Further To The SEC’s Inconsistent Approach To Enforcing The FCPA’s Books And Records And Internal Controls Provisions
Other than this website (see here, here, here, here, here, here, here and here), there seems to be little focus on the SEC’s inconsistent approach to enforcing the FCPA’s books and records and internal controls provisions.
Which is too bad because consistency is a basic rule of law principle.
In other words, the same legal violation ought to be sanctioned in the same way. When the same legal violation is sanctioned in materially different ways, trust and confidence in law enforcement is diminished.
As highlighted in the numerous prior posts as well as the latest example described below, there sure does seem to be a lack of consistency between how the SEC resolves Foreign Corrupt Practices Act books and records and internal controls violations.
The Latest Reminder That The FCPA Has Always Been A Law Much Broader Than Its Name Suggests
The Foreign Corrupt Practices Act 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 and these provisions are among the most generic legal provisions one can possibly find.
The latest example to demonstrate this point is yesterday’s announcement by the SEC that Healthcare Services Group, Inc. has agreed to pay $6 million to settle charges that the company engaged in accounting and disclosure violations that enabled the company to report inflated quarterly earnings per share (EPS) that met research analysts’ consensus estimates for multiple quarters.
SEC Charges Live Ventures And Its Current CEO And CFO With, Among Other Things, FCPA Books And Records And Internal Controls Violations
The SEC frequently resolves administrative actions against issuers and occasionally, in connection with the same core conduct, resolves administrative actions with current executive officers.
But the SEC charging an issuer and its current executive officers in federal court? This is a rare instance indeed.
Yet that is exactly what the SEC did last week in this complaint charging Live Ventures (a Nevada based online marketing services company) and its current CEO John Isaac and CFO Virland Johnson.
There are no allegations of foreign bribery, but the enforcement action once again demonstrates that the FCPA has always been a law much broader than its name suggests as Live Ventures, Isaac, and Johnson were charged with, among other things, FCPA books and records and internal controls violations.
Baker Hughes Under FCPA Scrutiny For Sanctions Issues
If you are confused by the above headline, this post serves as a useful reminder that the Foreign Corrupt Practices Act has always been a law much broader than its name suggests because of its books and records and internal controls provisions.
These provisions, among the most generic legal provisions one can find applicable to issuers, can be implicated in a variety of situations – situations that often have nothing to do with foreign bribery.
For instance, recently Baker Hughes disclosed:
A Further Reminder That The FCPA Has Always Been A Law Much Broader Than Its Name Suggests
The Foreign Corrupt Practices Act 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 and these provisions are among the most generic legal provisions one can possibly find.
Case in point is this recent SEC enforcement action against Gulfport Energy Corporation.