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SEC Chair Nominee Clayton – Because Of Exposure To FCPA And Related Laws “There Are Some Jurisdictions Where In The Vast Majority Of The Cases It May Make Sense Just Not To Participate”

Sullivan & Cromwell partner Jay Clayton testifies before the Senate Committee on Banking, Housing, and Urban Affairs during his confirmation hearing to become the next Chairman of the U.S. Securities and Exchange Commission in Washington.  March 23, 2017.

The flawed New Yorker article about the Trump Organization and its potential FCPA liability (see prior posts here and here as well as additional commentary here) continues to percolate.

During yesterday’s Senate Committee on Banking, Housing and Urban Affairs hearing on Jay Clayton’s nomination to head the SEC, the below exchange took place between Senator Sherrod Brown (D-Ohio) and Clayton.

It was the only Foreign Corrupt Practices Act related question posed to Clayton during the hearing. (See this prior post for coverage of a report titled“The FCPA and its Impact on International Business Transactions – Should Anything Be Done to Minimize the Consequences of the U.S.’s Unique Position on Combating Offshore Corruption?” by the Clayton-chaired International Business Transactions Committee of the Association of the Bar of the City of New York).

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Civil Monetary Penalties In SEC FCPA Enforcement Actions

SEC

This recent speech by Acting SEC Chairman Michael Piwowar received some coverage based on the following sentence from the speech: “I am generally comfortable with assessing civil monetary penalties in Foreign Corrupt Practices Act cases.”

It’s unclear what Piwowar really meant by this statement.

As highlighted below, approximately 40% of SEC corporate FCPA enforcement actions since 2010 have included civil monetary penalties even if such penalties have traditionally been a very minor component of overall settlement amounts because of the dominance of disgorgement and prejudgment interest.

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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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A Focus On SEC Individual Actions

SEC

After a wild week or so in 2017 Foreign Corrupt Practices Act enforcement, back to some 2016 FCPA enforcement statistics.

This previous post highlighted various facts and figures from 2016 SEC FCPA enforcement actions against issuers.

As highlighted in the prior post, of the 24 corporate SEC FCPA enforcement actions from 2016, 7 (29%) have involved, at present, related SEC charges or findings against company employees.

In 2016, the SEC charged or found that 8 individuals violated the FCPA.

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SEC Enforcement Of The FCPA – 2016 Year In Review

SEC

Foreign Corrupt Practices Act enforcement, it’s not just about the DOJ.

Granted, as a civil enforcement agency the SEC’s sticks are less sharp than the DOJ’s, but the SEC also claims a significant piece of the FCPA enforcement pie (query whether it should – but that is a subject for another day – for instance as discussed in “The Story of the Foreign Corrupt Practices Act” the SEC wanted no part in enforcing the FCPA’s anti-bribery provisions).

This previous post was a 2016 year in review of DOJ FCPA enforcement.

Today’s post is a 2016 year in review of SEC FCPA Enforcement.  (See here for a similar post for 2015; here for a similar post for 2014; here for a similar post for 2013; here for a similar post for 2012; here for a similar post for 2011; and here for a similar post for 2010).

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