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SEC FCPA Enforcement – 2018 Year In Review

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 [1]” the SEC wanted no part in enforcing the FCPA’s anti-bribery provisions).

This previous post [2] highlighted various corporate enforcement statistics from 2018, this post [3] focused more specifically on DOJ enforcement in 2018, and this post goes in-depth into various facts and figures relevant to SEC FCPA enforcement in 2018.

[See here [4] for a similar post for 2017; here [5] for a similar post for 2016; here [6] for a similar post for 2015; here [7] for a similar post for 2014; here [8] for a similar post for 2013; here [9] for a similar post for 2012; here [10] for a similar post for 2011; and here [11] for a similar post for 2010]

Settlement Amounts and Specifics

In 2018, the SEC brought 14 corporate enforcement actions and collected approximately $382 million in those enforcement actions. (Note: this figure represents net FCPA settlement amounts after accounting for various credits or deductions in certain enforcement actions for related foreign law enforcement actions).

By way of comparison:

The range of SEC FCPA enforcement actions in 2018 was on the high end $143.2 million (Panasonic) and on the low end $500,000 (Elbit Imaging).

Of the 14 corporate enforcement actions brought by the SEC in 2018, 9 (64%) were SEC only.

By way of comparison, of the 7 corporate enforcement actions brought by the SEC in 2017, 4 (58%) were SEC only and of the 24 corporate enforcement actions brought by the SEC in 2016, 14 (58%) were SEC only.

Of the 14 corporate enforcement actions brought by the SEC in 2018, 100% were administrative actions. In other words, there was no judicial scrutiny of any SEC corporate FCPA enforcement actions in 2018.

By way of comparison:

[12]

In 2018, the SEC collected approximately $171 million in disgorgement and prejudgment interest in enforcement actions that did not charge or find anti-bribery violations. This is noteworthy because many question, and rightfully so, whether disgorgement is an appropriate remedy in cases that do not charge FCPA anti-bribery violations.  See here [13] for a prior post on so-called “no-charged bribery disgorgement” cases.

By way of comparison:

The $382 million the SEC collected in 2018 FCPA enforcement actions breaks down as follows:

In other words, 92% of SEC corporate FCPA settlement amounts in 2018 consisted of disgorgement and prejudgment interest.

By way of comparison:

If one tries to analyze why some SEC FCPA enforcement actions in 2017 included a civil penalty, disgorgement and prejudgment interest (Polycom, United Technologies, Sanofi, Beam, Dun & Bradstreet), whereas other enforcement actions included only disgorgement and prejudgment interest (Vantage Drilling, Petrobras, Legg Mason, Credit Suisse), whereas other enforcement actions included only a civil penalty (Eletrobras, Stryker, Kinross Gold, Elbit Imaging) good luck and please enlighten us all with your insight.

Corporate vs. Individual Actions

Of the 14 corporate SEC FCPA enforcement actions in 2017, 1 (7%) has involved, at present, related SEC FCPA charges or findings against company employees.

By way of comparison:

Voluntary Disclosures

Of the 14 corporate SEC FCPA enforcement actions from 2018, 6 (43%) was the result of a voluntary disclosure.

By way of comparison:

This remainder of this post provides an overview of SEC FCPA enforcement in 2018.

Polycom (December 26th)

See here [14] for the prior post

Charges:  None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions

Settlement: $16.3 million (disgorgement of $10,672,926, prejudgment interest of $1,833,410, and a civil penalty of $3,800,000)

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: Yes

Eletrobras (December 26th)

See here [15] for the prior post

Charges:  None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.

Settlement: $2.5 million civil penalty

Origin: Foreign law enforcement investigation

Individuals Charged: No

Related DOJ Enforcement Action: No

Vantage Drilling (November 19th)

See here [16] and here [17] for prior posts

Charges:  None.  Administrative cease and desist order finding violations of FCPA’s internal controls provisions.

Settlement: $5 million in disgorgement

Origin: Foreign law enforcement investigation

Individuals Charged: No

Related DOJ Enforcement Action: No

Stryker (Sept. 28th)

See here [18] for the prior post.

