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

inconistent

I recognize that I can be a creature of habit, but when an issue – such as the SEC’s inconsistent treatment of FCPA violations – is so frequent I will keep on writing about it. So here goes the umpteenth post on this issue. (See here for other examples).

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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Friday Roundup

Roundup

About time, scrutiny updates, ripple, for the record, just saying, and for the reading and listening stack. It’s all here in the Friday roundup.

About Time

After dinging companies for nearly 40 years for internal controls and risk management failures, the SEC names its first chief risk officer.

As highlighted in this prior post, if the SEC were an issuer there would be many books and records and internal controls issues within the organization.

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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 (hereherehere 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.

Continue Reading

60% Of SEC FCPA Enforcement Actions In Recent Years Do Not Involve Charges Or Findings That An Issuer Violated The Anti-Bribery Provisions

Statistical Analysis

Between 2011 and 2018, the SEC brought 90 corporate Foreign Corrupt Practices Act enforcement actions.

However, only 36 of those actions (40%) involved charges or findings that a company violated the FCPA’s anti-bribery provisions. In other words, the majority of SEC corporate FCPA enforcement actions in recent years “merely” involve books and records and/or internal controls charges or findings.

Strangely, as further highlighted below, several SEC enforcement actions that did not involve civil charges or findings of anti-bribery violations, did involve the DOJ (an agency that enforces the FCPA criminally) bringing criminal anti-bribery charges.

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A Focus On SEC Individual Actions

SEC

This previous post highlighted various facts and figures from 2018 SEC FCPA enforcement actions against issuers.

As highlighted in the prior post, of the 14 corporate SEC FCPA enforcement actions in 2018, 1 (7%) has involved, at present, related SEC FCPA charges or findings against company employees.

In 2018, the SEC charged or found that three individuals violated the FCPA: Joo Hyun Bahn (associated with Colliers International Group); Patricio Contesse Gonazlez (associated with SQM which resolved an FCPA enforcement action in 2017); and Paul Margis (associated with Panasonic Avionics). (Note: the SEC’s enforcement action against Takeshi Uonaga (Panasonic Avionics former CFO) is not included in FCPA enforcement statistics for the simple reason that this was a revenue recognition matter and thus a non-FCPA FCPA enforcement action).

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