DOJ Announces Approach to AI and its First Chief "AI Officer"

Deputy Attorney General Lisa Monaco Announces DOJ’s Approach to AI

On February 14, 2024, Deputy Attorney General Lisa Monaco announced two important developments related to the advent of artificial intelligence (AI) as it relates to the work of the U.S. Department of Justice (DOJ). First, Monaco announced that federal prosecutors now will seek longer sentences for defendants convicted of crimes involving the use of AI. Second, DOJ will be conducting an internal evaluation, called Justice AI, to determine how DOJ can deploy AI in a safe and ethical manner in connection with performing its work. As we anticipated in our regulatory, compliance, and enforcement predictions for 2024, these two pronouncements confirm that DOJ has turned its attention toward AI.

Texas crypto company sues SEC for ‘overreach’ on digital assets

A Texas cryptocurrency company and an industry group sued the U.S. Securities and Exchange Commission on Wednesday, saying the regulator has overstepped its authority and asking a judge to rule that digital assets traded on exchanges are not securities.

Fort Worth-based crypto company Lejilex and lobbying group Crypto Freedom Alliance of Texas (CFAT) claim the SEC has asserted jurisdiction over the industry without a “clear statutory mandate.”

Lejilex says it seeks to run a cryptocurrency platform called Legit.Exchange. The company formed last year said it plans to list digital assets including those the SEC has deemed securities in lawsuits against Coinbase, the largest cryptocurrency exchange in the U.S., and Binance, the world’s largest crypto exchange.

Lejilex wants the court to rule that listing pre-existing tokens will not violate securities laws.

Overworked SPAC Auditor’s Lapses Lead to $2 Million Fine

WithumSmith+Brown PC agreed to pay $2 million to settle charges that it shirked US audit rules as it churned out audits of blank-check companies that briefly were Wall Street’s favorite way to take companies public.

The Public Company Accounting Oversight Board said in an order Wednesday that the New Jersey firm’s internal safety checks meant to deliver high-quality audits buckled as Withum added hundreds of special purpose acquisition companies as clients. SPACs are publicly traded shell companies whose aim is to raise money and find an operating company to take public via merger.

Sam Bankman-Fried Replaces Trial Lawyers Ahead of Sentencing, Taps Celsius CEO Alex Mashinsky’s Legal Team

Sam Bankman-Fried, in his first appearance in court after being found guilty of defrauding billions of dollars from FTX customers, said his trial attorneys would no longer represent him as he heads towards sentencing.

Instead, his newly hired lawyer, Marc Mukasey, will represent him over the next month. Bankman-Fried, who was found guilty on seven different counts of fraud and conspiracy last November, will be sentenced in late March.

Mukasey also represents bankrupt crypto lender Celsius founder Alex Mashinsky, who is accused by the Department of Justice of securities fraud, commodities fraud and conspiracy to manipulate the price of the company’s token CEL, among others. Mashinsky is set to go on trial this fall.

Major Questions Doctrine Hands Power to Judges After Chevron

The major questions doctrine, which has been gaining momentum as the Chevron doctrine withers, could empower judges to invalidate almost any significant agency action that’s inconsistent with the governing philosophy of the president who appointed the judge.

The doctrine, in effect, directs courts to reject agencies’ interpretation of statutes on major questions—those of national political or economic significance—unless there’s a clear authorization from Congress to accept them.

The Supreme Court announced and applied this important new doctrine, known as MQD, in its 2021 opinion in Alabama Association of Realtors v. Department of Health & Human Services. The high court has since applied the MQD in three other cases, and lower courts have applied it in 38 cases.

COVID-Related Results Lead to Securities Suit

I think we all recognize that the disruptions from the COVID pandemic continue to reverberate through the economy. Many industries and many companies are still trying to get back to equilibrium. The pandemic continues to impact companies, their operations, and their financial results. A new lawsuit filed against the sporting goods retailer Dick’s Sporting Goods(DSG) illustrates how the pandemic-related factors continue to affect companies and translate into securities litigation. DSG was one of the companies that prospered at the outset of the pandemic; when conditions normalized, the company claimed it would be able to keep the positive momentum going. However, after the company announced disappointing results, its share price declined, and now a shareholder plaintiff has filed a securities class action lawsuit, in the latest in a series of COVID-related securities suits. A copy of the February 16, 2024, lawsuit against the company can be found here.

“Ask a Recruiter” — How to Prepare for a Law Firm Job Search in 2024

You’ll also need to confidentially share a raft of information with your recruiter that details your key clients, current billable rate, hours worked over the last three years, originations for this time period, and estimates on your portable book of business. Don’t be scared by that last one! The estimates are just this; law firms understand that you can’t guarantee that your clients will follow you and that you are ethically prohibited from soliciting them in advance of giving notice of resignation. Your recruiter will use this information to craft cover letters (ahem, emails) to your target firms.

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If you’re in the government, would you prefer to join a firm with an existing practice in your space or build and lead a new practice? If you’re currently at a law firm, focus on the firms that solve the problems you have with your current platform. Client conflicts? Seek out firms that are currently representing your largest clients in different areas, as this could be an opportunity to cross-sell your practices. Stay away from firms that represent your clients’ main competitors. Have your clients begun balking at a recent rate increase implemented by your current firm? A move to a firm with different rate structures and billables might alleviate that pain-point. If you feel your compensation isn’t cutting it any longer, look at firms that reported higher earnings in 2023 and/or higher Profits Per Partner (PPP).