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Morgan, Lewis & Bockius LLP

WHITE PAPER Conflicts of Interest and the President Background for President-Elect Trump’s January 11, 2017 Press Conference Prepared by Morgan, Lewis & Bockius LLP1

I. OVERVIEW

From President Washington to Vice President Rockefeller to President-Elect Trump, many of this Nation’s leaders have been extraordinarily successful businessmen. Neither the Constitution nor federal law prohibits the President or Vice President from owning or operating businesses independent of their official duties, as a careful textual and historical analysis shows.

Generally speaking, federal conflict-of-interest laws prohibit “officers” or “employees” of the United States from taking positions against the country’s interests, maintaining outside employment, receiving an outside salary for official duties, or taking official acts that affect their personal financial interests.2

But these laws have historically not applied to the President or Vice President. As then-Assistant Attorney General Antonin Scalia observed in an Office of Legal Counsel memorandum, the term “officer” typically includes neither the President nor Vice President.3 And since 1989, Congress has approved this tradition by expressly excluding the President and Vice President—along with Members of Congress and federal judges—from most conflict-of-interest laws.4 The Office of Government Ethics has recently re-affirmed that these conflict-of-interest laws do not apply to the President.5

Though Congress has long exempted the President and Vice President from federal conflict-of-interest laws, consistent with a tradition extending back to the Founding, many of these public servants have nevertheless sought to provide extra assurances that their undivided commitment is to the good of the country. For example, Presidents Johnson and Carter voluntarily stepped away from their broadcasting stations and peanut farms.6

Today, President-Elect Trump wishes to announce his own plans to transfer management of his businesses and to voluntarily limit those businesses’ ability to engage in transactions that could pose any conflict-of-interest concerns.

1 Authored by: Sheri Dillon, Fred F. Fielding, Allyson N. Ho, Michael E. Kenneally, William F. Nelson, and Judd Stone. 2 See generally 18 U.S.C. §§ 203, 205, 207-09. 3 Memorandum from Antonin Scalia, Assistant Attorney General, Office of Legal Counsel, to Kenneth A. Lazarus, Associate

Counsel to the President, Applicability of 3 C.F.R. Part 100 to the President and Vice President (Dec. 1974). 4 18 U.S.C. § 202(c) (stating that, unless otherwise provided, “officer” and “employee” do not include President or Vice

President). 5 Letter from Walter M. Shaub, Jr., Director, Office of Government Ethics, to Senator Thomas R. Carper, at 2 (Dec. 12, 2016)

(“[T]he primary criminal conflicts of interest statute, 18 U.S.C. § 208, is inapplicable to the President[.]”). 6 See Megan J. Ballard, The Shortsightedness of Blind Trusts, 56 KAN. L. REV. 43, 54-56 (2007).

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1/27/17, 9(15 AMSchool Board candidate under fire for Facebook post | KSDK.com

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School Board candidate under fire for Facebook post Rebecca Sheehan, KSDK 7:42 PM. CST January 26, 2017

HILLSBORO, ILL. - A school board candidate filed suit againsta special education teacher and others who shared one of hisFacebook posts.

Hillsboro School Board Candidate Tom DeVore filed a libellawsuit in Montgomery County, Illinois, Circuit Court. He's alsorequesting an injunction that would prohibit the defendantsfrom posting anything about him on social media.

It all started with a Facebook post published by DeVore. In thepost, he talks about a recent experience at a children’s basketball game. He says the kidsworking the concession stand were having trouble giving him the proper change, and were beingrude to him.

DeVore then stated in his post, "Lord help us with the window lickers, I mean special children."

According to Devore, the three defendants named in the lawsuit, including a Hillsboro specialeducation teacher, shared Devore's original post, saying he was criticizing children with specialneeds. The derogatory term “window lickers” refers to a person with learning disabilities.

DeVore pointed out that his post used the phrase "special child", not "special-needs child", andhe said “special needs” is not what he meant.

"I grew up in a different era than we're in right now," he said. "That word, which you can find in aslang dictionary, was used in my time to refer to irritating, unruly, mean, disrespectful, right topeople's face."

(Photo: Getty Images)

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1/8/17, 9(45 PMChinese Nationals Charged With Hacking Firms to Steal M A Info | The American Lawyer

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Chinese Nationals Charged With HackingFirms to Steal M&A InfoMark Hamblett, The Am Law Daily

December 27, 2016

Three Chinese nationals face federal charges for allegedly hacking into two major U.S. law firms ina scheme to trade on information about imminent mergers and acquisitions.

