Welcome to The BR Investigations and Enforcement Forum ("B.R.I.E.F."), Blank Rome’s monthly newsletter highlighting enforcement priorities and compliance risk issues impacting businesses domestically and abroad. B.R.I.E.F. delivers concise insights into regulatory and sanctions developments, internal investigations, enforcement trends, and evolving financial crime risks.
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Recent Developments
DOJ National Security Division Issues First Declination Under Department-Wide Corporate Enforcement Policy
On June 17, 2026, the Department of Justice (“DOJ”) announced that it has declined to prosecute Robert Bosch GmbH ("Bosch") for export control violations, marking the first declination issued by DOJ's National Security Division ("NSD") under the new Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy ("CEP"), released on March 10, 2026. Between September 2020 and September 2024, Bosch exported over $70 million worth of foreign-produced Micro-Electro-Mechanical Systems sensor products and foreign-produced software to Huawei Technologies Co. and its affiliates through two non-U.S. subsidiaries, Bosch Sensortec GmbH and ETAS GmbH, in violation of the Export Administration Regulations ("EAR") under the Foreign Direct Product Rule (“FDPR”).
Bosch voluntarily self-disclosed the misconduct, cooperated with NSD's investigation, and remediated by making organizational changes, imposing disciplinary action, adding employees to its trade compliance function, and updating internal policies and procedures. Concurrently, the Bureau of Industry and Security ("BIS") imposed a civil penalty of $36,184,680 on Bosch, and Bosch agreed to disgorge approximately $11.4 million in pre-tax profits to DOJ, with approximately $3.6 million payable after BIS credit.
This resolution is a landmark illustration of the incentives embedded in the new Department-wide CEP. Under the prior NSD policy, the presumptive favorable outcome for cooperating companies was a non-prosecution agreement; under the new CEP, it is a full declination of prosecution—a materially more favorable result that should give compliance officers and boards meaningful reason to invest in early detection and disclosure infrastructure. Companies operating in the export controls space should take particular note of DOJ's emphasis on the adequacy of trade compliance staffing and the expectation that increased vigilance is required for transactions governed by the EAR.
OFAC Settles with FTI Consulting for $1.05 Million
On June 1, 2026, OFAC announced a $1,050,000 settlement with FTI Consulting, Inc., resolving apparent violations of OFAC sanctions targeting Russia’s financial sector. Between April 2019 and May 2021, FTI indirectly dealt in prohibited debt of VTB Bank OAO, a Russian state-owned bank on OFAC’s Sectoral Sanctions Identification List, on six occasions. OFAC determined that FTI’s conduct was non-egregious and not voluntarily self-disclosed. The settlement reflects OFAC's continued focus on gatekeepers — professional service providers who fail to properly understand and mitigate sanctions risks in their provision of services. The action extends a trend that began in 2025, when OFAC repeatedly emphasized that gatekeepers in the private equity, venture capital, real estate, and legal markets must undertake robust diligence looking beyond mere corporate formalities.
Iran Sanctions: "Economic Fury" Campaign Continued with New Designations
OFAC and the Department of State continued to increase sanctions pressure on Iran throughout late May 2026. On May 27, 2026, OFAC sanctioned the Persian Gulf Strait Authority, which Iran's Islamic Revolutionary Guard Corps (“IRGC”) had been using to impose tolls on commercial traffic. On May 28, 2026, OFAC sanctioned an alleged network of individuals, entities, and vessels facilitating trade in Iranian oil, and the Department of State concurrently sanctioned additional entities involved in the transportation of Iranian petroleum products and offered a reward of up to $15 million for information leading to the disruption of IRGC financial mechanisms. On June 10, 2026, OFAC designated additional persons whose property and interests in property subject to U.S. jurisdiction are now blocked.
State Department Designates Brazilian Criminal Organizations as SDGTs
On May 28, 2026, the Department of State designated two alleged criminal organizations with operations in Brazil—Comando Vermelho and Primeiro Comando da Capital—as Specially Designated Global Terrorists ("SDGTs"), with an intention to designate the groups as Foreign Terrorist Organizations (“FTOs”) effective June 5, 2026. This action is consistent with the Administration's broader initiative to apply terrorism-related authorities to transnational criminal organizations, and multinational companies with Brazilian operations should evaluate their exposure to these designations.
