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Are SEC Tolling Agreements Actually Enforceable?

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A guest post from Russell Ryan (King & Spalding and former Assistant Director of the SEC’s Division of Enforcement).

Most readers of FCPA Professor are well aware that tolling agreements are commonplace in Foreign Corrupt Practices Act investigations.  Investigations in this space are notoriously lengthy and protracted, in part because misconduct can remain hidden for years and a good portion of the relevant evidence and witnesses is typically located overseas.

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Supreme Court Decides SEC Disgorgement Case


Yesterday, the Supreme Court issued this opinion in Liu v. SEC.

At issue was 15 USC 78u(d)(5) which states in pertinent part that “in any action or proceeding brought or instituted by the Commission under any provision of the securities laws … any Federal court may grant .. any equitable relief that may be appropriate or necessary for the benefit of investors.” The specific question presented was whether the Securities and Exchange Commission may seek and obtain disgorgement from a court as ‘equitable relief’ for a securities law violation.

In addition to punishing securities law violations through civil proceedings in federal court, the SEC also uses administrative proceedings and 15 USC 77h-1(e) states that “in any cease-and-desist proceeding … the Commission may enter an order requiring accounting and disgorgement, including reasonable interest.” This provision was not before the Court in Liu and this is important to understand as approximately 90% – 100% of SEC FCPA enforcement actions against issuers in the modern era are administrative actions.

Thus, when the FCPA Blog states in this post that the decision in Liu will make “a significant change to how corporate FCPA settlements will be reached with” the SEC – this is not accurate as very few modern SEC enforcement actions against issuers result in federal court actions and the specific statute at issue in Liu.

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Other SEC Commissioners Have Objected To Corporate FCPA Enforcement Actions


Yesterday’s post highlighted how during her tenure as SEC Commissioner Hester Peirce has objected (in whole or in part) to approximately 65% of the corporate FCPA enforcement actions.

While no other SEC Commissioner comes close to matching Peirce’s objections, set forth below are several other instances in which SEC Commissioners have objected (in whole or in part) to corporate FCPA enforcement actions.

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During Her Tenure As SEC Commissioner, Hester Peirce Has Objected To A Majority Of Corporate FCPA Enforcement Actions


Hester Peirce was appointed by President Trump to the U.S. Securities and Exchange Commission and was sworn in on January 11, 2018.

During her time on the Commission, Peirce has voted on 27 corporate Foreign Corrupt Practices Act enforcement actions. As detailed below, Peirce has not approved 25% of the enforcement actions she has voted on and in an additional 40% of cases she has approved the enforcement action with exceptions (disagreeing on the disgorgement amount or civil penalty).

All told, Peirce has objected (in whole or in part) to approximately 65% of the corporate FCPA enforcement actions she has voted on while on the Commission.

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Friday Roundup


Listening in, SEC work continues, and for the reading stack. It’s all here in the Friday roundup.

Listening In

As highlighted in this recent post, Herbalife recently disclosed that it is poised to pay $123 million to resolve its long-standing FCPA scrutiny. In a recent investor conference call, John Agwunobi (CEO of the company) stated about the company’s disclosure: “we do believe that it [the disclosure] has freed us of any material, nonpublic information that would have affected our ability to repurchase shares.”

Goes to show that FCPA scrutiny and enforcement are often entwined with other legal issues.

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