U.S. Attorney Preet Bharara of the Southern District of New York announced Tuesday that IatHong, Bo Zheng and Hung Chin have been charged with infiltrating the servers of two law firms in2014 and 2015 and accessing nonpublic information about pending deals. According to Bharara'soffice, the information was used in trades that reaped roughly $4 million in illegal profits.

The indictment unsealed Tuesday does not name the law firms, which are referred to as Law Firm1 and Law Firm 2. According to the charges, Law Firm 1 advised Intel Corp. on its 2015 acquisitionof Altera Corp. for $16.7 billion and represented a company that was in deal talks with InterMuneInc., which sold to Roche AG in 2014 for $8.9 billion.

The second major law firm advised Pitney Bowes Inc. in the 2015 acquisition of New York-based e-commerce company Borderfree, the indictment states.

Based on those details the two firms appear to be Weil, Gotshal & Manges and Cravath, Swaine &Moore, firms where cyberbreaches previously were reported. Weil represented Intel in the Alterabuy and Cravath is identified in securities filings as Pitney Bowes lead deal counsel.

Representatives of both firms, reached Tuesday, declined to comment.

"This case of cyber meets securities fraud should serve as a wake-up call for law firms around theworld: you are and will be targets of cyber hacking, because you have information valuable towould-be criminals,” Bharara said.

In addition to infiltrating the two firms, Bharara said the defendants went after at least five other lawfirms between March and September 2015, trying to get unauthorized access to the firms' networksand servers on over 100,000 occasions.

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5/9/17, 3)32 AMWelcome to the Missouri Bar

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March-April 2017 Journal of The Missouri Bar Home Page (/journal/marapr2017/)

The Ethics of Client Trust Accounts: Frequently Asked QuestionsThe Ethics of Client Trust Accounts: Frequently Asked Questions

by Melinda J. Bentley[1]

Some of the most frequently asked questions of the Legal Ethics Counsel office focus on how to comply with ethical

obligations related to handling client trust accounts. Lawyers are often wary of making a misstep with their client

trust accounts, but by instituting sound accounting practices within their offices in accordance with Rules 4-1.145 –

4-1.155, lawyers should be able to readily comply with their safekeeping obligations. To assist lawyers with meeting

these obligations, this article will provide answers to some of the most frequently asked ethics questions.

Q: How do I find out if my financial institution Q: How do I find out if my financial institution is approved to hold client trust accounts?is approved to hold client trust accounts?

A: There are two steps by which financial institutions may be approved to hold client trust accounts. First, the

financial institution must be deemed “eligible” by the Missouri Lawyer Trust Account Foundation in accordance with

the requirements of Rule 4-1.145.[2] Second, the financial institution must be “approved” by the Advisory

Committee pursuant to the regulation it has adopted, which includes overdraft reporting to the Office of Chief

Disciplinary Counsel.[3] To find out if a financial institution is approved to hold client trust accounts, you may view

the list published at www.Mo-Legal-Ethics.org (http://www.Mo-Legal-Ethics.org).

Q: What do I do when I receive a payment through Q: What do I do when I receive a payment through an instrument that contains both earned feesan instrument that contains both earned fees

and advance payment of fees and and advance payment of fees and expenses?expenses?

A: Rule 4-1.15(a)(4) requires that receipts be deposited intact, so you cannot make a split deposit.[4] The proper

way to handle this situation is to deposit the full amount into the trust account. Once the funds have become

“good funds,” meaning the funds have actually been collected by the financial institution in which the trust account

is located,[5] you should then transfer the earned fees into your operating account within a reasonably prompt

period of time.

Q: May I keep my own funds in the client trust Q: May I keep my own funds in the client trust account?account?

A: No, you may not keep your own funds in the client trust account except an amount necessary for the sole

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1.3. If, after reasonable efforts, you are unable to locate the client, you must continue to hold those funds in your

trust account until such time that the client can be located. Missouri Supreme Court Advisory Committee Formal

Opinion 118 provides that the funds may be disposed of in accordance with the unclaimed property laws of

Missouri.[21]

Q: What do I do with excess funds in my trust Q: What do I do with excess funds in my trust account that were paid by a third party for theaccount that were paid by a third party for the

representation of a client?representation of a client?

