An effort to balance what is considered the nation’s most regressive state tax code came before the Washington Supreme Court on Thursday, with justices hearing arguments about whether they should overturn a prohibition on income taxes that dates to the 1930s.
Washington is one of nine states without an income tax, and its heavy reliance on sales and fuel taxes to pay for schools, roads and other public expenses falls disproportionately on low-income residents.
They pay at least six times more in taxes as a percentage of household income than the wealthiest residents do, according to lawmakers, and middle-income residents pay two to four times as much.
Democrats in Olympia, led by Gov. Jay Inslee, sought to begin addressing that in 2021, when they enacted a 7% capital gains tax on the sale of stocks, bonds and other high-end assets, with exemptions for the first $250,000 each year and gains from sales of retirement accounts, real estate and certain small businesses.
It was expected to be paid by 7,000 people — fewer than 1 in every 1,000 residents — and to bring in close to a half-billion dollars a year to help pay for public education in Washington. But it faces a legal challenge from wealthy residents and business and agricultural organizations, who say it violates the state and federal constitutions and makes for bad policy to boot.
“Washington’s unique, unprecedented and unconstitutional tax on capital gains will discourage our state’s resident entrepreneurs and investors from investing in new and expanded businesses in our state,” the Building Industry Association of Washington and Washington Retail Association wrote in a friend-of-the-court brief. “It will also cause significant numbers of individual business owners to leave Washington to avoid the new tax.”
Among the key issues during Thursday’s hourlong arguments before the justices was whether the new tax is, as the state insists, an excise tax — broadly defined as a tax on certain goods, services or activities — or an income tax, which the court long ago held unconstitutional in Washington.
Voters overwhelmingly passed a graduated income tax in 1932. But in a 5-4 decision the following year, the state Supreme Court struck it down, ruling that a tax on income was a tax on property — and the state Constitution says property taxes must be uniform and limited to 1% per year.
Last year, Douglas County Superior Court Judge Brian Huber in central Washington sided with those challenging the capital gains tax as a forbidden income tax. Democratic Attorney General Bob Ferguson appealed, saying Huber got it wrong because the tax is not on property — it’s on what an owner does with that property by selling it.
The Edmonds School District and Washington Education Association, which intervened in the case on behalf of the state, said it agreed that the capital gains tax is an excise tax. But, they said, if the justices disagree and find that it is an income tax, then they should overturn their nearly century-old holding that an income tax is a tax on property.
Unlike property, income isn’t something that is owned and can be sold, their lawyers wrote: “This Court’s cases holding that an income tax is a property tax were wrong when decided and they are wrong now.”
The arguments came as progressives are making a push in several states to have the rich pay more in taxes. Bills announced this month in California, New York, Illinois, Hawaii, Maryland, Minnesota, Washington and Connecticut all revolve around the idea that the richest Americans need to pay more. But the proposals all face questionable prospects.
Those challenging Washington’s capital gains tax argue the state’s labeling of the capital gains tax as an excise tax is merely designed to conceal its true nature as an income tax.
The challengers also say it might apply even if the taxpayer takes no action to generate their gains — in other words, they are taxed simply because they own the asset. A Washington resident who owns shares in an out-of-state company might benefit if the board of directors decides to sell major assets, with revenue passed on to shareholders.
That’s no different from the state’s inheritance tax, which the court has upheld, Washington Solicitor General Noah Purcell argued. People can owe that excise tax simply by receiving money from someone who died out of state, he said.
Some 41 states that tax capital gains tax it as income. Seven other states have no income taxes at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming. New Hampshire taxes only dividends and interest income earned by individual taxpayers.
The challengers noted that since the 1930s, Washington’s voters have 10 times rejected constitutional amendments or initiatives in favor of income taxes.
If Washington wants such a tax, “the way forward is to amend the Constitution,” former Republican Attorney General Rob McKenna argued on behalf of the challengers.
It wasn’t clear how soon the justices might rule. The court is allowing the state to collect the tax beginning in April pending a decision, but Purcell urged them to issue a ruling quickly so the Legislature, which is in session, knows whether it can spend the money.
Husch Blackwell is pleased to announce leaders for its Real Estate, Development and Construction business unit and its Tax and Commercial Litigation practice groups.
Jon Giokas will head up the firm’s Real Estate, Development and Construction business unit. Michael Hargens has been named as the leader of the Commercial Litigation team, and Robert Romashko has been named the practice leader of the firm’s Tax group. These changes are effective January 1, 2023.
Giokas, based in the firm’s St. Louis office, has been with Husch Blackwell since 2003 and counsels investors, institutions, companies and public entities with respect to real estate and finance matters, with a particular focus on transactions utilizing public and private capital sources. He succeeds Carrie Hermeling, who served as the head of the firm’s Real Estate, Development and Construction business unit for the past 10 years.
“Our real estate practice has grown tremendously over the past decade, earning national rankings and expanding our depth in key markets across our footprint,” said Giokas. “I look forward to capitalizing on all of the positive momentum that Carrie’s leadership has generated and to continue building on the esteem our lawyers have earned in the marketplace.”
Based in the firm’s Kansas City office, Hargens has served as the co-lead of Husch Blackwell’s Commercial Litigation practice group since 2020 and will take over the leadership of the team as JoAnn Sandifer steps down after 10 years leading or co-leading the group.
Romashko takes over leadership of the firm’s Tax group, succeeding Joe Pickart, who had led the team since 2017. He recently relocated to the firm’s Washington office from Chicago.
“Each of these partners has been promoted to their new roles because they share a set of core values that match our firm’s strategic vision when it comes to our clients and our colleagues,” said Paul Eberle, Husch Blackwell’s Chief Executive. “These individuals successfully collaborate with and develop those around them, support and share our One Firm Vision, and are stalwart champions in our desire to integrate Diversity, Equity and Inclusion into everything we do here.”
– Wilson Sonsini’s partner-elect class includes six women and 12 men from the firm’s corporate, litigation, intellectual property, technology transactions, and regulatory departments –
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PALO ALTO, CA (December 5, 2022) –
Wilson Sonsini Goodrich & Rosati, the premier provider of legal services to technology, life sciences, and growth enterprises worldwide, today announced that the firm has elected 18 new partners from its attorney ranks. The promotions will be effective February 1, 2023.
“Our 2023 class of partners is remarkable in how closely it reflects our values and the strength of our business,” said Doug Clark, Wilson Sonsini’s managing partner. “These attorneys have accomplished much in their careers and showcase not only the deep expertise within our firm, but also our diversity—both of which help define us. We are excited to welcome this group as our newest class of partners and look forward to continuing to work with them to provide clients with the sophisticated legal services we are known for.”