Insider Trading: Defendants Plead Not Guilty in Massive Law Firm Information Theft Scheme
On June 1, 2026, fifteen defendants, including corporate lawyers, pleaded not guilty to insider trading-related charges stemming from the coordinated DOJ/Securities and Exchange Commission (“SEC”) takedown announced on May 6, 2026 In the underlying action, charges were unsealed against 30 individuals in connection with a large-scale, decade-long insider trading scheme that allegedly netted tens of millions of dollars in illicit profits by stealing confidential mergers & acquisitions (“M&A”) information from several of the nation's premier corporate law firms. The SEC charged 21 individuals in a parallel civil enforcement action, alleging violations of Section 10(b)/Rule 10b-5 (securities fraud), and Section 14(e)/Rule 14e-3 (tender offer fraud).
The government's theory involves a classic misappropriation scheme with layered tipping: upstream sources at law firms allegedly misappropriated material nonpublic information ("MNPI") concerning pending M&As; middlemen distributed the MNPI through secretive communication channels; and downstream traders purchased securities and kicked back profits. At least four defendants had previously entered guilty pleas in sealed proceedings.
Supreme Court Unanimously Holds SEC Need Not Prove Investor Losses to Obtain Disgorgement: Sripetch v. SEC
On June 4, 2026, the Supreme Court handed down a unanimous decision in Sripetch v. Securities and Exchange Commission, No. 25-466, holding that the SEC need not prove that investors suffered pecuniary loss before obtaining a disgorgement award. Justice Gorsuch, writing for the Court, resolved a circuit split that had developed following the Court's 2020 decision in Liu v. SEC, 591 U.S. 71 (2020). While the First and Ninth Circuits had permitted disgorgement without a showing of pecuniary harm, the Second Circuit in SEC v. Govil, 86 F.4th 89 (2d Cir. 2023), required such proof. The Govil defense is now overruled nationwide.
The Court anchored its analysis in traditional equitable principles, drawing a critical distinction between legal damages (which compensate a plaintiff for losses) and equitable disgorgement (which strips a defendant of unjust gains from interference with another's legally protected interests). The Court cited centuries of equitable authority establishing that disgorgement has never required proof of pecuniary harm—only an "actionable interference by the defendant with the claimant's legally protected interests."
Justice Thomas concurred but wrote separately to urge the Court to address in a future case whether disgorgement under Section 78u(d)(7) is a legal remedy triggering the Seventh Amendment right to a jury trial. Thomas identified an existing circuit split between the Fourth Circuit (Hallam) and the Second Circuit (Ahmed) on this question, signaling that the jury-trial issue may reach the Court soon. He noted that in fiscal year 2024, the SEC obtained orders to disgorge $6.1 billion while returning only $345 million to victims—a practice he characterized as "difficult to see as anything other than a fines regime."
For defense practitioners in the Second Circuit, Sripetch eliminates a meaningful defense previously available under Govil. The SEC need only establish that the defendant interfered with investors' "legally protected interests" — a lower threshold than proving pecuniary harm. However, the Court expressly left open whether (1) Section 78u(d)(7) freed the SEC from Liu's requirement that disgorgement be "awarded for victims," (2) the SEC may seek disgorgement for technical violations not invading investors' legally protected interests, and (3) disgorgement under the 2021 statute triggers Seventh Amendment jury-trial rights. Defense counsel should preserve the jury-trial argument in every case where the SEC seeks disgorgement under Section 78u(d)(7), particularly where disgorged funds are unlikely to be distributed to investors.
Second Circuit Affirms Bankman-Fried Conviction and 25-Year Sentence
On June 12, 2026, a three-judge panel of the Second Circuit—Judges Parker, Lee, and Kahn— unanimously affirmed Sam Bankman-Fried's conviction on all seven counts of fraud and conspiracy, along with his twenty-five-year sentence and approximately $11 billion in forfeiture and restitution obligations. The opinion is most notable for its application of the Supreme Court's 2025 decision in Kousisis v. United States, 605 U.S. 114 (2025), which was decided after Bankman-Fried's trial. Kousisis held that "a defendant commits federal fraud whenever he uses a material misstatement to trick a victim into a contract that requires handing over her money or property—regardless of whether the fraudster, who often provides something in return, seeks to cause the victim net pecuniary loss."
Applying Kousisis, the Second Circuit concluded that Bankman-Fried’s core defense—that FTX held sufficient assets to eventually repay customers and that the collapse was merely a temporary “liquidity squeeze”—was legally irrelevant. The crime was complete at the moment of misappropriation under materially false pretenses; anything that happened afterward, including the appreciation of Bankman-Fried’s Anthropic investment, was irrelevant to the elements of fraud. The Court also upheld the District Court’s “no ultimate harm” jury instruction, which told the jury that even temporary deprivation of victims’ money through deception sufficed for fraudulent intent, and that “no amount of honest belief on the part of the defendant that the victim[s] ultimately would be benefited will excuse false representations that a defendant willfully made or caused to be made.”
