Past is Prologue? DOJ Enforcement under POTUS 47

Bondi is an experienced and serious nominee, having been Florida’s attorney general for eight years to 2019, and her confirmation by the Senate, although likely, is not guaranteed. That said, Trump’s selections for important DOJ roles offer an important insight into what DOJ’s national and international enforcement will look like under the second Trump administration. Looking backwards at corporate prosecutions in President Trump’s first term, and forward to indications of Trump’s intentions for his second term, we make predictions on how we expect the enforcement environment to change over the next four years. 

More corporate “soft landings” 

Domestic corporate penalties declined significantly under the first Trump administration. Comparing the first 20 months of that administration with the final 20 months of the Obama administration, there was an estimated 72 percent drop in corporate fines imposed by DOJ. This decline may have been linked to the Trump administration’s prioritization of enforcement relating to immigration, national security, violent crime, and drug trafficking. Those areas received plenty of airtime during the campaign and were featured in the Republican Party platform.

We expect this trend to continue early into President-elect Trump’s second term. Todd Blanche and Emil Bove, whom the President-elect picked for deputy attorney general and principal associate deputy attorney general, respectively, are experienced federal prosecutors, both of whom worked as prosecutors in the U.S. Attorney’s Office for the Southern District of New York. They bring extensive experience in their respective focus areas of violent crime and national security. 

Following the usual quiescence during the transition period, we do expect that there will be an uptick in international white collar enforcement cases that tackle fraud and corruption. Prior to his first term as President, Trump made his dislike of the FCPA clear, naming it a “horrible law” which he saw as unfairly penalizing American businesses operating abroad. Despite this widely reported antipathy, during President Trump’s first term, FCPA enforcement exceeded that under the Obama administration. Indeed, FCPA enforcement reached an all-time peak in the number of charged cases in 2019.  

We also expect continued cooperation with non-U.S. enforcement authorities. In May 2018, DOJ announced its “Anti-Piling On” policy, which aimed to encourage corporate compliance with the FCPA and coordinated compliance amongst domestic U.S. regulators. As part of that policy, DOJ attorneys were encouraged to coordinate with other federal, state, or foreign enforcement authorities to resolve cases relating to the same misconduct. Cooperation between regulators, both domestic and international, has been a hallmark of the last decade of corporate enforcement. Although this may oscillate between periods of heavy cooperation and slight cooperation, and vary from jurisdiction and jurisdiction, traditional allies and enforcement agencies will still share information. 

Given the long duration of corporate enforcement actions (for investigation, dialogue with regulators, and then resolution either through the courts or by agreement), which can run over several years, one would not normally expect a rapid or significant change in corporate enforcement from one administration to the next. We are aware of multiple live FCPA and other corporate investigations that will likely not be concluded in the next several months. The outflow of prosecutors between administrations can often be exaggerated, and many at enforcement agencies are career prosecutors, and not political appointees, who will seek to continue business as usual. Our prediction is that under Trump’s second term, DOJ’s FCPA and other corporate enforcement will continue.

The reality is that most DOJ investigations and enforcement actions are not impacted by changes in administrations. Investigative actions (subpoenas, requests, new enquiries) launched in the final months of the Biden administration will still result in investigations that continue through the Trump administration. We expect a common trend in sustaining these FCPA actions will be a particular focus on non-U.S.-headquartered businesses’ conduct in foreign countries. 

To invoke Mark Twain, the death of the FCPA and its enforcement is greatly exaggerated.

Antitrust enforcement 

One area we do not foresee significant changes is enforcement coming out of DOJ’s Antitrust Division. The Biden administration’s enforcement in this area has been particularly aggressive, notably against big tech. Although Republicans openly criticized the Biden administration’s aggressive antitrust enforcement, President Trump championed a “populist” economic approach during his campaign, and we do not expect a complete reversal of this aggressive stance. Instead, Trump’s pro-business stance as part of a move to strengthen the U.S. economy may mean that antitrust enforcement continues in a similar vein, but possibly with a focus on more moderate remedies. 

