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Does The SEC Really Even Need A Specific FCPA Unit?

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In fiscal year 2010, the Securities and Exchange Commission created a specialized unit (one of only five in its enforcement division “dedicated to particular highly specialized and complex areas of securities law“) devoted to enforcing the FCPA.

The question arises however: does the SEC really even need a specific FCPA unit?

The below post highlights how, based on the SEC’s own enforcement statistics, FCPA enforcement actions comprise a minuscule percentage of its overall enforcement actions as well as other quantitative and qualitative factors relevant to the question posed.

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

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Other than this website (see here, herehereherehere and here), there seems to be little focus on the SEC’s inconsistent approach to enforcing the FCPA’s books and records and internal controls provisions.

Which is too bad because consistency is a basic rule of law principle. 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.

As highlighted in the numerous prior posts as well as the latest example described below, 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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Former DOJ FCPA Unit Chief Duross On The “Sneaky Sh*t” Accounting Provisions And Other Things Heard On The Conference Circuit

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As highlighted in prior posts here, here and here, it is always interesting when former DOJ or SEC FCPA enforcement officials travel the conference circuit and make statements that undermine or contradict things they said while at the DOJ or SEC.

From approximately 2010 to 2014, Charles Duross was the Chief of the DOJ’s FCPA Unit. Currently a partner at Morrison & Foerster, Duross recently appeared on a panel at this ABA event.

At approximately the 14:40 mark of the video, Duross mentioned the FCPA’s accounting provisions and called them “sneaky sh*t” and said that “everybody talks about the bribery piece, if your client is publicly traded what you care about is that thing [the accounting provisions] because it is the books and records and internal controls and the truth is – and I hope nobody from the SEC is in the room – the SEC has long left the moorings of what the statute actually means. […] The SEC has interpreted that today to mean that if there is anything that has ever gone wrong in your business period, like you have not devised and maintained an effective accounting control, its ridiculous, but that is the current status I am just telling you the practical sh*t.” (Duross used the “sh*t” word several times during his presentation).

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SEC Chair Clayton Says That “In Many Areas Of The World, Our [FCPA] Work May Not Be Having The Desired Effect”

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These pages have long posed the question of whether the Foreign Corrupt Practices Act has been successful in achieving its objectives. (See here for a recent law review article titled “Has the FCPA Been Successful in Achieving Its Objectives” – see also here for FCPA Flash podcast episodes on the topic).

These pages have also long posed the question of whether country exits in the aftermath of FCPA scrutiny or enforcement are a good thing (as the government often seems to suggest) or rather a bad thing. (See here for numerous posts).

Yesterday, in this speech, SEC Chairman Jay Clayton discussed the same topics and offered candid observations that seemingly conflict with much of the government’s FCPA enforcement rhetoric over the last several years.

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SEC Commissioner Hester Peirce On “Reasonableness Pants” And “Secret Law”

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This site is a big fan of SEC Commissioner Hester Peirce and this post highlights two recent speeches she delivered. Neither of the speeches are FCPA specific, but both are indeed FCPA relevant.

In this speech, titled “Reasonableness Pants,” Peirce stated: “A strong enforcement program requires us—to draw from the admonition a judge recently gave to us in a matter before her—to “put on [our] reasonableness pants.” The SEC ought always to wear reasonableness pants, and I would like to talk today about what those reasonableness pants look like on a regulator.”

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