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The FCPA Doesn’t Answer Many Of The Questions Compliance Professionals Have

June 14, 2024

Naturally, and understandably, those tasked with Foreign Corrupt Practices Act compliance within a business organization want clear answers to many questions.

However, the FCPA rarely provides clear answers and this is particularly true with the internal controls provisions.

The provisions are not rule-based, but principle-based in the sense that the key statutory language is that issuers  shall “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances” that certain financial objectives are met. The FCPA then defines  “reasonable assurances” to mean “such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.”

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Four Years Later, Dr. Reddy’s Laboratories Is Still Under Scrutiny

June 13, 2024

Remember when a high-ranking Department of Justice official declared in 2017 that it was the intent of the DOJ “for our FCPA investigations to be measured in months, not years.” (See here for the prior post).

The statement was laughable when made and remains laughable approximately seven years later because since the statement was made FCPA scrutiny tends to average approximately 4-5 years. (See here).

Several current instances of FCPA scrutiny have dragged on for years including the scrutiny of Dr. Reddy’s Laboratories Ltd., (an India-based pharmaceutical company with ADRs listed on the New York Stock Exchange).

As highlighted in this prior post, in 2020 the company disclosed that it “has commenced a detailed investigation into an anonymous complaint” alleging that “healthcare professionals in Ukraine and potentially in other countries were provided with improper benefits in violation of U.S. laws.”

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Is Calavo Growers “Boiling The Ocean”?

June 12, 2024

Not all companies under Foreign Corrupt Practices Act scrutiny disclose the fees and expenses to conduct an internal investigation.

In my estimation, approximately 25% of issuers do so.

Calavo Growers, Inc. has done so.

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HF Foods Group Resolves Books And Records And Internal Controls Matter

June 11, 2024

The Foreign Corrupt Practices Act has always been a law much broader than its name suggests.

Sure, the FCPA contains anti-bribery provisions which concern foreign bribery.

Sure, the FCPA’s books and records and internal controls provisions can be implicated in foreign bribery schemes.

However, the fact remains that most FCPA enforcement actions (that is enforcement actions that charge or find violations of the FCPA’s books and records and internal controls provisions) have nothing to do with foreign bribery. For lack of a better term, these enforcement actions have longed been called non-FCPA, FCPA enforcement actions by this site.

The latest example concerns HF Foods Group Inc., a Nevada-based food service distributor to Asian restaurants in the United States.

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SEC Commissioner Uyeda On Foreign Company Disclosures

June 10, 2024

Recently, various SEC officials have delivered speeches in connection with the 90th anniversary of the Securities and Exchange Commission (SEC).

This speech by SEC Commissioner Mark Uyeda focused on foreign company disclosures.

In recent years, approximately 1,000 foreign companies (the number fluctuates each year) have shares traded on a U.S. exchange and thus qualify as “issuers” making such companies subject to a variety of securities laws including the Foreign Corrupt Practices Act.

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