The 2023 partners-elect are:
Lester Ang, Corporate. Based in Palo Alto, Ang represents start-up and late-stage private companies in matters ranging from incorporation and initial capitalization to venture capital, debt financing, and initial public offerings. He also represents public companies in securities offerings, M&A transactions, SEC reporting, and corporate governance matters. In addition, Ang advises investment banks, venture capital firms, and private equity firms. He received his J.D. from UC Davis School of Law.
Haley Bavasi, Privacy and Cybersecurity. Based in Seattle, Bavasi focuses primarily on advising digital health companies across a range of privacy, transactional, research, and healthcare regulatory issues. In particular, she leverages her expertise in the Health Insurance Portability and Accountability Act (HIPAA) to provide early-stage companies with practical day-to-day counseling, as well as to advise in the context of complex commercial transactions, M&A, and go-to-market strategy. She received her J.D. from UC Berkeley School of Law.
Robert Broderick, Corporate. Based in New York, Broderick practices corporate and securities law and focuses on start-ups and venture capital. He regularly works with high-profile technology companies, with an emphasis on capital raising through complex financings. He also provides advice with respect to corporate governance, strategic transactions, and day-to-day corporate matters. Broderick received his J.D. from Columbia Law School.
Jose Campos, Corporate. Based in London, Campos advises U.S. and European technology start-ups and scale-ups through all stages of their life cycles, including incorporation, venture capital financings, mergers and acquisitions, and other strategic transactions. Campos also supports investors that invest in technology companies. He is well-versed in assisting non-U.S. technology companies with their U.S. expansion plans and “flipping” them into U.S. holding companies. He received his J.D. from UC Hastings College of the Law.
Jonathan Chan, Corporate. Based in San Francisco and Palo Alto, Chan works in the emerging companies practice, and represents private technology companies and investors in formation, venture capital financings, and mergers and acquisitions. He focuses on representing companies and investors in the fintech, blockchain, and gaming sectors. Before joining the firm, Chan was a co-founder and COO of a venture-backed investment platform and previously served as a senior director of business development at Electronic Arts. He received his J.D. from Harvard Law School.
Andy Cordo, Litigation. Based in Wilmington, Cordo focuses on corporate governance litigation in the Delaware Court of Chancery. His experience includes representing stockholders, officers, and directors of Delaware corporations and alternative entities in appeals, disputes over corporate and alternative entity control, fiduciary duties and management, corporate appraisal actions, and contract and other commercial disputes. Cordo received his J.D. from the Pennsylvania State University Dickinson School of Law.
Elina Coss, Energy and Climate Solutions. Based in Seattle, Coss represents borrowers and sponsors in project and structured finance, acquisitions, and project development transactions, with a focus on financing cash flow streams from the renewable energy technology sector. Coss advises clients on complex asset-based financings at all levels of the capital stack, including joint ventures, construction, back-leverage and mezzanine financings, tax and cash equity financings, capital market securitizations, and forward flow financings. She also advises lenders, tax equity investors, private equity funds, and other investors in the renewable energy space. She received her J.D. from New York University School of Law.
Jake Gatof, Corporate. Based in Boston, Gatof represents life sciences and technology companies, as well as their sponsors, through all stages of growth and investment. He represents companies with respect to venture capital financings, corporate governance, mergers and acquisitions, and other complex strategic transactions. He also advises leading growth equity, venture capital, and other institutional sponsors. Gatof received his J.D. from the University of Michigan Law School.
Broderick Henry, Corporate. Based in Palo Alto, Henry focuses on mergers and acquisitions, divestitures, equity investments, and other strategic matters involving public and private companies. He primarily represents clients in the technology industry, but he has represented clients in a wide range of sectors, including aviation, financial services, consumer products, energy and infrastructure, security, and manufacturing. Henry received his J.D. from New York University School of Law.
Jocqui Kaup, Corporate. Working virtually in Washington, Kaup focuses on corporate and securities matters for emerging growth companies and venture capital and private equity firms in both equity and debt financing transactions and mergers and acquisitions. She also advises on strategic alliances, spinouts, recapitalizations, and other corporate reorganizations. Kaup represents private technology growth companies ranging from start-ups to late-stage enterprises, with an emphasis on larger private companies. She received her J.D. from the Benjamin N. Cardozo School of Law.
Megan Kayo, Privacy and Cybersecurity. Based in San Francisco, Kayo advises clients on information security and privacy issues under various laws and regulations, specializing in data breach response and mitigation. She has worked on hundreds of security incidents and acted as the lead counsel, directing the investigation, notifications, and responses to regulators and consumers in connection with global data breaches. Kayo received her J.D. from the University of Virginia School of Law.
Brendan Mahan, Mergers and Acquisitions. Based in Seattle, Mahan advises public and private companies on mergers and acquisitions, divestitures, minority and controlling investments, and other strategic transactions. His experience includes public and private mergers, tender offers, asset and stock purchases, and spin-off transactions, as well as financings and structured finance transactions, across North America, Asia, and Europe. He received his J.D. from Cornell Law School.
Chris McAndrew, Patents and Innovations. Based in Boston, Dr. McAndrew advises early-stage life sciences companies on intellectual property issues and helps clients develop and build a meaningful IP portfolio from inception through their exits. He specializes in representing companies within the complex life science biologics space, including antibodies and cell therapies. Dr. McAndrew was a patent agent at the firm before becoming an attorney. He received his J.D. from the George Washington University Law School.
Victor Nilsson, Corporate. Based in Seattle, Nilsson practices corporate and securities law with a focus on representing issuers, investment banks, and strategic investors on a broad range of capital markets transactions. These include IPOs and follow-on offerings, ADS offerings, ATMs, PIPEs, private placements, and convertible note offerings, as well as high-yield and investment-grade debt offerings. He also advises public companies on SEC reporting, securities law compliance, and corporate governance matters. Nilsson received his J.D. from the University of Arizona College of Law.
David Pirko, Technology Transactions. Based in Palo Alto, Pirko represents leading life sciences companies and venture capital investors in strategic transactional and corporate matters, including partnering and collaboration agreements, licensing agreements, services agreements, clinical trial agreements, manufacturing and supply agreements, and other complex matters. His practice extends from start-ups to public companies operating in all sectors of the life sciences industry. Pirko received his J.D. from Harvard Law School.
