Books and Records Archives

That Was Then, This Is Now

By Mike Koehler on August 28, 2023 in Books and Records, Enforcement Agency Policy, Enforcement Agency Speeches, Internal Controls, SEC

To best understand (and place in context) current SEC FCPA enforcement positions and policies, it is useful to understand past SEC FCPA enforcement positions and policies.

The year was 1981, the event was the American Institute of Certified Public Accountants, and the speaker was Harold Williams, the Chairman of the SEC. The speech did not contain the standard disclaimer (i.e. I am just an individual and not speaking on behalf of the SEC), rather Williams specifically stated that his remarks “constitute a statement of the Commission’s policy.”

Williams focused his remarks (here) “solely to one major auditing development of recent years: the accounting provisions of the Foreign Corrupt Practices Act of 1977″ and stated that “the anxieties created by the Foreign Corrupt Practices Act – among men and women of utmost good faith – have been, in my experience without equal.”

Williams tried to damper these anxieties and spoke about the scope of the provisions including when an enforcement action would be warranted.

Duped By Certain China Subsidiary Employees, 3M Resolves A $6.5 Million Enforcement Action

By Mike Koehler on August 25, 2023 in 2023 Enforcement Action, 3M, Books and Records, China, Healthcare Companies, Healthcare Providers As Foreign Officials, Internal Controls, SEC Enforcement Action, Third Parties, Travel and Entertainment

The SEC announced today that 3M resolved a $6.5 million Foreign Corrupt Practices Act enforcement.

The basics are as follows.

Approximately 6-10 years ago, a former Marketing Manager of a 3M China-based subsidiary “secretly” provided “tourism activities” for Chinese health care officials.

The Marketing Manager “would create a travel itinerary that included various legitimate business, training and marketing activities for submission to 3M-China’s compliance personnel for approval,” however there were “alternate itineraries” that “consisted of various tourism activities at or near the location of the educational events.”

There is no suggestion that anyone at 3M headquarters knew of or approved of the conduct. Indeed, subsidiary employees, among other things, “falsified internal compliance documents that affirmatively denied and/or omitted mention of the Tourism Activities that were planned as part of the overseas trip.”

That Was Then

By Mike Koehler on July 17, 2023 in Books and Records, Enforcement Agency Policy, Enforcement Agency Speeches, Internal Controls, SEC

To best understand (and place in context) current SEC FCPA enforcement positions and policies, it is useful to understand past SEC FCPA enforcement positions and policies.

The year was 1981, the event was the American Institute of Certified Public Accountants, and the speaker was Harold Williams, the Chairman of the SEC.

Williams focused his remarks (here) “solely to one major auditing development of recent years: the accounting provisions of the Foreign Corrupt Practices Act of 1977.”

Williams began has remarks as follows.

A Further Reminder That The FCPA Has Always Been A Law Much Broader Than Its Name Suggests

By Mike Koehler on June 7, 2023 in Books and Records, Internal Controls, Non-FCPA FCPA Enforcement Actions, USA Technologies

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 and these provisions are among the most generic legal provisions one can possibly find.

The latest example is this recent SEC enforcement action against Cantaloupe Inc. (a manufacturer and distributor of cashless payment devices which operated under the name USA Technologies Inc. prior to April 2021).

Off-Target Enforcement Of The FCPA’s Books And Records Provisions

By Mike Koehler on May 9, 2023 in Books and Records

This prior post highlighted the jury instructions in a recent domestic bribery criminal trial which also involved the books and records provisions of the Foreign Corrupt Practices Act.

The jury instructions included that the “books, records, or accounts were of the type that were required to accurately and fairly reflect in reasonable detail the transactions and dispositions of the assets of [the relevant issuers].”

The instruction properly captured the explicit statutory standard “transactions and dispositions of the assets” of the issuer and was consistent with the relevant legislative history and even prior enforcement agency guidance.

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That Was Then, This Is Now

Duped By Certain China Subsidiary Employees, 3M Resolves A $6.5 Million Enforcement Action

That Was Then

A Further Reminder That The FCPA Has Always Been A Law Much Broader Than Its Name Suggests

Off-Target Enforcement Of The FCPA’s Books And Records Provisions

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