Testimony Against Flavored Tobacco | Affordable Cellular Service | McKinsey Settles Over Opioid Role

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2022 AG Elections

Arkansas Lt. Governor Announces Intent to Run for Attorney General

Antitrust

Consolidation in Wireless Communications Industry Raises Affordability Concerns

  • A group of 17 Democratic AGs, led by Virginia AG Mark Herring, sent a letter to the Federal Communications Commission (“FCC”) urging it to request additional information regarding Verizon Communications Inc.’s (“Verizon”) planned acquisition of TracFone Wireless Inc. (“TracFone”) in order to evaluate the impact of the deal on Lifeline, an affordable communications service for low-income consumers offered by telecommunications companies.
  • The letter notes that TracFone is one of the largest providers of Lifeline services with approximately 1.7 million low-income subscribers nationwide—while Verizon only offers the program in parts of four states—and argues that it is imperative that low-income consumers have access to mobile networks through programs such as Lifeline given the vital role of mobile phones in modern society.
  • The AGs urge the FCC to ensure that the Verizon-TracFone deal will not result in the reduced access to or quality of Lifeline services.

Consumer Protection

Connecticut Attorney General Backs State Legislation Banning Flavored Tobacco Products

  • Connecticut AG William Tong submitted testimony to the Public Health Committee of the state Senate in support of Senate Bill 326, An Act Prohibiting the Sale of Flavored Cigarettes, Tobacco Products, Electronic Nicotine Delivery Systems and Vapor Products.
  • AG Tong’s testimony argues that ending the sale of flavored tobacco products will reduce youth tobacco addiction, adolescent use of e-cigarettes, and the number of people who suffer health consequences from using tobacco products. AG Tong’s testimony also notes that 80% of kids who have ever used tobacco products started with a flavored product.
  • AG Tong also co-authored an op-ed with the president of the Campaign for Tobacco-Free Kids in support of the Senate bill, reiterating his testimony to the Public Health Committee.
  • As previously reported, AG Tong was part of a group of 23 AGs that sent a letter to the Food and Drug Administration urging it to ban menthol cigarettes.

Energy

Republican Attorneys General Protest Biden Decision to Halt Keystone XL Pipeline

  • A group of 14 Republican AGs, led by Montana AG Austin Knudsen, sent a letter to President Biden urging him to reconsider his revocation of the 2019 Presidential Permit for the Keystone XL pipeline.
  • The letter argues that the revocation will result in the loss of thousands of jobs and millions of dollars in economic activity and tax revenues for the affected states, as well as an increased U.S. dependence on foreign sources of energy, and warns that the signatories are reviewing available legal options to protect their states’ interests.
  • As previously reported, Republican AGs have shown ongoing support for pipeline projects, including by filing an amicus brief in September 2020 in the U.S. Court of Appeals for the Ninth Circuit in Northern Plains Resource Council v. U.S. Army Corps of Engineers, No. 20-35412, urging the court to overturn the District Court’s order enjoining the Corps from authorizing any new oil and gas pipeline projects nationwide.

Financial Industry

Too Good to Be True: Private Equity Fund Allegedly Ran Ponzi-Like Scheme

  • A coordinated enforcement effort by several AGs and state securities regulators, including New York AG Letitia James, the U.S. Securities and Exchange Commission (“SEC”), and the U.S. Attorney’s Office for the Eastern District of New York (“EDNY”), resulted in multiple lawsuits filed against investment advisor GPB Capital Holdings, LLC and related entities and individuals (collectively, “GPB Capital”) over allegations that GPB Capital defrauded its investors across the country in violation of securities and consumer protection laws.
  • AG James’ complaint alleges that GPB Capital devised and executed a Ponzi-like scheme to defraud thousands of investors nationwide by offering monthly distributions that were reliant on monies received from new investors, rather than the fund’s returns; that GPB Capital falsified financial statements to create an appearance of sufficient income for the distributions it promised; and that GPB Capital received $1.8 billion from investors, but used $700 million of that money to subsidize the lavish lifestyles of controlling individuals and direct payments to family members.
  • AG James’ complaint—which parallels actions brought by 6 other states and the SEC—seeks injunctive relief, disgorgement, restitution, an accounting of all investor funds, and attorneys’ fees and costs. The EDNY also filed indictments against related individuals on related charges.

Pharmaceuticals

McKinsey & Co. Agrees to $574 Million Settlement Over Its Consulting Work for Opioid Companies

  • A bipartisan group of 53 AGs, led by an executive committee that included California AG Xavier Becerra and Tennessee AG Herbert Slatery III, reached a settlement with consulting firm McKinsey & Company (“McKinsey”) to resolve allegations that McKinsey contributed to the opioid crisis by devising misleading marketing schemes for opioids, in violation of consumer protection laws.
  • The complaints allege, among other things, that McKinsey provided consulting services to Purdue Pharma—the manufacturer of OxyContin—for over a decade, during which time it “turbocharged” the epidemic by advising Purdue regarding targeting high-volume opioid prescribers, creating messaging that would induce physicians to prescribe more OxyContin to more patients, and how to evade pharmacy restrictions in order to deliver high-dose prescriptions.
  • Under the terms of the settlement, McKinsey agreed to pay $573,919,331, of which approximately $559 million will be allocated among the settling states to remediate the damage caused by the opioid epidemic, and $15 million will be paid to the National Association of Attorneys General Fund to be used for reimbursement of attorneys’ fees and costs. McKinsey will also be barred from consulting on opioid-related projects, and will be required to publicly disclose tens of thousands of documents relating to its opioid-related work, to adopt a strict document-retention policy, and implement a strict ethics code and conflicts policy, among other things.

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