Deborah Smith, Patents and Innovations. Based in San Diego, Dr. Smith advises companies on IP strategy beginning from early platform development through commercialization. This includes venture capital, capital markets, and M&A transactions in the fields of chemistry, pharmaceuticals, and biotechnology. Dr. Smith specializes in advising clients that use platform technologies to bring new therapeutics to market. She received her J.D. from the University of San Diego School of Law.
Stephen Strain, Litigation. Based in Palo Alto, Strain is part of the firm’s complex litigation and investigations group. He focuses on representing clients in government and internal investigations, including matters involving allegations of insider trading, complex financial reporting and accounting fraud, violations of the FCPA, and disclosure violations, among others. Strain also frequently represents companies, as well as their officers and directors, in securities class actions, shareholder derivative suits, and related litigation matters. He received his J.D. from New York University School of Law.
Eva Yin, Regulatory. Based in Seattle, Dr. Yin is part of the firm’s FDA regulatory, healthcare, and consumer products practice. She focuses on conducting FDA and healthcare regulatory due diligence for corporate transactions; providing legal counsel to manufacturers regarding FDA approval/clearance for various products, including medical devices, mobile apps, and drugs; FDA compliance; regulation of promotional materials and labeling; and manufacturer compliance. Dr. Yin received her J.D. from UC Hastings College of the Law.
About Wilson Sonsini Goodrich & Rosati
For more than 60 years, Wilson Sonsini’s services and legal disciplines have focused on serving the principal challenges faced by the management and boards of directors of business enterprises. The firm is nationally recognized as a leading provider to growing and established clients seeking legal counsel to complete sophisticated corporate and technology transactions; manage governance and enterprise-scale matters; assist with intellectual property development, protection, and IP-driven transactions; represent them in contested disputes; and/or advise them on antitrust or other regulatory matters. With deep roots in Silicon Valley, Wilson Sonsini has 19 offices in technology and business hubs worldwide. For more information, please visit www.wsgr.com.
The launch marks the creation of the world’s first international commercial real estate online marketplace, allowing tenants, brokers and investors to access properties available for sale and lease across multiple countries on a single platform.
Prior to its launch in the
With over 11m monthly unique visitors,
Prior to the launch of
With 88% of commercial property searches currently being initiated online as market participants aim to save time and money,
CoStar Group Founder and Chief Executive Officer
Tel: (202) 346-6775
This news release includes ‘forward-looking statements’ including, without limitation, statements regarding CoStar’s expectations, beliefs, intentions, or strategies regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that
The American Hospital Association (AHA) survey, released Wednesday, found that 78% of hospitals and health systems said their relationship with commercial insurers is getting worse. Less than 1% said their relationship is improving and the rest said it has stayed the same.
The survey included 304 respondents representing 772 hospitals. All of the respondents are members of AHA.
One of the main culprits behind the worsening relationship appears to be certain practices of commercial insurers, such as prior authorization. The report found that 95% of hospitals and health systems said staff time spent seeking prior authorization approval is increasing. Meanwhile, 62% of prior authorization denials are eventually overturned, the report found.
Aside from time spent on administrative procedures, costs may also be a factor in the relationship souring. A whopping 84% said the cost of complying with insurer policies is also increasing.
“Misuse of utilization management tools like prior authorization has several negative implications for patients and the health care system,” AHA said in the report. “Prior authorization denials can result in delays of necessary treatment for patients and ultimately lead to unexpected medical bills. The extensive approval process that doctors and nurses must go through adds wasted dollars to the health care system through overuse of prior authorization, inefficient submission processes, excessive requests for unnecessary documentation and the need to reprocess inappropriate payment and coverage denials.”
AHA also takes issue with claims denials, stating that commercial health insurers are “increasingly delaying and denying coverage of medically necessary care.” However, 50% of claims denials that are appealed are overturned, AHA said.
There are financial consequences to these delays and denials, AHA stated. The survey found that 50% of hospitals have more than $100 million in accounts receivable for claims that are older than six months, totaling $6.4 billion in delayed or potentially unpaid claims among the 772 hospitals in the survey. Another 35% of respondents said they’ve lost $50 million or more in revenue because of denied claims.
“These payment delays and denials for medically necessary care have serious implications for the financial stability of health care providers and compound fiscal challenges plaguing our health care system,” AHA said.
The report also provided several policy recommendations, including streamlining the prior authorization process and increasing oversight on insurers. Additionally, the organization sent a letter to the Department of Health and Human Services and the Department of Labor, calling for action against commercial payers.
“Health care coverage must work better for patients and the providers who care for them. We urge you to take additional steps to ensure adequate oversight of commercial health plans, including those offering Medicare Advantage plans, this open enrollment season,” the letter stated. “Individuals and families should feel assured that the plan they choose during open enrollment will actually be there for them when they need care.”
America’s Health Insurance Plans (AHIP) declined to comment publicly on AHA’s survey, but previously told MedCity News that commercial insurers’ practices are needed to reduce expenses for patients.
“Health insurance providers advocate for the people they serve by ensuring that the right care is delivered at the right time in the right setting — and covered at a cost that patients can afford. Prior authorization prevents waste and improves affordability for patients, consumers, and employers,” Kristine Grow, AHIP spokesperson, previously said. “Health insurance providers have a comprehensive view of the health care system and each patient’s medical claims history and work to ensure that medications or treatments prescribed by clinicians are safe, effective, and affordable for patients. This results in better outcomes and lower costs for patients.”
Photo: santima.studio, Getty Images
Ukraine concerns loom large in Macron’s visit to Vatican
Pope Francis receives Ukraine war-themed drawings during the weekly general audience at the Paul VI Hall at the Vatican, April 13, 2022.
Vatican Media | Reuters
Pope Francis met at the Vatican with French President Emmanuel Macron, with the war in Ukraine looming large in both leaders’ concerns.
The Vatican in a brief statement said that after Macron spoke with Francis, the French leader met with the Holy See’s secretary of state and its foreign minister.
“During the cordial discussions, which took place in the Secretariat of State, the parties focused on matters of an international nature, starting from the conflict in Ukraine, with special attention to the humanitarian situation,” the Vatican said. “Particular consideration was given to the region of the Caucasus, the Middle East, and Africa.”
A French presidency official indicated the focus on Ukraine was in line with Macron’s speech on Sunday evening to a peace-promoting forum, which Francis will address later this week. Macron used that speech to argue that it’s up to Ukraine to decide the moment and terms of peace to end the war.
