Calavo Growers – “Activity In The [SEC] Investigation Has Been Postponed”
Several prior posts have discussed the impact of President Trump’s Executive Order on upcoming or recently completed FCPA trials involving individuals. (See here, here, here and here).
What impact might the Executive Order have on existing corporate FCPA investigations by the DOJ or SEC?
Tough to tell as there is little in the public domain regarding such investigations.
Except of course public company filings – if the company chooses to disclose FCPA issues.
In what is believed to be the first filing by a company under existing FCPA scrutiny since the February 10th Executive Order, Calavo Growers disclosed yesterday that “activity in the [SEC] investigation has been postponed.”
500.com and the Specter of “Chinese-Issuer” Enforcement
A guest post from Eric Harris (a White Collar Defense Attorney and Anti-Corruption Compliance Consultant).
The DOJ and SEC recently announced an enforcement action against BIT Mining Ltd., which is the successor entity of 500.com. The action was brought against Bit Mining Ltd. due to 500.com’s migration from the online sports lottery business in 2021 to focus on cryptocurrency mining. 500.com’s activities are the focus of the agencies’ enforcement action against BIT Mining Ltd. as it is the responsible entity due to the nature of inherited FCPA violations. As such, 500.com is referred to as the entity at issue here.
Since the release of 500.com’s enforcement action, some have wondered whether the 500.com enforcement action is the first FCPA enforcement against a “Chinese issuer” (while acknowledging that 500.com was not technically a Chinese issuer). However, there are some practical reasons a similar enforcement action has not previously been brought with the fact pattern therein. Moreover, there are additional likely causes for the lack of a similar fact pattern in prior FCPA enforcement activity.
A Closer Look At The DOJ FCPA (And Broader) Enforcement Action Against Various Individuals Associated With Adani Group and Azure Power
As indicated in this prior post, the SEC’s FCPA enforcement action against Cyril Sebastien Dominique Cabanes (“Cabanes” an individual associated with Azure Power – a former U.S. issuer) and the SEC’s securities fraud action against two senior executives of Adani Green (Gautam Adani and Sagar Adani) in connection with an alleged Indian bribery scheme were just one prong of a broader enforcement action announced earlier this week.
As highlighted in this post, the DOJ also announced unsealing of a criminal indictment (originally filed on October 24th) against the following individuals in connection with the same alleged Indian bribery scheme.
SEC Brings First FCPA Individual Action Since 2020
Yesterday, the SEC announced a Foreign Corrupt Practices Act enforcement action against Cyril Sebastien Dominique Cabanes (“Cabanes”) – a French citizen and resident of Singapore who was previously a member of the board of directors of Azure Power Global Limited (a Mauritius company with its principal place of business in India). During the time period relevant to the enforcement action, Azure was a publicly traded company with shares traded on the New York Stock Exchange.
The Cabanes enforcement action is the first SEC FCPA enforcement action against an individual since October 2020.
An FCPA First*
Foreign Corrupt Practices Act enforcement actions against a company based on the conduct of a Chinese subsidiary are numerous (including instances in which the Chinese subsidiary is part of the resolution process).
FCPA enforcement actions against Chinese companies for violations of the FCPA’s books and records and internal controls provisions outside the context of foreign bribery (so-called non-FCPA, FCPA enforcement actions) have occurred. (See here, here and here for instance).
The FCPA enforcement action earlier this week involving BIT Mining (500.com) is believed to be the first FCPA enforcement action in history to involve a “Chinese issuer.”
Well, sort of.*
At least as close to a “Chinese issuer” “resolving” an FCPA enforcement action without technically a “Chinese issuer” “resolving” an FCPA enforcement action.