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Shallow FCPA Commentary

shallow

Certain of what passes for Foreign Corrupt Practices Act commentary is shallow and lacks an appreciation of context and perspective. Another hallmark of shallow FCPA commentary is the logical fallacy post hoc ergo propter hoc (in other words, since event Y followed event X, event Y must have been caused by event X).

Shallow FCPA commentary matters because it spreads misleading information about FCPA enforcement and policy.

The latest shallow commentary was articulated in connection with the recent Credit Suisse enforcement action (see here and here for prior posts).

This law firm post states:

“In an apparent nod to the anti-‘piling on’ policy, the SEC agreed to refrain from imposing any civil penalty. In fact, the SEC administrative order expressly provides that ‘[Credit Suisse] acknowledges that the Commission is not imposing a civil penalty based upon the imposition of a $47 million criminal fine as part of Credit Suisse’s settlement with the United States Department of Justice.'”

Likewise, Thomas Fox (who calls himself the Compliance Evangelist) pontificated:

“This enforcement action is now one of three from the spring of 2018 which demonstrates the effect of the new FCPA Corporate Enforcement Policy, announced in late November 2017, and the new anti-piling on policy announced in May 2018. […] It is also important to note that the SEC stated in its Order, “Respondent acknowledges that the Commission is not imposing a civil penalty based upon the imposition of a $47 million criminal fine as part of Credit Suisse’s settlement with the United States Department of Justice.”

In both instances, the commentators link the SEC not imposing a civil penalty in the Credit Suisse enforcement action to the DOJ’s May 2018 announcement of a no piling on policy (see here and here for prior post) ignoring of course that the policy was a DOJ policy and not an SEC policy.

More fundamentally, let’s swim over to the deep end of the pool (where context and perspective are important) and one quickly discovers after a few minutes of research (well … a few minutes with a powerful search feature) that the SEC has frequently not imposed civil penalties or other forms of relief in corporate FCPA enforcement actions with a parallel DOJ component – and has done so long before the DOJ’s May 2018 no piling on policy.

In the 2014 Aloca enforcement action, the SEC’s order states:

“[Alcoa] shall pay disgorgement of $175,000,000. A portion of [Alcoa’s] disgorgement obligation in the amount of $14,000,000 shall be deemed satisfied by [Alcoa’s] payment of $14,000,000 in forfeiture as part of [Alcoa’s resolution with the United States Department of Justice (“DOJ”).”

In the 2014 HP enforcement action, the SEC’s order states:

“[HP] shall … pay disgorgement of $29,000,000 and prejudgment interest of $5,000,000 to the United States Treasury. $2,527,750 of [HP’s] disgorgement obligation will be satisfied by [HP’s] payment of $2,527,750 in forfeiture as part of HP Mexico’s resolution with the United States Department of Justice.”

In the 2016 PTC enforcement action, the SEC’s order states under the heading“Non-Imposition of a Civil Penalty” as follows:

“[PTC] acknowledges that the Commission is not imposing a civil penalty based upon its payment of a $14,540,000 criminal fine as part of [PTC’s] subsidiaries’ settlement with the United States Department of Justice.”

In the 2016 Analogic enforcement action, the SEC’s order states:

“Analogic acknowledges that the Commission is not imposing a civil penalty based in part upon BK Medical’s payment of a $3,402,000 criminal fine as part of BK Medical’s settlement with the United States Department of Justice.”

In the 2016 LAN Airlines enforcement action, the SEC’s order states under the heading “Non-Imposition of a Civil Penalty” as follows:

“[LAN] acknowledges that the Commission is not imposing a civil penalty based upon its payment of a $12,750,000 criminal fine as part of [LAN’s] settlement with the United States Department of Justice.”

In the 2016 Och-Ziff enforcement action, the SEC’s order states:

“Och-Ziff acknowledges that the Commission is foregoing a one-time $173,186,178 civil penalty for these charges based upon the imposition of a $213,055,689 criminal penalty as part of Och-Ziff’s settlement with the DOJ.”

In the 2016 JPMorgan enforcement action, the SEC’s order states under the heading “Non-Imposition of a Civil Penalty” as follows:

“[JPMorgan] acknowledges that the Commission is not imposing a civil penalty based upon the imposition of a $72,000,000 criminal fine as part of JPMorgan APAC’s settlement with the United States Department of Justice.”

In the 2016 General Cable enforcement action, the SEC’s order states:

“GCC acknowledges that the Commission is not imposing a civil penalty for the violations described in this Order based in part on GCC’s payment of a criminal fine of $20,469,694.80 as part of GCC’s settlement with the Department of Justice.”

In the 2017 Telia enforcement action, the SEC’s order states:

“[Telia’s] disgorgement obligation shall be deemed satisfied in part by [Telia’s] forfeiture payment of up to $40,000,000 within ten (10) days of its sentencing hearing as part of [Telia’s] resolution with the United States Department of Justice.”

Another instance of shallow commentary is here courtesy of Michael Volkov (Corruption Crime & Compliance) who asserts:

“In the FCPA enforcement area, we have seen a “new” trend in the use of non-FCPA charges, such as money laundering, against recipients of foreign bribes.”

Good lord.

The DOJ has been criminally charging alleged “foreign officials” for money laundering and related charges (when there is jurisdiction) since at least 2009. (See here and here for some of the earlier actions).

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