SEC’s FCPA Charges Against Former Och-Ziff Executives Cohen And Baros Dismissed
This previous post highlighted the SEC’s Foreign Corrupt Practices Act (and related) enforcement action against Michael Cohen and Vanja Baros (former Och-Ziff executives) based on the same core conduct as the DOJ and SEC’s September 2016 enforcement action against Och-Ziff.
The post noted that the meaty 80 page complaint against Cohen and Baros was a clear signal that a negotiated settlement was unable to be reached and that the defendants would put the SEC to its burden of proof. It was further noted that the SEC is rarely put to its burden of proof in FCPA enforcement actions (corporate or individual) and indeed has never prevailed in FCPA history when put to its ultimate burden of proof. Prior posts here and here summarized the issues in the motion to dismiss briefing.
Yesterday, in yet another blow to the SEC when put to its burden of proof in an FCPA enforcement action, Judge Nicholas Garaufis (E.D.N.Y.) dismissed the SEC’s complaint finding the SEC’s claims time-barred.
Kokesh – One Year Later
As highlighted in this previous post, on June 5, 2017 in Kokesh v. SEC the Supreme Court unanimously rejected the SEC’s position and held that disgorgement “in the securities-enforcement context is a ‘penalty’ within the meaning of [28 U.S.C.] 2462 and so disgorgement actions must be commenced within five years of the date the claim accrues.”
Although Kokesh was not a Foreign Corrupt Practices Act enforcement action, it most certainly was FCPA relevant because ever since the SEC first sought a disgorgement remedy in an FCPA enforcement action in 2004, disgorgement has become the dominant remedy sought by the SEC in corporate FCPA enforcement actions.
Issues To Consider From The Legg Mason Enforcement Action
This previous post went in-depth into the DOJ’s recent Foreign Corrupt Practices Act enforcement action against Legg Mason. This post continues the analysis by highlighting additional issues to consider.
SEC Enforcement Action Is Forthcoming
Given Legg Mason’s recent disclosure (see here for the prior post), it was a bit of a surprise that this week’s enforcement action included only a DOJ component. FCPA enforcement actions against issuers that involve a DOJ and SEC component are almost always announced on the same day.
Deal With It – Not Following The Law Has Consequences
Imagine a company engaged in conduct that was very profitable to it. However, a unanimous Supreme Court declared the conduct illegal. Thereafter, a business executive of the relevant company testifies before Congress and complains that the Supreme Court decision is hurting its business.
I highly doubt anyone would have sympathy for the business executive or the company. After all the rule of law is the rule of law and a unanimous Supreme Court decision probably does sting.
The above analogy came to mind when reviewing a transcript of the recent “Oversight of the SEC’s Division of Enforcement” hearing by the House Committee on Financial Services, Subcommittee on Capital Markets, Securities, and Investment. (See here).
Issues To Consider From The Panasonic Enforcement Action
This prior post went in-depth into the $280 million Foreign Corrupt Practices Act enforcement action against Japan-based Panasonic Corp. and a U.S. subsidiary Panasonic Avionics Corp. (PAC).
This post continues the analysis by highlighting additional issues to consider.
Timeline
As highlighted in this prior post, Panasonic’s FCPA scrutiny appears to have begun in early 2013. Thus from start to finish, the company’s FCPA scrutiny lasted approximately 5.5 years.