communication as any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period, as well as video, social media, mobile applications, and websites.    

A Banner Year for SEC Enforcements 

The SEC’s ramped up enforcement has resulted in $6.44 billion in monetary penalties, the highest on record and representing a 67% increase over the previous year’s $3.865 billion in penalties.

Of the total $6.4 billion, civil penalties amounted to $4.194 billion (a record) and disgorgement of $2.245 billion, according to the SEC’s news release.

By the close of fiscal year ending September 30, 2022, the regulatory agency had filed 760 enforcement actions, up 9% from the prior year. These included 462 new enforcement actions (a 9% increase), 129 actions against issuers who were allegedly delinquent in making required SEC filings, and 169 “follow-on” administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders.

Whistleblowers did well last year too. The SEC paid out approximately $229 million in 103 awards, the second highest year in dollars and number of awards for its Whistleblower Program. Overall whistleblowers provided a record of over 12,300 tips for the year.

Salaries to Rise in 2023

As companies adjust to inflationary pressures and a tight labor market, overall salary increases in the US are forecast to rise 4.6% in 2023, up from the 4.2% increase that occurred in 2022.

That’s according to the just released Salary Budget Planning Report conducted by global advisory firm WTW of 1,550 organizations in the US.

Survey highlights include:

·    The tight labor market has been an influencing factor in the decision of 68% of companies to increase salary budgets.

·    70% of companies surveyed spent more than they originally planned on pay adjustments for the past 12 months.

·    75% of respondents also are experiencing problems with attracting and retaining talent — a figure that has nearly tripled since 2020.

·    67% of companies have provided more workplace flexibility, while 61% have already put broader emphasis on diversity, equity and inclusion

·    90% of organizations making or considering salary increase adjustments are doing two adjustments per year. 

Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.