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Issues To Consider From The Linde Enforcement Action

Issues

This previous post highlighted the DOJ’s recent $11.2 million declination with disgorgement and forfeiture against Linde for nearly decade-old conduct of an acquired entity.

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

Voluntary Disclosure

Nearly all decisions to voluntary disclose should be questioned (see this article for the reasons why), but Linde’s decision to voluntarily disclose should seriously be questioned.

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The First Corporate FCPA Enforcement Action In The Trump Era Is A $11.2 Million Declination With Disgorgement And Forfeiture Against Linde For Nearly Decade-Old Conduct Of An Acquired Entity

Linde

Last Friday the DOJ quietly updated its FCPA Pilot Program “declinations” page to include a June 16th letter from the Fraud Section and the U.S. Attorney’s Office (D.N.J.) to counsel for Linde North America Inc. and Linde Gas North America LLC.

The letter states that “consistent with the FCPA Pilot Program announced on April 5, 2016, the [DOJ is closing its] investigation of [Linde] and certain of their subsidiaries and affiliates concerning violations of the FCPA.”

Pursuant to the letter agreement, Linde agreed to disgorge or forfeit approximately $11.2 million. The Linde enforcement action is the first corporate FCPA enforcement action in the Trump era and is similar to the previous “declinations with disgorgement” enforcement actions released by the Obama DOJ in September 2016. (See here for a prior post).

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What Others Are Saying About Kokesh

Soapbox

Previous posts here, here and here concerned the Supreme Court’s recent benchslap of the SEC in Kokesh v. SEC. As previously noted, the Court unanimously held that disgorgement “in the securities-enforcement context is a ‘penalty’ within the meaning of [28 U.S.C.] 2462 and so disgorgement actions must be commenced within five years of the date the claim accrues.”

The case should impact SEC FCPA enforcement against issuers, but that first requires issuers not to roll over and play dead when faced with SEC scrutiny by agreeing to waive or toll statute of limitations.

This post highlights what others are saying about Kokesh.

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Kokesh – Yet Another Reason Why Issuers Should Not Roll Over And Play Dead When Under FCPA Scrutiny

rollover

The Supreme Court’s recent unanimous decision in Kokesh rejecting the SEC’s position and holding that disgorgement “in the securities-enforcement context is a ‘penalty’ within the meaning of [28 U.S.C.] 2462 and so disgorgement actions must be commenced within five years of the date the claim accrues” should impact SEC FCPA enforcement against issuers.

However, statute of limitations issues are meaningless when issuers (as often happens in the FCPA context) waive statute of limitations defenses or agree to toll the statute of limitations.

Thus, whether Kokesh will impact SEC FCPA enforcement against issuers depends on whether issuers will continue to roll over and play dead when under FCPA scrutiny or actually mount a defense.

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Kokesh Footnote Seems To Be Inviting A Future Disgorgement Case

invite

The Supreme Court’s decision earlier this week in Kokesh v. SEC was yet another Supreme Court benchslap of the SEC. As highlighted in this prior post, the Supreme Court unanimously rejected the SEC’s position and held that disgorgement “in the securities-enforcement context is a ‘penalty’ within the meaning of [28 U.S.C.] 2462 and so disgorgement actions must be commenced within five years of the date the claim accrues.”

As previously highlighted in numerous prior posts regarding Kokesh, the non-FCPA case is FCPA relevant in that since the SEC first sought a disgorgement remedy in an FCPA enforcement action in 2004, disgorgement has become the dominant remedy sought by the SEC in corporate FCPA enforcement actions.

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