TheCorporateCounsel.net

This blog from Steve Quinlivan flags a recent Executive Order that could result in a major shake-up among federal agencies.  Here’s an excerpt:

President Trump has issued an Executive Order directing the Director of the Office of Management and Budget (Director) to propose a plan to reorganize governmental functions and eliminate unnecessary agencies (as defined in section 551(1) of title 5, United States Code), components of agencies, and agency programs.

The Executive Order directs the head of each agency to submit to the Director a proposed plan to reorganize the agency, if appropriate, in order to improve the efficiency, effectiveness, and accountability of that agency. The submission must be made within 180 days of the date of the order.

The Executive Order contains a laundry list of factors to be considered by the Director in formulating a reorganization plan – including whether any agency functions would be better left to state or local governments or the private sector.  It also requires the OMB’s director to invite public comment on improvements in the organization and functioning of the executive branch, and to consider those comments when formulating the proposed reorganization plan required by the order.

SEC Enforcement: Budget Cuts Looming

Last month, the House Financial Services Committee delivered a sharp rebuke to the SEC’s preliminary budget request – & signaled that the SEC’s recent priorities don’t align with those of House Republicans. Here’s an excerpt from the Committee’s memorandum addressing the request:

The Committee remains concerned that despite receiving significant annual appropriations increases, the SEC has neither met statutory deadlines for the issuance of rulemakings nor significantly improved its annual examination rates for investment advisers. Instead, the SEC has prioritized other objectives that are not central to its mission. For example, the SEC has expended thousands of man-hours and tens of millions of dollars in pursuit of Dodd-Frank mandates unrelated to the causes of the financial crisis while its capital formation objectives languish.

What “other objectives” that the agency has prioritized are likely to be on the budgetary chopping block? Bloomberg reports that the SEC’s Division of Enforcement is front & center, and notes a recently-imposed travel ban is likely the tip of the iceberg:

The measure is part of a series of cuts that the enforcement department – the division responsible for policing federal securities laws – is implementing as it braces for deep spending reductions in President Donald Trump’s budget proposal, according to two people with knowledge of the matter. In addition to the ban on non-essential travel, the department has also imposed a hiring freeze and curbed the use of outside contractors who assist SEC lawyers with cases.

Also, based on the Committee’s reaction to its request, the SEC can forget about a new HQ building.

Cybersecurity: Director Liability for Data Breaches

This Bass Berry memo reviews case law dealing with the potential liability of directors for data breaches. As this excerpt notes, there’s good news & bad news:

As a rising number of companies experience data breaches, director liability lawsuits have inevitably followed. Thus far, however, these suits have been uniformly unsuccessful, failing to move past the motion to dismiss stage. In 2016, despite a continued reluctance on the part of courts to permit these cases to move forward, plaintiffs persisted in pursuing such claims.

Despite their lack of success, the memo speculates that plaintiffs will continue to pursue similar derivative litigation in the hope that they can identify the right legal theory – or the right set of facts.

– John Jenkins