We expect variation in the enforcement approaches across industries, with the pharmaceutical, tech, and agriculture industries potentially in the spotlight. However, the approach to big tech is less easy to predict. Gail Slater, who Trump has selected to head DOJ’s Antitrust Division, is likely to continue the crackdown on big tech. When announcing his nomination of Slater, Trump wrote on his social media platform that “Big Tech has run wild for years, stifling competition in our most innovative sector and, as we all know, using its market power to crack down on the rights of so many Americans, as well as those of Little Tech!”. We note the wisdom of commentators who urge watching what President Trump and his administration does, rather than reacting only to what he says. 

Extra-territorial focus 

Under both the Trump and Biden administrations, DOJ has shown a marked focus on Mexico and China across various areas of law enforcement. Trump’s campaign focused on an “America first” message. We predict that this focus will continue, and that DOJ will be able to utilize already-existing resources focused on these areas.

The focus on Mexico has centred around issues such as drug trafficking, money laundering, and organised crime. During his first term, Trump placed major emphasis on tackling Mexico’s drug cartels, and DOJ increased its efforts to target cartel leaders through extradition and cooperation with the Mexican authorities. We expect this trend to continue into Trump’s second term. 

During his first term, Trump’s DOJ was focused on intellectual property theft and economic espionage by Chinese state-backed entities and individuals, which included a significant number of charges in sectors such as pharmaceuticals, semiconductors, and AI. The first Trump administration took a more hardline stance against China around trade wars and national security issues. Trump’s statements on the campaign trail indicate this stance will likely continue into his second term, and we expect national security – as seen through the lens of the country’s economic interests – to remain at the top of Trump’s agenda. 

Continued emphasis on sanctions and trade

Trump’s first administration was very active in sanctions investigations and enforcement, leading some commentators to term sanctions as the “new FCPA.” Under the new administration, we predict sanctions-related enforcement will remain aggressive. Extraterritorial sanctions will likely continue to be prominent in the China, Russia, North Korea, and Iran sanctions programs. 

Secondly, on the campaign trail, Trump focused heavily on an aggressive tariff policy aimed at addressing reciprocity for U.S. companies, lowering the U.S. trade deficit, and addressing national security concerns. Notably, this looks to include plans to impose high tariffs on imported goods from China. We predict this area will be a particular enforcement area for the incoming Trump Administration, though whether Trump will use existing authority, such as the International Emergency Economic Powers Act, or seek to enact new legislation, will be interesting to watch. 

Immigration and the environment 

Bondi is an outspoken ally of Trump, and we expect the White House and DOJ to work closely in an enforcement agenda. We predict that DOJ will focus on immigration enforcement in line with Trump’s priorities. We would not be surprised to see investigations of corporations that employ large numbers of undocumented workers.

Similarly, we predict significant changes in the Environmental Crimes Section of the Environment and Natural Resources Division of the DOJ under Trump. The previous Trump administration dismantled major climate policies, and the Trump administration’s antipathy to environmental regulation will almost certainly result in a reduction in environmental enforcement actions on the federal level. However, that does not mean that environmental enforcement will cease; we expect to see State Attorneys General – especially in “blue” states such as California, Illinois, and New York – rush to fill the vacuum that has been created.

Congressional investigations 

With both houses of Congress under Republican control, we expect close coordination in investigative activity between the executive and legislative branches. The Permanent Select Committee on Investigations of the Senate Homeland Security and Government Affairs Committee, the House Judiciary Committee, and the House Select Committee on the Chinese Communist Party have outlined active investigation agendas. We expect the Republican’s agenda will focus on matters such as China’s threat to the West, COVID-19 origins, DEI, ESG, immigration, supply chain, and social media content moderation.¹

Watch this space 

Attorney General nominee Bondi joins a growing list of Trump’s Cabinet and administration picks early on in the transition planning process. Trump’s prior Attorneys General picks, Jeff Sessions and William Barr, parted with the President-elect on acrimonious terms. As a staunch ally of Trump, Bondi appears to be on good footing to put her stamp on the role and stay the course, if confirmed. 

Authored by Stephanie Yonekura, Peter Spivack, Khushaal Ved, and Sophia Kinally