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The Many Issues To Consider From The Cognizant Technology Enforcement Action

Issues

Previous posts here and here highlighted the recent Foreign Corrupt Practices Act enforcement action against Cognizant Technology Solutions and two of its former executives.

This post continues the analysis by highlighting several issues to consider.

Timeline

As highlighted in this prior post, Cognizant disclosed its FCPA scrutiny in a September 2016 SEC filing. Thus from start to finish, Cognizant’s FCPA scrutiny lasted approximately 2.5 years. While 2.5 years is shorter than recent medians of over 4 years (see here), 2.5 years is still too long for FCPA scrutiny to last.

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Cognizant Technology Solutions Resolves $25 Million SEC Enforcement Action In Connection With Various Licenses And Permits In India

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This previous post highlighted the DOJ and SEC’s individual enforcement action against Gordon Coburn and Steven Schwartz (former executives of Cognizant Technology Solutions) in connection with a planning permit in India.

This post highlights the SEC’s enforcement action (as well as the DOJ’s so-called declination letter) against the company based on the same core conduct in which the company, without admitting or denying the SEC’s findings, agreed to pay approximately $25 million in disgorgement and prejudgement interest.

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Former Cognizant Technology Solutions Executives Criminally And Civilly Charged In Connection With Indian Planning Permit – Company Resolves $25 Million SEC Enforcement Action

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In this 2016 post highlighting Cognizant Technology Solutions’s disclosure of Foreign Corrupt Practices Act scrutiny it was also noted that Gordon Coburn resigned from his position as President of Cognizant Technology Solutions. This follow-up post noted that the two disclosures were likely related.

Sure enough as today the DOJ announced that Coburn and Steven Schwartz (Executive Vice President, Chief Legal and Corporate Affairs Officer) were criminally charged with FCPA violations. If the defendants choose to put the DOJ/SEC to its burden of proof, disputed issues will likely focus on corrupt intent, obtain or retain business and the facilitating payments exception.

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Friday Roundup

Roundup

Affirmed, very distressing, scrutiny updates, and for the reading stack. It’s all here in the Friday roundup.

Affirmed

As highlighted in this previous post, in July 2017 Dmitrij Harder was sentenced to 60 months (5 years) in federal prison and also ordered to forfeit $1.9 million after pleading guilty to two counts of violating the FCPA for “bribing an official at the European Bank for Reconstruction and Development (EBRD).”

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A Few FCPA Related Securities Fraud Claims Are Allowed To Proceed

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This recent post highlighted how securities fraud class actions in the aftermath of Foreign Corrupt Practices Act enforcement actions or mere instances of FCPA scrutiny are frequently dismissed.

This remains a true statement, but as highlighted in this post, sometimes a claim or two does advance past the motion to dismiss stage as was recently the case in matters involving Cognizant Technology Solutions and Obebrecht.

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