A: Missouri Informal Advisory Opinion 20050041 suggests that “it is useful to have an agreement about what

happens to the funds if: (a) the representation is prematurely terminated, or (b) the representation terminates

normally, but there are funds left, or (c) the third party demands his or her money back while the representation is

ongoing.” The Rules of Professional Conduct do not address who owns excess funds in a third-party payee

relationship; however, it is important to remember that Rule 4-1.8(f) prohibits a lawyer from accepting

compensation for representing a client from someone other than the client unless the client gives informed

consent, there is no interference with the lawyer’s independent professional judgment or with the lawyer-client

relationship, and confidential information is protected in accordance with Rule 4-1.6. If two or more persons claim

an interest in those excess funds, follow Rule 4-1.15(e) and Comment [8].[22]

Q: When I am jointly representing a client with Q: When I am jointly representing a client with another attorney not in my law firm, and we have aanother attorney not in my law firm, and we have a

division of fees agreement division of fees agreement pursuant to Rule 4-1.5(e), may I hold the fees that are for that otherpursuant to Rule 4-1.5(e), may I hold the fees that are for that other

attorney attorney in my trust account?in my trust account?

A: Yes, that is the proper way to hold the fees that belong to another attorney not in your law firm when you have a

division of fee agreement under Rule 4-1.5(e). For purposes of Rule 4-1.15, those are funds of a third person that

should be properly secured separately from your own funds. You have an obligation to promptly notify the lawyer

not in the law firm that you have received the funds and should promptly deliver those funds to the lawyer upon

the funds becoming good funds, so long as the funds are not in dispute.[23]

Q: I have earned fees sitting in my client trust Q: I have earned fees sitting in my client trust account. May I just pay my bills directly from thataccount. May I just pay my bills directly from that

account?account?

A: No! It is imperative that you take ownership of any earned fees sitting in your client trust account. The trust

account has the special purpose of protecting funds being held for clients or third persons in connection with a

representation, not holding earned fees of lawyers. Before utilizing any earned fees, you must take ownership of

those funds by transferring them to an operating account. Otherwise the lawyer has defeated the special purpose

of the trust account. “Paying personal expenses from a client trust account clearly is prohibited by Rule 4-1.15.”[24]

If you still have questions about the Rules of Professional Conduct regarding trust accounts or any other ethics

issue, you are always welcome to contact the Legal Ethics Counsel office (www.Mo-Legal-Ethics.org (http://www.Mo-

Legal-Ethics.org)) to seek an informal advisory opinion about your prospective conduct under the Rules of

Professional Conduct.

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12/27/16, 3)12 PMAre US Lawyers a Weak Link in the Fight Against Money Laundering | The American Lawyer

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Are US Lawyers a Weak Link in the FightAgainst Money Laundering?Susan Beck, The Am Law Daily

December 22, 2016

Earlier this month, for the first time in 10 years, an intergovernmental organization called theFinancial Action Task Force graded the United States on its efforts to combat money launderingand terrorist financing. The group, which includes government representatives from more than 30countries, gave the U.S. the lowest possible score in five of the 51 categories it uses to judgecountries' efforts.

The five categories had one thing in common. They each singled out the activities of Americanlawyers.

This isn't surprising. Going back to 2002, when Congress floated new rules to identify moneylaundering in the wake of the Sept. 11 attacks, the American Bar Association has staunchlyopposed any federal legislation that would require lawyers to help identify money laundering orterrorist financing. Banks and other financial institutions must comply with the Bank Secrecy Act,which imposes stringent "know your customer" rules and requires that suspicious transaction bereported to federal authorities.

U.S. lawyers are exempt from these rules, which puts the country at odds with the United Kingdomand the European Union, where lawyers have been required to adhere to anti-money launderingrules for more than a decade.

The task force report concluded that the failure of lawyers to follow accepted anti-money launderingrules is a "significant gap" in the U.S. regulatory framework for identifying money laundering andterrorist financing. Moreover, there's no evidence that U.S. lawyers "have an adequateunderstanding of [money laundering and terrorist financing] vulnerabilities and the need toimplement appropriate controls to mitigate them," the report concluded.

"The U.S. has always been lagging behind in this area," said Kristine Safos, a manager in HBRConsulting's law firm advisory group who has reviewed law firms' anti-money laundering practices.

She noted that lawyers in the U.K. and EU haven't been hindered by complying with anti-money

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MichaelDowneyDowneyLawGroupLLC

(314)961-6644(844)961-6644tollfree

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