— Associated Press
Russia’s Black Sea grain inspection delays are “politically motivated,” Ukraine says
Ukraine’s Ministry of Foreign Affairs expressed concerns over Russia’s prolonged inspection of vessels, which have caused shipping delays along the Black Sea grain corridor.
“We have reason to believe that the delays in Russia’s inspections of the grain initiative’s vessels are politically motivated,” the ministry said in a statement.
Ukraine contended that Russia’s actions “undermine global food security.” The backlogs “have already prevented Ukraine from exporting an additional 3 million tons of grain,” enough to feed 10 million people worldwide, the Foreign Affairs Ministry said.
The United Nations-backed Black Sea Grain Initiative, which was agreed to in July to ease the effects of the war on grain exports from Ukraine, is up for renewal on Nov. 20. Russia has demanded new benefits from the deal, threatening to reject the renewal if its terms are not met.
— Rocio Fabbro
German official says it’s time to start rebuilding Ukraine
German Development Minister Svenja Schulze said she believes it is important to start rebuilding Ukraine now.
“You probably have to do a lot of things in parallel and also expect that one or the other can be destroyed again,” Schulze said on ARD Mediathek’s morning program. “But it’s important that the children continue to have schools, that the local hospital works, that electricity, that water is there.”
Germany is already helping with reconstruction, she added. About 200 million euros of the 426 million euros Germany has sent to Ukraine for rebuilding efforts have gone directly to people in Ukraine, Schulze said.
It could cost up to $350 billion to rebuild Ukraine after the war, according to a report released early last month by the World Bank, Ukrainian government and European Commission.
— Rocio Fabbro
Kremlin says France and Germany have shown “no desire” for mediation on Ukraine
Moscow says that France and Germany have shown “no desire” to take part in mediation over the Ukraine conflict, and it is praising Turkey’s willingness to broker talks.
“[Turkish capital] Ankara takes a different position from that of Paris and Berlin… and has declared its readiness to continue mediation efforts,” Kremlin spokesman Dmitry Peskov told reporters.
He added that French President Emmanuel Macron and German Chancellor Olaf Scholz have so far demonstrated “no desire to listen to Russia’s position or participate in mediation efforts.”
Macron said on Sunday that the terms of peace should be dictated by Ukraine.
— Natasha Turak
Ukraine’s foreign minister asks UN nuclear watchdog to inspect its facilities to disprove Russian ‘dirty bomb’ allegation
Ukrainian Foreign Minister Dmytro Kuleba asked International Atomic Energy Agency chief Rafael Grossi to send a team of experts to Ukraine to inspect its nuclear facilities, in order to disprove Russia’s allegation that it has a “dirty bomb” it plans to use on its own territory.
Grossi, the head of the IAEA, which is the U.N.’s nuclear watchdog agency, “agreed” to Kuleba’s request to “urgently send experts to peaceful facilities in Ukraine,” the minister wrote on Twitter.
“Unlike Russia, Ukraine has always been and remains transparent. We have nothing to hide,” Kuleba added. In a separate tweet, he said he had spoken to EU foreign policy chief Josep Borrell, who “welcomed Ukraine’s decision to invite IAEA experts.”
— Natasha Turak
Ukraine increasingly successful at taking down Iranian drones, UK’s Defence Ministry says
Local residents look at parts of an unmanned aerial vehicle (UAV), what Ukrainian authorities consider to be an Iranian-made drone Shahed-136, after Russian drone strike, amid Russia’s attack on Ukraine, in Kyiv, Ukraine October 17, 2022.
Vladyslav Musiienko | Reuters
Russia has been using Iranian-made Shahed-136 drones over many parts of Ukraine to target critical infrastructure and civilian areas, the UK’s Ministry of Defence said in its latest intelligence update, but added that Ukrainian forces’ use of anti-drone technology is becoming more effective.
“Russia continues to use Iranian uncrewed aerial vehicles (UAVs) against targets throughout Ukraine. Ukrainian efforts to defeat the Shahed-136 UAVs are increasingly successful,” the ministry said in a Twitter post.
Ukrainian President Zelenskyy and other officials claim that up to 85% of attacks are being intercepted, the ministry wrote, adding “These UAVs are slow, noisy and fly at low altitudes, making lone aircraft easy to target using conventional air defences.”
The drones are likely being used as a replacement for Russia’s precision-guided long-range missiles, which it said “are becoming increasingly scarce.”
— Natasha Turak
Zelenskyy calls out Kremlin’s ‘dirty bomb’ claim, says only Russia would use nuclear weapons in Europe
“The morning is difficult. We are dealing with terrorists. Dozens of missiles, Iranian ‘Shahids’,” Zelenskyy wrote on his Telegram official account, referencing the Iranian-made Shahid drones increasingly used by Russian forces.
Ukrinform | Future Publishing | Getty Images
Ukrainian President Volodymyr Zelenskyy said that Russia is the only actor that would deploy nuclear weapons in Europe, calling out its destruction of Ukrainian infrastructure over the past eight months.
His comments came in response to the Kremlin’s claim, without evidence, that Ukraine was preparing to use a ‘dirty bomb’ — which uses nuclear fission to contaminate a large area with radioactivity, without using an explosion — on its own territory.
It was Russia using “nuclear blackmail” at Ukraine’s Zaporizhzhia nuclear power plant, which has been under Russian occupation since March, as well as using phosphorus munitions and other banned weapons again civilian infrastructure, Zelenskyy said.
He added that such a claim only meant that Russia was the one preparing to deploy the weapon it accused Ukraine of having.
In response, Kremlin spokesman Dmitry Peskov reiterated the Russian position that Ukraine plans to use a “dirty bomb” on its own territory to escalate the conflict with Russia.
“Their distrust of the information that has been provided by the Russian side doesn’t mean that the threat of using such a dirty bomb doesn’t exist,” Peskov told the press.
“Such a threat exists, and the defense minister has given the information about it to his interlocutors. It’s up to them whether to trust it or not.”
— Natasha Turak
‘Ukraine has neither ability nor need to use dirty bomb,’ former British ambassador says
Ukraine “has neither ability nor need to use dirty bomb,” senior fellow for Russia and Eurasia at the International Institute for Strategic Studies, Nigel Gould-Davies, wrote in a thread on Twitter.
“[Russian Defense Minister] Shoigu’s round of calls with US, UK, France and Turkey, claiming Ukraine planning to use a ‘dirty bomb’ is v worrying. We’ve seen nothing like this intense military diplomacy since war began. Its substance is even more worrying,” Gould-Davies, who formerly served as the UK’s ambassador to Belarus, wrote.
