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Query Why The SEC Did Not Bring A Books And Records Or Internal Controls Case Against Exelon In Connection With The ComEd Bribery Matter?

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For years these pages have highlighted the SEC’s inconsistent approach to enforcing the books and records and internal controls provisions of the Foreign Corrupt Practices Act. (See herehereherehereherehere and here for prior posts).

Unlike the FCPA’s anti-bribery provisions, the FCPA’s accounting provisions are generic and generally require that issuers shall: (i) maintain books and records which, in reasonable detail, accurately and fairly reflect issuer transactions and disposition of assets (the books and records provisions); and (ii) devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are properly authorized, recorded, and accounted for (the internal controls provisions).

The SEC frequently advances an enforcement theory akin to strict liability that goes something like this: if problematic conduct occurs within a subsidiary, the conduct becomes an issuer violation of the books and records because the subsidiary’s books and records are consolidated with the issuers for purpose of financial reporting as well as an internal controls violation because the subsidiary is subject to the issuer’s internal controls.

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Friday Roundup


The Bible?, Rampage?, scrutiny alert, cert denied and for the reading stack. It’s all here in the Friday roundup.

The Bible?

This Vinson & Elkins alert calls the FCPA Guidance “the ‘Bible’ for those operating in the FCPA space.”

The “Bible” for those operating in the FCPA space is the law and other legal authority – not non-binding enforcement agency guidance.

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Issues To Consider From The Alexion Enforcement Action


This recent post went in-depth into the SEC’s recent $21.5 million Foreign Corrupt Practices Act enforcement action against Alexion Pharmaceuticals and this post highlights additional issues to consider.


Alexion became the subject of FCPA scrutiny in May 2015. Thus, from start to finish, its scrutiny lasted more than 4 years. I’ve said it many times, and will continue saying it until the cows come home, if the SEC wants its FCPA enforcement program to be viewed as credible and effective it must resolve instances of FCPA scrutiny much quicker.

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Wow – The SEC Acknowledges That Section 13(b)(6) Exists


In 1988, the FCPA’s books and records and internal controls provisions were amended to include a de facto “good faith” compliance defense in certain situations involving issuers. (See 15 USC 78m(b)(6) – so-called Section 13(b)(6) of the ’34 Act). Since then, Section 13(b)(6) has seemed to be relevant to several Foreign Corrupt Practices Act enforcement actions, however the enforcement actions were silent on this important statutory provision.

The recent Eni enforcement action (see here and here for prior posts) is believed to be the first FCPA enforcement to meaningfully address Section 13(b)(6). In this regard, wow – the SEC actually acknowledged that Section 13(b)(6) exists after completely ignoring this relevant statutory provision in several prior relevant enforcement actions. But did the SEC get it right?

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Eni Joins The Repeat Offender Club – This Time Resolves A $24.5 Million SEC FCPA Enforcement Action


As highlighted in this prior post, in 2010 ENI S.p.A (an Italy-based oil and gas company with American Depositary Shares listed on the New York Stock Exchange) along with its wholly-owned subsidiary Snamprogetti resolved a $125 million SEC Foreign Corrupt Practices Act enforcement action concerning conduct in Nigeria.

On Friday, the SEC announced that ENI resolved another FCPA enforcement action – this one a $24.5 million enforcement action concerning conduct in Algeria by Saipem S.p.A. (a minority-owned and controlled subsidiary during the relevant time period). The conduct at issue in the enforcement action occurred 10 – 13 years ago.

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