Charges: None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions

Settlement: $7.8 million civil penalty

Origin: The administrative order states: “in response to the Commission’s investigation, Stryker retained outside counsel and forensic auditors to conduct an internal investigation into the company’s compliance with the FCPA concerning Stryker’s activities in India, China, and Kuwait. (Note: in 2013 [19] Stryker also resolved an FCPA enforcement action).

Individuals Charged: No

Related DOJ Enforcement Action: No

Petrobras (Sept. 27th)

See here [20] and here [21] for prior posts

Charges: None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions as well as other securities law provisions.

Settlement: $85.3 million after accounting for credits and deductions for related enforcement actions

Origin: Foreign law enforcement investigation

Individuals Charged: Not by the SEC

Related DOJ Enforcement Action: Yes

United Technologies Corp. (Sept. 12th)

See here [22] and here [23] for prior posts

Charges: None.  Administrative cease and desist order finding violations of FCPA’s anti-bribery, books and records and internal controls provisions

Settlement: $13.9 million (disgorgement of $9,067,142, prejudgment interest of $919,392, and a civil money penalty of $4,000,000)

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: No

Sanofi (Sept. 4th)

See here [24] and here [25] for prior posts

Charges: None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions

Settlement: $25.2 million ($17.5 million in disgorgement, $2.7 million in prejudgment interest, and a civil penalty of $5 million)

Origin: Media reports suggest a voluntary disclosure, however the SEC’s order is silent on this topic

Individuals Charged: No

Related DOJ Enforcement Action: No

Legg Mason (August 27th)

See here [26] for the prior post

Charges: None.  Administrative cease and desist order finding violations of FCPA’s internal controls provisions

Settlement: $34.5 million in disgorgement and prejudgment interest

Origin: Pro-active government investigation and subpoena

Individuals Charged: No

Related DOJ Enforcement Action: Yes

Credit Suisse (July 5th)

See here [27] and here [28] for prior posts

Charges: None.  Administrative cease and desist order finding violations of FCPA’s anti-bribery and internal controls provisions

Settlement: $29.8 million (approximately $25 million in disgorgement and approximately $4.8 million in prejudgment interest).

Origin: Likely an industry sweep connected to JPMorgan’s FCPA scrutiny

Individuals Charged: No

Related DOJ Enforcement Action: Yes

Beam (July 2nd)

See here [29] and here [30] for prior posts

Charges: None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions

Settlement: $8.2 million (disgorgement of $5,264,340, prejudgment interest of $917,498, and a civil monetary penalty of $2 million)

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: No

Dun & Bradstreet (April 23)

See here [31]here [32]here [33]here [34] and here [35] for prior posts.

Charges:  None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.

Settlement: $9.2 million (disgorgement of $6,077,820, prejudgment interest of $1,143,664, and a civil money penalty in the amount of $2 million).

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: No (as highlighted here [32] the DOJ publicly issued a so-called declination letter).

Panasonic (April 30)

See here [36] and here [37] for prior posts

Charges:  None.  Administrative cease and desist order finding violations of the FCPA’s anti-bribery, books and records, and internal controls provisions. In addition, based on the underlying conduct the SEC also found that Panasonic fraudulently reported revenue and found violations of Section 10(b) and Rule 10b-5 as well as other reporting violations.

Settlement: $143.2 million ($126.0 million in disgorgement and $16.3 million in prejudgment interest).

Origin: The order states: The Company did not receive voluntary disclosure credit because the Company’s disclosures occurred only after the Securities and Exchange Commission (“SEC”) requested documents from Panasonic related to possible violations of anti-corruption laws and several years after the Company and Panasonic first became aware of the allegations of bribery through a whistleblower complaint and civil lawsuit, which the Company took steps to investigate internally but chose not to voluntarily report to the relevant authorities;

Individuals Charged: Yes

Related DOJ Enforcement Action: Yes

Kinross Gold (March 26th)

See here [38] for the prior post

Charges:  None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.

Settlement: $950,000 civil penalty

Origin: SEC subpoena

Individuals Charged: No

Related DOJ Enforcement Action: No

Elbit Imaging (March 9th)

See here [39] for the prior post

Charges:  None.  Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.

Settlement: $500,000 civil penalty (an amount reflective of the fact that Elbit is currently winding down its operations).

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: No

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