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The Equity Facade Of SEC Disgorgement

SEC

Recently the Supreme Court agreed to hear Liu v. SEC in which the question presented is the following: “Whether the Securities and Exchange Commission may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation even though this Court has determined that such disgorgement is a penalty.” (See here for the prior post).

Given this development, the below guest post from Russ Ryan (King & Spalding) which originally was published on FCPA Professor in 2013, is republished.

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Supreme Court To Hear Another SEC Disgorgement Case

supremecourt

As highlighted in this previous post, in 2017 the Supreme Court unanimously bench slapped the SEC in Kokesh v. SEC 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.”

It was noted that while Kokesh was not an FCPA case, the decision was FCPA relevant given that disgorgement has become the dominant remedy sought by the SEC in corporate FCPA enforcement actions.

In covering the Kokesh decision, this prior post highlighted how a footnote in the Supreme Court’s decision seemed to be inviting another disgorgement case. Specifically, footnote 3 of the decision stated:

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Issues To Consider From The Juniper Networks Enforcement Action

Issues

This prior post highlighted the SEC’s $11.7 million Foreign Corrupt Practices Act enforcement action against Juniper Networks. This post continues the analysis by highlighting additional issues to consider.

Timeline

As highlighted in this prior post, Juniper Networks disclosed its FCPA scrutiny in mid-2013. Thus, from start to finish the company’s FCPA scrutiny lasted an unconscionable six years.

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Issues To Consider From The Deutsche Bank Enforcement Action

Issues

This prior post highlighted the SEC’s $16.2 million Foreign Corrupt Practices Act enforcement action against Deutsche Bank – the latest FCPA enforcement action focused on alleged improper internship and hiring practices primarily involving the financial services industry.

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

Timeline

The company’s FCPA scrutiny reportedly began in mid-2013. Thus, from start to finish, Deutsche Bank’s FCPA scrutiny lasted an unconscionable six years.

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Issues To Consider From The Microsoft Enforcement Action

Issues

This prior post went in-depth into the recent Microsoft Foreign Corrupt Practices Act enforcement action and this post continues the analysis by highlighting additional issues to consider.

Timeline

As highlighted in this prior post, Microsoft was reportedly under FCPA scrutiny in various countries since early 2013. Thus, from start to finish the various facets of the company’s FCPA scrutiny lasted an unconscionable 6.5 years. If the DOJ and SEC want their FCPA enforcement programs to be viewed as credible and effective, they must resolve instances of FCPA scrutiny much quicker.

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