SEC Also Dismisses Enforcement Action Against Coburn And Schwartz
Since 2019, this site has followed the Foreign Corrupt Practices Act enforcement action (DOJ and SEC) against former Cognizant Technology Solutions executives Gordon Coburn and Steven Schwartz in connection with an alleged bribery scheme in India.
This February 25th post set forth the many reasons (legal and factual) why the enforcement action was unusual.
In April, the DOJ finally did the right thing and dismissed the indictment ending the DOJ enforcement action. (See here for the prior post).
Yesterday, the SEC also finally did the right thing.
This SEC release states:
“The Securities and Exchange Commission … filed a joint stipulation with Defendants Gordon J. Coburn and Steven E. Schwartz to dismiss, with prejudice, the Commission’s ongoing civil enforcement action against them.
The Commission’s decision to exercise its discretion and dismiss the pending enforcement action rests on its judgment that the dismissal is appropriate as a policy matter, not on any assessment of the merits of the claims alleged in the action. Furthermore, as stated in the joint stipulation, the Commission’s decision to seek dismissal of this action “does not necessarily reflect the Commission’s position on any other case.”
“To Preserve The Integrity Of The Truth-Seeking Process,” An FCPA Trial Is Again Adjourned
The FCPA’s extensive legislative history contains concerns about the due process of individuals charged with violating the Foreign Corrupt Practices Act.
Representative Bob Eckhardt (D-TX) was particularly concerned about this issue and he stated that if an individual is “brought to court in the United States and the witnesses are halfway across the world, it seems to me that he is at a disadvantage …”. Eckhardt likewise expressed concern about imposing a burden on an individual defendant “far away from the point where the evidence can be obtained.”
The FCPA’s legislative history also contains a report by The Association of the Bar of the City of New York expressing concern for the due process rights of individual defendants charged with violating the FCPA.
MLATs: They Are Not Just For DOJ Any More (Maybe)
Today’s post is from Sara Kropf. A shorter version of this post was published by Bloomberg News on May 14, 2024. (See here).
I’ve written before about the Department of Justice’s questionable tactics in an FCPA case against two former executives for Cognizant Technology Solutions. The two executives eventually lost their bid to suppress certain statements made during an internal investigation interview by the company. But they continue to battle DOJ. Their efforts led the trial judge to take the extraordinary step of effectively forcing DOJ to help the defense secure exculpatory overseas evidence through a mutual legal assistance treaty or MLAT.
The case is an example of how a trial judge can exercise discretion to help ensure a fair trial simply by refusing to take what DOJ lawyers say at face value. It’s also a master class in persistent lawyering; by refusing to abandon the battle to obtain this key evidence, the defense may win the war.
“That Cognizant Was Acting In Furtherance Of Generally Applicable Government Policies Does Not Render All Of Its Actions State Actions”
As highlighted in this prior post, in connection with the Cognizant Technology Solutions Foreign Corrupt Practices Act enforcement action concerning obtaining various permits in India, in early 2019 the DOJ (and SEC) also charged Gordon Coburn (former President and CFO of the company) and Steven Schwartz (former Executive Vice President and Chief Legal and Corporate Affairs Officer) with various FCPA offenses.
As highlighted in this prior post, in late 2022 the individuals filed motions claiming that the government outsourced its investigation to Cognizant.
FCPA Related Caremark Claim Dismissed
As highlighted here, in 2019 Cognizant Technology Solutions resolved a $25 million SEC FCPA enforcement action in connection with various licenses and permits in India.
As often happens in the aftermath of Foreign Corrupt Practices Act scrutiny or enforcement, plaintiff lawyers representing shareholders filed related civil claims.
Several related derivative actions against current and former members of Cognizant’s board as well as current and former Cognizant executive officers were filed and consolidated into one action.
Recently, the court dismissed the consolidated actions (see here) and in doing so concluded, among other things, that plaintiffs’ so-called Caremark claims were not viable.