Earlier this week, the SEC announced that its FCPA Unit Chief, Kara Brockmeyer, will soon be leaving.
Similar to prior DOJ/SEC press releases upon FCPA enforcement attorneys leaving the government, the SEC’s release largely defines Brockmeyer’s tenure in terms of quantity of enforcement actions brought and settlement amounts secured. (See here for a prior post discussing this dynamic). The vast majority of this FCPA enforcement, because of the prominence of SEC administrative actions as well as NPAs and DPAs, occurred in the absence of any judicial scrutiny.
This post highlights additional data points relevant to Brockmeyer’s tenure as SEC FCPA Unit Chief, a position she assumed in September 2011 after the SEC’s first formal FCPA Unit Chief Cheryl Scarboro departed (see here for the prior post).
The SEC’s release notes:
“Under Ms. Brockmeyer’s supervision of the FCPA unit, the SEC has brought 72 FCPA enforcement actions addressing a wide range of misconduct and resulting in judgments and orders totaling more than $2 billion in disgorgement, prejudgment interest, and penalties.”
Stephanie Avakian, Acting Director of the SEC’s Enforcement Division stated: “Kara’s creativity and perseverance have led to truly outstanding results in the SEC’s FCPA program. Her leadership of the unit has led to many successes in the FCPA area.”
Brockmeyer stated: “It has been an honor and a privilege to work with the incredibly talented and dedicated staff in the FCPA Unit and throughout the Division of Enforcement and the SEC. I am very proud of the results that the unit has achieved over the past five years.”
Like prior DOJ and SEC enforcement officials, Brockmeyer often spoke of the importance of individual FCPA prosecutions.
However, during her tenure as FCPA Unit Chief approximately 85% of corporate SEC FCPA enforcement actions lacked related individual charges against company employees.
Moreover, as the below chart demonstrates, individual FCPA prosecutions during Brockmeyer’s tenure was (with the exception of 2016) below historical norms.
Number of Individual SEC Enforcement Actions
|2011||12 (including 7 former Siemens executives and 3 former Magyar Telecom executives)|
During Brockmeyer’s tenure as FCPA Unit Chief, the SEC was never put in a position, in a corporate enforcement action, to prove its case. However, there were three individual enforcement actions during Brockmeyer’s tenure in which the SEC was put in a position to prove its case and in all three instances the SEC struggled.
As highlighted in this post, in February 2013 a federal trial court judge granted former Siemens executive Herbert Steffen’s motion to dismiss the SEC’s complaint.
As highlighted in this post, in July 2014, on the eve of trial the SEC collapsed its enforcement action against Mark Jackson and James Ruehlen. Since it was filed in 2012, the SEC’s case against the defendants was consistently trimmed as the SEC attempted to meet its burden. Among other things, a portion of the SEC’s claims were dismissed or abandoned on statute of limitations grounds and the trial court judge ruled, in an issue of first impression, that the SEC has the burden of negating the FCPA’s facilitation payments exception. (See also here). Without any admission of liability and without any payment of money, Jackson and Ruehlen agreed not to violate the FCPA’s books and records and internal controls provisions in the future. Although Brockmeyer publicly stated it was a “very good settlement” for the SEC, less-biased observers stated the obvious fact that “the settlements represent significant victories for the individuals.”
Most recently, in the SEC’s long-standing enforcement action against former Magyar Telecom executives (the case was filed in December 2011), after the federal trial court denied competing motions for summary judgment, and with a May 2017 trial date fast approaching, the defendants, without admitting or denying the SEC’s allegations, agreed to settle. (See here).
Another notable feature of Brockmeyer’s tenure as SEC FCPA Unit chief was the three enforcement actions based on alleged improper internship and hiring practices: BNY Mellon (here and here), Qualcomm (here and here), and JPMorgan (here and here). Commenting on the enforcement theory at issue in these inquiries, former SEC Commissioner Arthur Levitt called the FCPA scrutiny “scurrilous and hypocritical.” You can decide for yourself whether the JPMorgan represented a trifecta of off-the-rails FCPA enforcement.
Do the above data points indicate “many successes in the FCPA area” as suggested in the SEC’s release?
That is for you to decide.
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