On June 8, 2026, Bankman-Fried formally filed a presidential pardon petition with the Trump administration, though the White House has signaled that the application is unlikely to succeed and bipartisan congressional opposition has emerged. Absent a pardon, Bankman-Fried's release eligibility is projected for 2044.
SEC Enforcement Director David Woodcock Delivers Inaugural Policy Address
On May 13, 2026, newly appointed Division of Enforcement Director David Woodcock delivered his first public remarks at the Managed Funds Association Legal & Compliance Conference in New York. Director Woodcock—who returned to the Commission after serving as Director of the SEC’s Fort Worth Regional Office from 2011 to 2015—announced priorities aligned with Chairman Atkins's "back to basics" approach, emphasizing quality over quantity in enforcement actions and focusing the Division on protecting investors from "real harm."
Key institutional priorities announced by Director Woodcock include: reinstituting the Retail Fraud Working Group to strengthen coordination at the state and federal level; improved interagency cooperation, particularly with the United States Commodity Futures Trading Commission (“CFTC”) and DOJ; continued regulatory attention on private funds, with specific focus on conflicts of interest, valuation practices, and liquidity risks; and active monitoring of the private credit space. Director Woodcock also signaled that the Division would take a nuanced approach to honest mistakes, noting that not every apparent irregularity necessarily constitutes securities fraud, while cautioning counsel to work through the Division’s established chain of command.
SEC Rescinds Policy Regarding Denials of Settlements in Enforcement Actions
On May 18, 2026, the SEC rescinded its prior policy regarding denials of settlements in enforcement actions. This change restores greater flexibility for the Commission in resolving enforcement matters and may reduce uncertainty for respondents considering settlement offers.
Export Controls Enforcement: A Year of Escalation
Bureau of Industry and Security enforcement in 2026 has produced an extraordinary series of penalties signaling that the semiconductor supply chain and FDPR compliance are top-priority enforcement areas. The cumulative penalties this year—including Applied Materials ($252 million), Bosch ($36 million), and an earlier settlement with Coastal PVA ($1.7 million)—reveal a pattern of violations tied to subsidiary oversight failures, inadequate FDPR analysis, and insufficient compliance infrastructure for controlled technology. BIS has explicitly requested "dramatically higher" maximum penalty amounts from Congress and a doubling of the statute of limitations for export violations. Companies in the semiconductor, technology, and advanced manufacturing sectors should pressure-test their FDPR compliance programs and ensure trade compliance personnel are adequately trained on evolving Entity List and FDPR obligations.
H.R. 4505: Export Controls Enforcement Act
On May 22, 2026, the Congressional Budget Office scored H.R. 4505, the Export Controls Enforcement Act, which would require BIS to appoint a director for the export control officer program and strengthen enforcement infrastructure. This bill is part of a broader package of export control legislation considered by the House Foreign Affairs Committee.
DOJ National Fraud Enforcement Division Continues Expansion
The DOJ's National Fraud Enforcement Division ("NFED"), formally established by Acting Attorney General Todd Blanche's April 7, 2026, memorandum, continues to build operational capacity. In mid-June, the NFED announced coordinated law enforcement actions resulting in the arrest of seven men in connection with fraudulent COVID-19 relief loan applications. The Division, led by Assistant Attorney General Colin McDonald, has assumed operational control of the Tax Section; the Health Care Fraud Unit; and the Market, Government, and Consumer Fraud Unit from the Criminal Division. The NFED's stated mission is to investigate and prosecute those who steal or fraudulently misuse taxpayer dollars, and it has been charged with establishing a National Fraud Detection Center employing data-driven investigative techniques.
Companies with potential exposure to government program fraud—including healthcare, defense procurement, and pandemic relief—should anticipate an accelerating pace of prosecutorial activity as the NFED matures and deploys additional resources nationwide through designated prosecutors in each U.S. Attorney's Office.
Ghost Fleet Tanker Master Pleads Guilty to Evading U.S. Coast Guard
On June 12, 2026, Avtandil Kalandadze, the former ship master of a ghost fleet tanker that historically transported Iran- and Venezuela-origin oil, pleaded guilty in the U.S. District Court for the District of Columbia for refusing to obey orders from the U.S. Coast Guard during a multi-week pursuit. This prosecution reflects the Administration's intensified effort to disrupt maritime sanctions evasion networks and demonstrates that personal criminal liability can attach to vessel operators participating in shadow fleet operations.