“Of course, Ukraine has neither ability nor need to use dirty bomb. It’s Russia that’s losing. Nor will anyone believe Shoigu anyway – esp [UK Defense Minister] Ben Wallace, who was lied to during his pre-invasion visit to Moscow.
“Shoigu also warned of ‘uncontrolled escalation’. It’s Russia that is escalating… So hard to see these calls as anything other than Shoigu either doubling down on Putin’s bluffs, or preparing way for Russian nuclear use. Yes, nuclear (ie fission),” Gould-Davies added. “A dirty bomb wd breach nuclear taboo but not achieve significant effects.”
— Natasha Turak
U.S. dismisses Russian claims that Ukraine will use a ‘dirty bomb’
U.S. and Ukrainian officials have struck down claims by Moscow that Ukraine is planning to use a “dirty bomb,” calling them “transparently false.”
The allegation was made by Russian Defense Minister Sergei Shoigu in a round of high-level calls with Western defense directors. Shoigu expressed “concerns about possible provocations by Ukraine with the use of a ‘dirty bomb’,” according to Russia’s defense ministry.
Russian Defence Minister Sergei Shoigu and Chief of the General Staff of Russian Armed Forces Valery Gerasimov attend a meeting with Russian President Vladimir Putin in Moscow, Russia February 27, 2022.
Aleksey Nikolskyi | Sputnik | Reuters
A “dirty bomb” is made to contaminate a large area with radioactivity, making it harmful or uninhabitable for residents there, without using a nuclear explosion.
Secretary of State Antony Blinken told his Ukrainian counterpart Dmytro Kuleba that “the United States rejects Russian Defense Minister Shoygu’s transparently false allegations that Ukraine is preparing to use a dirty bomb on its own territory and that the world would see through any attempt by Russia to use this allegation as a pretext for escalation,” according to a White House statement.
Ukrainian President Volodymyr Zelenskyy also slammed the Russian accusation.
“If Russia calls and says that Ukraine is allegedly preparing something, it means one thing: Russia has already prepared all this,” Zelenskyy said in his nightly address.
— Natasha Turak
France’s Macron says terms of peace with Russia must be decided by Ukraine
French President Emmanuel Macron gestures during a press conference on the last day of the NATO Heads of State summit in Madrid on June 30, 2022.
Bertrand Guay | AFP | Getty Images
French President Emmanuel Macron said that the terms of peace with Moscow must be decided by Ukraine, stressing that the war’s end “can’t be the consecration of the law of the strongest.”
“To stay neutral would mean accepting the world order of the strongest, and I don’t agree with this,” Macron said from Rome on Sunday, as the three-day Cry for Peace conference began.
Macron added that the international community would be receptive when Ukraine’s government decides on that time.
Ukrainian forces are gradually retaking territory occupied and illegally annexed by Russia, and while Moscow increasingly looks to be on the back foot, its ability to wreak havoc on Ukraine’s cities and vital infrastructure remains intact and analysts fear it could use more extreme measures in retaliation, such as nuclear weapons.
— Natasha Turak
More than 1 million Ukrainian homes are without power
Smoke rises above the buildings after the Russian missile attack on the critical infrastructure of Lviv on Oct. 10, 2022. Russia launched 15 rockets in the Lviv region, some were shot down by air defense forces, the rest hit energy infrastructure facilities. Due to the rocket attack, Lviv was left without electricity, water and mobile communication.
Sopa Images | Lightrocket | Getty Images
Russian strikes on critical energy infrastructure in Ukraine have left more than 1 million homes in the country without power, deputy head of the Ukrainian presidency Kyrylo Tymoshenko said over the weekend. Cities and towns all over Ukraine have faced power outages this month due to Russian attacks, prompting fear about what could be in store for the coming winter.
Ukrainian President Volodymyr Zelenskyy urged his fellow citizens to be careful with their power use.
“We should consume electricity very consciously. Please remember to limit the use of unnecessary and energy-consuming appliances … It is necessary to be really frugal with energy consumption in public space,” he said in his nightly address Sunday.
— Natasha Turak
When it comes to investment, including healthcare and biotech, companies in the Bay area, Boston and New York tend to get the lion’s share of venture capital. But in recent years there’s been greater attention to investment in companies beyond those regions. The Covid-19 pandemic also played a significant role as people were forced to limit travel and use Zoom to connect their In a panel discussion at INVEST Digital Health, healthcare and life science investors discussed investment strategies and why they are placing their funding bets in states like Texas, Indiana, Utah and Arkansas.
The panel, Investing between the coasts, moderated by Dr. Hubert Zajicek, CEO, partner and co-founder of Health Wildcatters, offered a window into how investors are finding companies that match their investment theses, even in states that are not thought of as startup hubs. The panel was sponsored by Lyda Hill Philanthropies.
“We were the most active investor in Arkansas last year,” said Ayush Jain, a senior associate with Revolution’s Rise of the Rest Seed Fund. The fund, which was started by Steve Case of AOL fame, has made investments in more than 200 companies in 40 states since 2017.
The video platform Zoom has made an indelible impact towards democratizing investment across the country, according to Ayse McCracken, a founder and board chair with Ignite Healthcare in Houston and president of eNNOVATE Health Ventures. Ignite focuses on women-led digital health and medical device startups, while eNNOVATE invests in a broad array of startups across the continent of Africa.
McCracken said it was one of the unintended consequences of the pandemic.
“[Zoom] has allowed us to connect with entrepreneurs all across the country and all across the world and match them with mentors across the U.S. All of a sudden, we were working with an expanded ecosystem coast to coast, and we were working with startups coming from all across the country. We have eight of the 22 companies [in our latest cohort] that are coming from the Texas market — San Antonio, Austin, Dallas and Houston, which is great. We’d love to see Texas continue to grow. Denver has been another location where we’re seeing a number of entrepreneurs come from, also Minneapolis.”
Max Rosett, a principal with Research Bridge Partners, conceded that Zoom has been useful for connecting with and keeping in touch with portfolio companies in areas that would have otherwise been costly to travel to from his offices in Salt Lake City.
“This is going to sound incredibly trite and yet it’s incredibly real. Now that it’s okay to have board meetings over Zoom, life is much easier,” Rosett said.
Research Bridge Partners, which focuses on life science companies, is trying to chip away at what it refers to on its website as the “geographic misalignment” of venture capital in the Bay area and Boston. It also calls attention to trends among larger venture capital firms of creating lab-to-market systems to advance ideas towards financial liquidity that make it tougher for midcontinent principal investigators to access, because these firms favor institutional brand and geographical proximity to their offices.
