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The Percentage Of Corporate DOJ And SEC FCPA Enforcement Actions That Result From A Voluntary Disclosure

Gift

For at least 15 years the government has encouraged business organizations to voluntary disclosure conduct that violates the Foreign Corrupt Practices Act.

In more recent years, in 2012 the government sought in the FCPA Guidance to entice business organizations to voluntarily disclose by, among other things, highlighting six “anonymized examples of matters DOJ and SEC have declined to pursue” where a common thread was voluntary disclosure. In April 2016, it was the DOJ’s pilot program, an effort – in the words of the DOJ –  to “encourage voluntary corporate self-disclosure.” Thereafter, it was the November 2017 DOJ FCPA Corporate Enforcement policy which – in the words of the DOJ – was intended to provide “guidance and greater certainty for companies struggling with the question of whether to make voluntary disclosures of wrongdoing…”

But what do the numbers show? What percentage of DOJ and SEC enforcement actions are the result of a voluntary disclosure? The below post provides the answers.

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The Largest Civil Monetary Penalties In Corporate FCPA Enforcement Actions

assetrecovery

This recent post highlighted the 2002 Foreign Corrupt Practices Act enforcement action against Syncor International.  It was noted that the $500,000 civil monetary penalty Syncor paid to resolve the action was – at the time – the largest penalty ever obtained by the SEC in an FCPA matter.

Fast forward to the present and such a figure would not even crack the Top 50 civil monetary penalties assessed in an FCPA enforcement action.

Disgorgement and prejudgment interest comprise the bulk of SEC recovery in corporate FCPA enforcement actions (typically 90% or so of overall recovery in most years). However, in approximately 40% of corporate FCPA enforcement actions since 2010 the SEC has assessed a civil monetary penalty and set forth below are the Top 25 civil monetary penalties in FCPA actions.

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The SEC Has Collected Approximately $4.6 Billion In Disgorgement In FCPA Enforcement Actions

piles of money

This 2010 article titled “The Facade of FCPA Enforcement” discusses how the facade of FCPA enforcement is evident not only in connection with the FCPA’s substantive provisions, but also in the remedies the enforcement agencies typically pursue in an FCPA enforcement action.

The Foreign Corrupt Practices Act contains specific penalty provisions for both violations of the anti-bribery and books and records and internal control provisions. However, in the FCPA’s modern era there has been a dramatic shift by the SEC away from the FCPA’s statutory penalties in most corporate enforcement action towards disgorgement.

The 2004  FCPA enforcement action against ABB is believed to be the first FCPA enforcement in which the SEC sought a disgorgement remedy and since then the SEC has secured approximately $4.6 billion in disgorgement (and associated pre-judgment interest) in approximately 130 corporate enforcement actions. Set forth below is the current top 20 list of SEC disgorgement amounts.

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A Common Language For Accurately Tracking Individual FCPA Enforcement Actions

commonlanguage

Today’s post is from Cuneyt Akay (Greenberg Traurig)

As loyal readers of this website know, every year FCPA Professor makes a plea for FCPA commentators to adopt a common language for tracking FCPA corporate enforcement actions. (See here for instance and here for the article “A Common Language to Remedy Distorted FCPA Enforcement Statistics”).

Well, how about a common language and approach for tracking individual enforcement cases as well?

Reviewing various published year-end FCPA summaries shows that tracking of individual enforcement actions is all over the board.  For 2019, some commentators had the number of individual enforcement actions as low as the mid-twenties while others had numbers in the forties.

So, my plea is that we also bring some consistency and standardization to tracking individual enforcement cases.  Set forth below is the methodology I utilize to track and count the number of FCPA individual enforcement cases in a year.

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Largest SEC Only FCPA Enforcement Actions

SEC

So-called “issuers” under the Foreign Corrupt Practices Act (that is companies with shares traded on a U.S. exchange or otherwise with reporting obligations to the Securities and Exchange Commission) are subject to both Securities and Exchange Commission and Department of Justice FCPA enforcement.

However, many FCPA enforcement actions against issuers are SEC only and lack a DOJ component. Although FCPA enforcement agencies rarely have to “prove” an FCPA case against issuers (rather issuers typically resolve an enforcement action through a resolution vehicle not subjected to any meaningful judicial scrutiny), theoretically the DOJ in a criminal action has a much higher burden of proof (beyond a reasonable doubt) compared to the SEC in a civil action (preponderance of the evidence).

Regardless of the reasons for SEC enforcement actions against issuers that lack a DOJ component, set forth below are the 20 largest SEC only FCPA enforcement actions.

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