Should a company subject to the Foreign Corrupt Practices Act refuse to hire a law firm that employs an attorney who helped create – while at the DOJ or SEC’s FCPA Unit – the enforcement climate the company is now subject to?
Interesting issue and it would seem that the company in the above scenario would have some legitimate concerns about the issue – particularly given that the enforcement climate created was in part the result of expansive enforcement theories advanced in resolution documents not subject to any meaningful judicial scrutiny.
According to this article, “Cryptocurrency exchange Coinbase made clear that it won’t work with law firms that employ former U.S. Securities and Exchange Commission attorneys who led the charge on crypto enforcement suits, singling out Milbank LLP for its hiring of ex-SEC enforcement director Gurbir Grewal.”
According to the article:
“CEO Brian Armstrong posted to social media site X … that the company has told all the law firms it works with that hiring ex-SEC enforcers who championed the agency’s crypto cases is a nonstarter.
We’ve let all the law firms we work with know, that if they hire anyone who committed these bad deeds in the (soon to be) prior administration, we will no longer be a client of theirs.
[…]
Armstrong called out Milbank, saying the firm “recently messed up” when it hired Grewal in October. While Coinbase did not have an active relationship with the law firm, Armstrong said his crypto exchange won’t be hiring Milbank while Grewal works there.
[…]
Coinbase and other digital asset firms have decried the mounting SEC enforcement actions against crypto firms under Chair Gary Gensler, who has repeatedly asserted that much of the industry’s activity implicates securities laws. Coinbase itself is defending claims that it failed to register its business. Meanwhile, it has repeatedly called for rulemaking to clarify what crypto-related activity must be registered and how, including in a lawsuit before the Third Circuit.
[…]
In an interview with Law360 on Tuesday, Coinbase Chief Legal Officer Paul Grewal — no relation to Gurbir Grewal — said there’s no hard-and-fast rule for what level of seniority at Gensler’s SEC would disqualify an attorney from working with Coinbase in the future, noting that some within the agency were far removed from strategic decisions about what he called its “campaign of regulation by enforcement.”
“What we’re really focused on is the people who made these strategic decisions to unleash this effort against our industry,” said Paul Grewal.
While Coinbase may be drawing its line in the sand publicly, Paul Grewal said the principles behind it aren’t complicated, and that the move isn’t meant to be vindictive or a commentary on the quality of attorneys. Instead, it’s a statement that “the people who represent us matter, what they’ve done in the past matters, what they do in the future matters,” he said.
“The notion that you could literally sue us one day and then represent us the next without any hesitation is kind of ludicrous on its face,” he said.
If the statement draws concern from law firm leaders about how one attorney could affect their client matters, Paul Grewal said it should spark further reflection on how existing or future clients might react to certain hiring decisions.
“I think they should understand that this is not just about the one lawyer,” he said. “It really reflects the judgment of the firm as a whole. I think that’s the main point.”
Coinbase isn’t the only firm to call on crypto businesses to broadly box out former SEC enforcers. Stu Alderoty, the chief legal officer of Ripple Labs, which is engaged in its own ongoing battle with the SEC over its XRP token, posted similar sentiments to X …
[…]
Ripple declined to provide a list of attorneys, but Alderoty said in an emailed statement that “actions have consequences.”
“Those who were working proactively to destroy the crypto industry through regulation-by-enforcement should not be able to easily go through the revolving door,” Alderoty said.”
Hmmmm … interesting.
“The people who represent us matter, what they’ve done in the past matters, what they do in the future matters.”
“The notion that you could literally sue us one day and then represent us the next without any hesitation is kind of ludicrous on its face.”
