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FCPA Insurance

This “new era of FCPA enforcement” (see here) has resulted in “a thriving and lucrative anti-bribery complex” that is – in the words of the DOJ’s former FCPA head from a different era – “good business for law firms […] good business for accounting firms, […] good business for consulting firms, the media – and Justice Department lawyers who create the marketplace and then get [themselves] a job.” (See here).

FCPA practices are now profit centers at law firms and accounting firms and dozens of companies have appeared on the landscape to provide all imaginable services related to the FCPA. Persons “working in this growing field” can now even receive “a professional accreditation” as an anti-bribery compliance specialist. (See here).

As if further evidence was needed that FCPA Inc. is indeed a full-fledged industry in and of itself, an insurance company has begun to offer Foreign Corrupt Practices Act insurance.

Chartis, a New York based “world leading property-casualty and general insurance organization” recently announced (here) the introduction of “Investigation Edge, developed by its Executive Liability Division as the first insurance solution to cover company costs arising from SEC investigations, including those related to internal investigations.”

According to the release, “Investigation Edge covers legal expenses, discovery costs and insurable settlements resulting from investigations by enforcement authorities – including the SEC and the Department of Justice – into insider trading, restatements, accounting fraud and reporting violations.”

Need a specific endorsement for FCPA issues?

No problem – as the release notes “coverage is also available via endorsements for investigations into Foreign Corrupt Practices Act violations and derivative investigations.”

It is not surprising that an insurance company is now offering such a product.

FCPA professional fees and expenses have reached, in some cases, nine figures such as Avon’s recent disclosure that it has spent approximately $100 million just to investigate conduct that may implicate the FCPA. In addition will be any enforcement action fines, penalties, and disgorgement, as well as any post-enforcement action compliance fees and expenses. In addition, collateral civil litigation seems to have become a new norm (see here for example).

However, would it not be easier, more cost efficient, and more desirable for any number of policy reasons to address the root causes for why the “new era of FCPA enforcement” exists in the first place?

For some – yes.

For others – no. The current era is suiting them just fine.

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