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The SEC’s Other Recent “FCPA” Enforcement Actions

SEC

September 30th was the end of the SEC’s fiscal year – and like prior years – there was much enforcement activity in September. Just don’t call it “earnings management” – even though that is a term SEC Commissioner Hester Peirce has used to describe enforcement activity in September (see here).

Forty percentage of corporate SEC FCPA enforcement actions thus far in 2022 occurred during a 12-day period last month (see here and here) and this post highlights several other non-FCPA, FCPA enforcement actions (that is – enforcement actions that charge or find violations of the FCPA’s books and records and internal controls provisions, yet have nothing to do with foreign bribery) from late September.

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Another Diluted Oracle Enforcement Action

weak

This post highlighted the SEC’s recent $22.9 million Foreign Corrupt Practices Act enforcement action against Oracle based on subsidiary conduct in Turkey, the United Arab Emirates, and India.

It was the second time in the past approximate decade that Oracle has resolved an FCPA enforcement action (see here). The first time Oracle resolved an FCPA enforcement action, this post was titled “The Dilution Of FCPA Enforcement Has Reached A New Level With The SEC’s Enforcement Action Against Oracle.”

The second FCPA enforcement action against Oracle this week was just as diluted – an issue apparent when actually reading the SEC’s findings.

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Yet Another Non-FCPA, FCPA Enforcement Action

Eagle

Thus far this year, the SEC has brought three Foreign Corrupt Practices Act enforcement actions involving alleged foreign bribery.

In the last approximate two months, the SEC has brought at least three FCPA enforcement actions not involving foreign bribery.

Confused? Don’t be. The FCPA 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. For lack of a better term, the name non-FCPA, FCPA enforcement actions has long been used on this site.

The latest example is this recent SEC enforcement action against Eagle Bancorp, Inc.

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

Surgalign

This type of post has been published several times before (see here and here among other posts), and once again today, to highlight an important (yet often overlooked) aspect of the Foreign Corrupt Practices Act: the FCPA 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. For lack of a better term, let’s call these numerous enforcement actions non-FCPA, FCPA enforcement actions.

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SEC Commissioner Peirce Hits Another Home Run

homerun

This site is a big fan of SEC Commissioner Hester Peirce.

Recently, the SEC announced a $100 million enforcement action against “Ernst & Young LLP (EY) for cheating by its audit professionals on exams required to obtain and maintain Certified Public Accountant (CPA) licenses, and for withholding evidence of this misconduct from the SEC’s Enforcement Division during the Division’s investigation of the matter.”

Commissioner Peirce agreed that the underlying cheating was worthy of an enforcement action, but nevertheless objected to the SEC’s settlement.

As discussed below, her reasoning – along the lines of “give the SEC an inch and they will take a mile” – are often present in Foreign Corrupt Practices Act enforcement actions as well.

Moreover, several of Commissioner Peirce’s objecting rationales are often present in FCPA enforcement action as well – such as her statement that “what [the SEC or an SEC Commissioner] might prefer and what one might do as a matter of prudence should not be confused with what one must do as a consequence of a legal obligation.”

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