Although everyone is pleased that the worst of the pandemic appears to be over, Zajicek said that in the past two years the accelerator has received a record number of applications from all over the world, which has spurred the development of a hybrid program combining in-person and Zoom-based interactions with startups in its cohorts. It has added an international flavor to its startup portfolio. Add to that the accelerator’s advantageous base in Dallas, in close proximity to an airport with the most direct flights in the country.
“It has flattened the world in non-trivial ways,” Zajicek said.
Health Wildcatters recently moved its offices to Pegasus Park, a 13-floor building that offers lots of space for healthcare and life science startups to work and connect with investors and collaboration partners.
Jain agreed that Zoom can offer a useful complement to in-person meetings and has made it easier to foster relationships with startups. He emphasized the importance of regional startup incubator and accelerator spaces, which frequently host demo days and other events to bring investors and startups together. They can also prove useful for investors from out of town seeking to plug into the regional startup ecosystem.
“If there’s a city that you gravitate towards, whether it’s because of a particular industry strength, or a personal connection, those are factors to leverage when you build relationships in those cities and find deal flow there,” Jain said. “That’s something we lean on a lot. We’re not lead investors. So we rely on finding opportunities to invest in startups, mostly through local regional investors, accelerators, incubators, places like Pegasus Park, where there’s a ton of companies. There’s some institutions in other cities like this. I think finding those and really honing in on them and building relationships is important.”
Addition Reflects the Continued Growth of the Boston Office and Sustained Demand for Transactional Experience Among Technology and Life Sciences Clients
Wilson Sonsini Recently Added Seth Flaum in New York as a Partner in the Technology Transactions Department
PALO ALTO, CA (September 28, 2022)—Wilson Sonsini Goodrich & Rosati, the premier provider of legal services to technology, life sciences, and growth enterprises worldwide, announced today that Rob Parr has rejoined the firm’s technology transactions department as a partner in the Boston office. His return reflects Wilson Sonsini’s continued growth in Boston and the ongoing demand for tech-driven deal experience.
Parr has advised clients at all stages of growth on transactions focused on IP rights and technology across various industries, including digital health, artificial intelligence, autonomous driving, big data, clean energy, cloud computing, digital media, e-commerce, edtech, fintech, gaming, internet of things, and software. He regularly drafts and negotiates complex commercial contracts and assists clients with the IP issues arising in financings and M&A deals.
Parr also has substantial expertise that will fortify Wilson Sonsini’s digital health practice, which is a multi-disciplinary group that represents clients in the many areas vital to their businesses, such as with corporate, privacy and data security, intellectual property, commercial transactions, FDA/regulatory and litigation matters.
“We’ve seen continued demand for a combination of transactional and industry experience that helps clients proceed with deal-making and ongoing business matters, even in what is a less active market in certain sectors,” said Doug Clark, managing partner at Wilson Sonsini. “Rob is accustomed to working with clients in dynamic industries that need his commercial and deal-related experience, and to that we add our firm’s strengths representing companies and investors in Boston, the Northeast, and nationwide. We’re pleased he’s returned to our firm.”
Prior to rejoining the firm, Parr was a partner at Orrick, Herrington & Sutcliffe. Before that, he worked in Wilson Sonsini’s technology transactions department. He joined the firm’s Washington, D.C., office as an associate in 2015 before relocating to the Boston office in 2019 and becoming Of Counsel in May 2021. Upon graduating from law school in 2012, Parr was an associate in Venable’s Washington, D.C., office before joining Wilson Sonsini.
Parr’s addition reflects the continued expansion of Wilson Sonsini’s Boston office. Wilson Sonsini opened its Boston office in 2016 to be in closer proximity to its base of clients in the area—many of which are innovative companies and investors in the region’s vibrant life sciences and digital health communities. The firm also aimed to better serve its expanding client base in the local technology and energy sectors, as well as other emerging growth enterprises in the area. Wilson Sonsini’s Boston office now has 10 partners, 29 other attorneys, and seven patent agents.
“I am very excited to return to Wilson Sonsini and to work with leading technology companies and their investors, and to help the firm expand its client base in Boston and beyond, including in the digital health space. I am also very excited to rejoin such an impressive and growing team in Boston, and my many friends and colleagues across the firm.”
Parr is the 16th lateral partner to join Wilson Sonsini in 2022. On August 25, 2022, the firm announced that Seth Flaum had joined the technology transactions department as a partner in the New York office. Flaum was previously executive associate general counsel for Daiichi Sankyo, Inc., a global pharmaceutical company based in Japan. While Parr’s practice will focus on representing technology clients, Flaum specializes in representing life sciences clients.
Parr earned his J.D. from George Washington University Law School in 2012. He is admitted to practice in the District of Columbia, Maryland, and Massachusetts.
About Wilson Sonsini Goodrich & Rosati
For more than 60 years, Wilson Sonsini’s services and legal disciplines have focused on serving the principal challenges faced by the management and boards of directors of business enterprises. The firm is nationally recognized as a leading provider to growing and established clients seeking legal counsel to complete sophisticated corporate and technology transactions; manage governance and enterprise-scale matters; assist with intellectual property development, protection, and IP-driven transactions; represent them in contested disputes; and/or advise them on antitrust or other regulatory matters. With deep roots in Silicon Valley, Wilson Sonsini has offices in 18 technology and business hubs worldwide. For more information, please visit www.wsgr.com.
Newly proposed environmental, social, and governance (ESG)-related amendments to Form ADV under the Investment Advisers Act of 1940 (Advisers Act) underscore the need for federally regulated investment advisers to fully disclose the material conflicts and risks associated with their investment management programs. In particular, advisers that manage assets based on a combination of financial technologies (fintech) and ESG-related factors should consider whether they are providing adequate disclosures regarding the potential features and outcomes of their advisory programs. Not only are these disclosures generally required under existing law and guidance, but it is possible that the U.S. Securities and Exchange Commission (SEC) will pursue ESG-based enforcement cases against investment advisers in light of the proposed changes, as it frequently does when it is pursuing new rulemaking and/or sees concerns in an area of focus.
Summary of Advisers Act Proposals
As part of a recent focus on ESG-related compliance and disclosure,1 the SEC has proposed amendments to Form ADV, the registration and disclosure filing for registered investment advisers and exempt reporting advisers2 (together with registered investment advisers, “Advisers”), to require certain ESG-related disclosures.