In Case You Missed It...
Chambers USA 2026 Recognizes Blank Rome Attorneys and Practices
Chambers USA 2026 once again recognized Blank Rome's White Collar Defense & Investigations practice with a Band 1 ranking for White-Collar Crime & Government Investigations in New York. The guide quoted sources describing the firm as having "an excellent litigation and white-collar practice" that "really works to understand the client's concerns and objectives" and possesses "deep expertise in subject matter" with "thorough and creative" problem-solving. Several members of our white-collar practice received individual rankings. We are grateful for the continued confidence of our clients and peers. Read more >>
Trump Administration Issues Executive Order Bolstering Customs Enforcement
On June 3, 2026, President Trump signed an Executive Order (“EO”) titled "Strengthening Customs Enforcement," directing federal agencies to address what the administration characterizes as inefficiencies and insufficient enforcement mechanisms in U.S. customs laws. The EO signals increased scrutiny of customs fraud, tariff evasion, and trade compliance failures—areas that are already subject to heightened enforcement through the DOJ's Trade Fraud Task Force and the National Fraud Enforcement Division's broadened mandate. Companies importing goods into the United States should evaluate their customs classification, valuation, and country-of-origin practices in light of the administration's continued emphasis on aggressive tariff enforcement. Blank Rome partners Anthony Rapa, Jennifer A. Short, Bradley L. Henry, Timothy J. Hruby, and Alan G. Kashdan authored an alert on this development. Read more >>
Insider Trading Meets Prediction Markets: Federal Enforcers Put the Industry on Notice
The DOJ's unsealing of a federal indictment against Gannon Ken Van Dyke—an active-duty U.S. Army soldier charged with using classified information to trade on prediction market platforms—has crystallized the enforcement risk at the intersection of insider trading law and event contract markets. Concurrently, the CFTC has signaled its own regulatory interest in ensuring that prediction market participants do not exploit informational asymmetries that would constitute fraud or manipulation under the Commodity Exchange Act. Blank Rome authored a client alert analyzing the implications of this prosecution for market participants, compliance officers, and platform operators. The alert examines the novel application of traditional insider trading theories — including the misappropriation doctrine — to event contracts that are not traditional securities, and identifies the enforcement gaps that prosecutors and the CFTC are working to close. Read more >>
Place Your Bets Carefully: Criminal Prosecution, CFTC Rulemaking, and the Prediction Market Reckoning for the Gaming Industry
The prediction market enforcement landscape continues to evolve at the intersection of securities, commodities, and gaming law. The explosive popularity of platforms such as Kalshi and Polymarket has raised complex regulatory questions about how traditional insider trading, market manipulation, and gaming prohibitions apply to this novel asset class. Blank Rome's team authored a separate analysis focusing specifically on the criminal prosecution risks, CFTC rulemaking developments, and implications for the gaming industry—a must-read for companies and counsel operating at the crossroads of fintech and regulated gaming. Read more >>
New U.S. Terrorist Designations of Brazil's Largest Criminal Organizations: What Companies Need to Know
As reported in our Recent Developments section, on May 28, 2026, the Department of State designated Comando Vermelho and Primeiro Comando da Capital as SDGTs, with intent to further designate both organizations as FTOs effective June 5, 2026. These designations carry immediate compliance consequences for multinational companies with operations, supply chains, or counterparties in Brazil. Blank Rome authored a detailed alert analyzing what these designations mean in practice—including the OFAC blocking requirements, criminal liability exposure under material support statutes, due diligence implications for financial institutions, and the broader trend of applying terrorism-related sanctions authorities to transnational criminal organizations in Latin America. Read more >>
Blank Rome Secures Full Dismissal for Co-Founder of Genesis Digital Assets in $1.15 Billion FTX Avoidance Action
In a significant litigation victory, on June 15, 2026, Blank Rome secured a full dismissal for the co-founder of Genesis Digital Assets in a $1.15 billion FTX avoidance action—one of the largest preference and fraudulent transfer claims in the sprawling FTX bankruptcy litigation. This result highlights the firm's skill in defending clients in complex cryptocurrency-related disputes arising from the collapse of FTX, and underscores the importance of vigorous defense advocacy in the continuing wave of clawback litigation emanating from the FTX estate. The dismissal comes against the backdrop of the Second Circuit's June 12 affirmance of Sam Bankman-Fried's conviction. Read more >>
© 2026 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.