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North Carolina’s Season Of Failures

NC

Earlier this week, North Carolina won the national championship basketball game to cap off a successful season.  By one measure, North Carolina was thus the most successful team in college basketball this year. But what if North Carolina was a business organization subject to the FCPA?

It is undisputed that North Carolina failed many times this year.

For starters, North Carolina ended the season 33-7 which means that North Carolina lost approximately 18% of its games.  During the season, North Carolina lost to unranked Georgia Tech and Miami and failed to win the ACC tournament conference championship.

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Further To JPMorgan Representing A Trifecta Of Off-The-Rails FCPA Enforcement

Offtherails

This prior post highlighted the recent article “JPMorgan – A Trifecta of Off-The-Rails FCPA Enforcement” (the article can be downloaded here).

A recent Federal Reserve Board enforcement action against Fang Fang (the former Managing Director and head of China Investment Banking at J.P. Morgan Securities (Asia Pacific) Limited (JPMSAP)) and Timothy Fletcher (the former Managing Director and Head of the Junior Resources Management Group at JPMSAP – the group responsible for recruiting, hiring, staffing, and compensation and reviews for junior employees) further highlights how the JPMorgan Foreign Corrupt Practices Act enforcement (see prior posts here and here) represents a trifecta of off-the-rails enforcement and why anyone who values the rule of law should be alarmed.

In addition, this post highlights how the recent Federal Reserve action against Fang and Fletcher was not the first Federal Reserve action against an individual in the FCPA context.

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Criminal Internal Controls Charges Against Individuals

Criminal Law

Pardon me for being that guy, but in the Foreign Corrupt Practices Act space someone needs to put on the stripes every now and then and blow the whistle on certain commentary.

Another statement (see here for a similar prior post) from Michael Volkov’s Corruption, Crime & Compliance has left me scratching my head and thinking to myself “you gotta be kidding me.” In the post, Volkov writes: “If you follow my blog, you know that I have often predicted that DOJ will eventually prosecute criminally an individual for circumventing internal controls. The implications of such a prosecution will be significant.”

Newsflash.

As highlighted in this post, the DOJ has already criminally prosecuted several individuals for circumventing internal controls.

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Delaware Court Once Again Rejects “The Conclusory Allegation That Because Illegal Behavior Occurred, Internal Controls Must Have Been Deficient, And The Board Must Have Known So”

rejected

In my non-FCPA life, I teach a variety of courses such as corporations and securities regulation.

Because of this, I continue to scratch my head as to the seeming inability of certain FCPA commentators to grasp certain basic aspects of the legal framework regarding corporate law and governance.

For instance, this recent post is titled “When Will Shareholders Force Boards to Do Compliance” and the commentator asserts: “[with] any of the companies which were embroiled in Foreign Corrupt Practices Act (FCPA) matters which recently settled, where was the Board when the company was busy paying out millions in bribes, in some cases literally across the globe?”

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Further To The SEC’s Inconsistent Approach To Enforcing The FCPA’s Books And Records And Internal Controls Provisions

inconistent

As highlighted in previous posts on this subject (here and here), a basic rule of law principle is consistency.

In other words, the same legal violation ought to be sanctioned in the same way. When the same legal violation is sanctioned in materially different ways, trust and confidence in law enforcement is diminished.

However, there sure does seem to be a lack of consistency between how the SEC resolves Foreign Corrupt Practices Act books and records and internal controls violations.

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