According to the proposing release for the changes (Proposing Release),3 a central purpose of the proposed amendments is to ensure that investors receive consistent, comparable, and reliable information about how advisers use ESG factors in their investment management programs.4
To that end, the SEC proposed changes to Form ADV Part 1A and the instructions for the Form ADV Part 2A “Brochure” that would require Advisers to describe, among other things, the ESG-related factors they consider within each significant investment strategy or method of analysis, any ESG-consultants or other similar partners they work with, and the nature of the ESG-specific strategies they use to manage private fund and separately managed account client assets. The changes would also require disclosures regarding whether an adviser uses “ESG Integration” strategies that consider one or more ESG factors alongside other, non-ESG factors; “ESG-Focused” strategies that use one or more ESG factors as a main or significant consideration; or “ESG Impact” strategies that have a stated goal that seeks to achieve a specific ESG impact or impacts that generate specific ESG-related benefits, by targeting investments that drive specific and measurable environmental, social, or governance outcomes.
Importantly, the SEC noted in the Proposing Release that current regulations already require Advisers to disclose material information about the ESG-related aspects of their advisory programs.5 As a result, regardless of whether the changes have been adopted, Advisers should consider whether their current ESG-related disclosures fully describe the features, conflicts, and risks associated with their investment management programs.
Considerations for Fintech-Based Advisory Programs
For fintech Advisers, ESG-related disclosures may require specific consideration of how the use of ESG-related concerns in asset management might interact with the use of fintech to impact performance and other issues. For example, fintech Advisers may need to consider the following types of issues:
- Information Scraping. Some investment advisers analyze and learn from “alternative data,” which can include information such as data from credit card transactions, social media posts, satellite images, and questions posed to smart speakers. If an Adviser scrapes ESG-related data from third-party websites as part of its asset management program, it will need to ensure it understands and fully discloses the reliability and limitations of those data. For example, an Adviser that scrapes data to determine what energy sources a company uses and manages assets based on that information would need, among other things, to evaluate and disclose the quality of the scraped information and its potential and measured effects on returns.
- Use of Artificial Intelligence. Advisers that use artificial intelligence (AI) to integrate ESG-related factors into their investment management programs may need to consider whether an AI-based system will adequately address the uncertainty those factors bring to both investing and to supporting the ESG-related goals they are designed to further, particularly as an AI-based system changes in response to new data and outcomes.6 The concept of “ESG” itself is relatively new, and it is unclear whether and how ESG-based decision-making will further investors’ investment goals, impact the success of businesses, or achieve any long-term environmental, social or governance changes, all of which may be among the goals of ESG-based approaches. Advisers should consider and disclose their methods for defining, monitoring, and assessing the success of AI- and ESG-based programs—both at launch and over time, given that Advisers will be responsible for the results of AI-based programs even after those programs adjust to new data and prior outcomes.
- Robo-Adviser Portfolio Programs. Many “robo-advisers” that manage client assets on a portfolio basis rely on Rule 3a-4 under the Investment Company Act of 1940 (1940 Act) to ensure the portfolios are not treated as funds subject to registration under the 1940 Act. Among other things, Rule 3a-4 requires that investors be allowed to impose reasonable limitations on how their money is invested. An Adviser can, however, reject limitations that are clearly inconsistent with the stated investment strategy or philosophy or the nature or operation of the relevant investment program. Advisers may need to consider whether certain limitations an investor seeks to impose will fundamentally change or impair the Advisers’ program—in which case the Adviser should either limit the restrictions investors can make or provide disclosures as to the potential effects of investor restrictions. This may be particularly important in the context of ESG-Focused or ESG Impact programs.7
Finally, although findings thus far are mixed, at least a few analyses suggest that ESG-based investment strategies may underperform similar investment strategies without an ESG focus.8 In this context, all Advisers might need to disclose that an ESG overlay could reduce investment returns.
Whether or not the SEC adopts the proposed changes to Form ADV, fintech Advisers should consider the unique issues ESG-based management raises in light of their ESG-based programs.
 For example, in March 2022, the SEC proposed rule changes that would require certain climate-related disclosures in registration statements and periodic reports under the Securities Act of 1933 and Securities Exchange Act of 1934. The Enhancement and Standardization of Climate-Related Disclosures for Investors, Release No. 33-11042 (Mar. 21, 2022), https://www.sec.gov/rules/proposed/2022/33-11042.pdf. In addition, in 2021 the SEC created the Climate and ESG Task Force (“Task Force”) within the Division of Enforcement to develop initiatives to identify ESG-related misconduct, identify material gaps or misstatements in issuers’ disclosures of climate risks, and analyze disclosure and compliance issues relating to Advisers’ ESG strategies. SEC, SEC Announces Enforcement Task Force Focused on Climate and ESG Issues (Mar. 4, 2021), https://www.sec.gov/news/press-release/2021-42. The SEC’s Division of Examinations also issued a Risk Alert in April 2021 to highlight observations from recent exams of investment advisers, registered investment companies, and private funds offering ESG products and services. SEC Division of Examinations, Risk Alert, The Division of Examinations’ Review of ESG Investing (Apr. 9, 2021), https://www.sec.gov/files/esg-risk-alert.pdf. A month prior, the Division of Examinations had announced that its 2021 examination priorities included a greater focus on climate-related risks. SEC Division of Examinations, 2021 Examination Priorities (Mar. 4, 2021), https://www.sec.gov/files/2021-exam-priorities.pdf.
 Exempt reporting advisers are generally advisers that are exempt from registration under sections 203(l) and 203(m) of the Advisers Act. These Advisers must file a truncated version of Part 1A of Form ADV.
 SEC, Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices, Securities Act of 1933 Release No. 11068, Securities Exchange Act of 1934 Release No. 94985, Advisers Act Release No. IA-6034, Investment Company Act Release No. IC-34594 (May 25, 2022), https://www.sec.gov/rules/proposed/2022/33-11068.pdf. The Proposing Release also includes amendments under the Investment Company Act of 1940, which we do not discuss in this alert.
 Proposing Release at 168. For example, Advisers Act Rule 206(4)-1 already requires Advisers to disclose material information about their advisory programs and would, the SEC stated, prohibit greenwashing, i.e., exaggerating “ESG practices or the extent to which their investment products or services take into account ESG factors.”
Following Russia’s invasion of Ukraine, the United States, United Kingdom, and European Union responded with an unprecedented and dizzying array of economic sanctions and export controls directed against the Russia government as well as many Russian banks, operating companies, and individuals. During the intervening months, Western companies and asset managers have attempted to understand and to comply with the newly imposed restrictions.
