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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.

Civil monetary penalties have long been issued in SEC corporate FCPA enforcement actions.

  • Of the 24 corporate SEC FCPA enforcement actions in 2016, 10 (42%) included civil monetary penalties as a component of the overall settlement amount;
  • Of the 9 corporate SEC FCPA enforcement actions in 2015, 8 (89%) included civil monetary penalties as a component of the overall settlement amount;
  • Of the 7 corporate SEC FCPA enforcement actions in 2014, 3 (43%) included civil monetary penalties as a component of the overall settlement amount;
  • Of the 8 corporate SEC FCPA enforcement actions in 2013, 2 (25%) included civil monetary penalties as a component of the overall settlement amount;
  • Of the 8 corporate SEC FCPA enforcement actions in 2012, 3 (38%) included civil monetary penalties as a component of the overall settlement amount;
  • Of the 13 corporate SEC FCPA enforcement actions in 2011, 6 (46%) included civil monetary penalties as a component of the overall settlement amount;
  • Of the 19 corporate SEC FCPA enforcement actions in 2010, 5 (26%) included civil monetary penalties as a component of the overall settlement amount.

In short, of the 88 corporate SEC FCPA enforcement actions since 2010, 37 (42%) included civil monetary penalties as a component of the overall settlement amount.

Notwithstanding the above statistic, as FCPA Professor has highlighted for years (see here, here and here for instance) there appears to be little consistency, indeed no rhyme or reason, in the composition of SEC FCPA settlement amounts. Some FCPA enforcement actions include a civil monetary penalty, disgorgement and prejudgment interest; whereas other enforcement actions include only disgorgement and prejudgment interest; whereas other enforcement actions include only a civil monetary penalty.

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

  • 96% of SEC FCPA settlement amounts in 2016 consisted of disgorgement and prejudgment interest
  • 51% of SEC FCPA settlement amounts in 2015 consisted of disgorgement and prejudgment interest;
  • 99% of SEC FCPA settlement amounts in 2014 consisted of disgorgement and prejudgment interest;
  • 98% of SEC FCPA settlement amounts in 2013 consisted of disgorgement and prejudgment interest;
  • 86% of SEC FCPA settlement amounts in 2012 consisted of disgorgement and prejudgment interest;
  • 94% of SEC FCPA settlement amounts in 2011 consisted of disgorgement and prejudgment interest; and
  • 96% of SEC FCPA settlement amounts in 2010 consisted of disgorgement and prejudgment interest.

Given that the FCPA contains specific penalty amounts, disgorgement (which is not mentioned in the FCPA) is a controversial remedy in many FCPA enforcement actions, (see here for article “The Facade of FCPA Enforcement”) particularly those which do not allege or find violations of the FCPA anti-bribery provisions. (See here).

Returning to Piwowar statement: “I am generally comfortable with assessing civil monetary penalties in Foreign Corrupt Practices Act cases.”

If that means assessing civil monetary penalties in lieu of disgorgement and prejudgment interest this would be noteworthy. If that means assessing civil monetary penalties in the approximately 60% of corporate FCPA enforcement actions that have not historically resulted in such a remedy, this is not really noteworthy given how little civil monetary penalties have traditionally added to overall settlement amounts.

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