However, as the pace of new sanctions and export controls has begun to slow, a new era may be beginning. Western governments’ actions—along with public officials’ statements—suggest that the United States, United Kingdom, and European Union will be increasingly focused on enforcing Russian sanctions and export controls.
U.S. Enforcement Initiatives
Senior Department of Justice (DOJ) officials have emphasized that sanctions enforcement will be a priority. Attorney General Merrick Garland wrote in March that the U.S. government would “leave no stone left unturned” when enforcing U.S. sanctions violations. In June, Deputy Attorney General Lisa Monaco elaborated on this warning, likening the DOJ’s dedication to sanctions enforcement to its previous focus on the Foreign Corrupt Practices Act (FCPA). Monaco explained that the DOJ has brought “a new level of intensity and commitment to sanctions enforcement,” such that sanctions enforcement is “the new FCPA.” She further noted that “sanctions should be at the forefront” of compliance for multinational companies and any other businesses with international supply chains.
The U.S. government has developed new initiatives dedicated to sanctions enforcement. In March, the U.S. launched Task Force KleptoCapture, an interagency law enforcement group based within the DOJ that is tasked with enforcing Russian sanctions and export controls. One of the group’s primary responsibilities is “investigating and prosecuting violations of new and future sanctions imposed in response to the Ukraine invasion, as well as sanctions imposed for prior instances of Russian aggression and corruption.” Historically, the DOJ has worked closely with the Office of Foreign Assets Control (OFAC) on sanctions-related investigations, which is responsible for administering most U.S. sanctions and enforcing civil violations of those programs.
Other U.S. government agencies have signaled they intend to take more aggressive approach to enforcement as well. In June, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced changes to strengthen its enforcement capabilities, including by implementing higher financial penalties for significant Export Administration Regulations violations. In a memorandum detailing BIS’s new policy, Matthew Axelrod, the Assistant Secretary for Export Enforcement, explained that “[w]e will use all of our existing regulatory and statutory authorities to ensure that the most serious administrative violations trigger commensurately serious penalties.” In addition, BIS is eliminating a policy that previously enabled companies to enter settlements without admitting fault.
The coming investigations likely will affect companies and individuals inside and outside the United States. In fact, if past is prelude, then non-U.S. banks and non-U.S. operating companies may face an increased risk of being targeted by U.S. government investigations for violating U.S. sanctions and export controls. Indeed, during the past decade, many of the United States’ largest sanctions and export controls investigations have stemmed from non-U.S. financial institutions and operating companies violating U.S. law.
UK Enforcement Initiatives
The UK government has taken steps to increase sanctions enforcement as well. In March, the United Kingdom passed the Economic Crime (Transparency and Enforcement) Act 2022, which grants the Office of Sanctions Implementation (OFSI) new powers to levy civil penalties on a strict liability basis against parties that violate certain UK sanctions after June 15, 2022. Before the enactment of this legislation, individuals and entities only faced sanctions liability if they had actual knowledge or reasonable cause to suspect that their conduct would violate the UK sanctions. In addition, OFSI is now authorized to publicize financial sanctions breaches committed by parties that do not result in the imposition of monetary penalties. The UK government may bring criminal charges against sanctions violators as well, although a party must be found to act with scienter to incur criminal liability.
The UK government’s words and actions illustrate that it intends to take an aggressive enforcement approach with respect to persons who facilitate sanctions evasion. In July, the National Crime Agency (NCA), OFSI, and other government agencies published a “Red ALERT” that describes various sanctions evasion techniques utilized by designated parties and highlights conduct that could result in enablers to designated parties—including attorneys, financial advisors, estate agents, auction houses, and company directors—incurring liability. Following publication of the Red Alert, the NCA arrested multiple individuals who allegedly assisted Russian oligarchs in evading UK sanctions.
EU Enforcement Initiatives
The European Commission recently pushed for a requirement that EU member states implement domestic legislation that criminalizes violations of the Russia sanctions. In the European Union, sanctions are enacted by the European Commission but enforced by individual member states. However, not all member states have implemented domestic legislation criminalizing sanctions offenses, resulting in disparate approaches to enforcement within the European Union. In addition, the European Commission recently put forth a proposal that would allow for the confiscation of assets related to sanctions violations.
Public reports indicate that senior EU officials are considering developing a mechanism that would allow for pan-EU enforcement of sanctions violations. The European Commission purportedly is considering standing up an EU-wide sanctions authority, which EU Financial Services Commissioner Mairead McGuinness explained might resemble OFAC. Alternatively, the European Commission could seek to expand the authority of the proposed Anti-Money Laundering Authority (AMLA) to include oversight and enforcement of sanctions violations.
Multi-Jurisdictional Enforcement Actions
The U.S., UK, and EU demonstrated unprecedented levels of cooperation in crafting the Russian sanctions and export controls. Since February, the United States, United Kingdom, and European Union have worked closely to maintain alignment and consistency with respect to the newly imposed sanctions, which has resulted in these sanctions programs containing many similar prohibitions and restrictions.
Given the substantive overlap, financial institutions and companies could face multi-jurisdictional investigations for potential sanctions and export control violations stemming from a single transaction with a sanctioned counterparty. Multi-jurisdictional enforcement actions are notoriously complex, expensive, and time-consuming. These investigations also can result in parties incurring liability, paying fines, and facing other penalties in multiple jurisdictions.
In light of the collaboration in developing the sanctions programs, coordination among these actors is expected to continue with sanctions enforcement as well. The United States, United Kingdom, and certain EU member states already have begun to share information that may be used in enforcement actions. For example, the Russian Elites, Proxies, and Oligarchs (REPO) task force launched in March with representatives from the U.S., UK, and European Commission as well as Australia, Canada, Germany, Italy, France, and Japan. REPO is charged with information sharing as well as identifying and freezing sanctioned parties’ assets.
As the United States, United Kingdom, and European Union begin to shift their focus from developing new sanctions and export controls to enforcing existing Russian sanctions and export controls, parties may find themselves subject to increased scrutiny on both sides of the Atlantic. Companies can and should take proactive steps—such as adopting policies and procedures, delivering training sessions, and completing risk assessments—to ensure compliance with all applicable sanctions and export controls and to minimize their risk of facing investigations in the future.
Please direct any questions regarding these topics to Wilson Sonsini partners Mike Casey, Tarek Helou, Tim Broas, or another member of our national security practice or government investigations practice.