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Yet Another FCPA-Related Securities Fraud Lawsuit Dismissed

Dismissed

It is as predictable as the sun rising in the east and dogs barking.

In the aftermath of a Foreign Corrupt Practices Act enforcement action (or mere instances of FCPA scrutiny), plaintiffs’ lawyers representing shareholders on a contingent fee basis file securities fraud claims against the company and/or certain officers or directors. Such FCPA-related claims are frequently dismissed, but the claims nevertheless continue to be filed.

In the latest example, U.S. District Court Judge Andrew Carter (S.D.N.Y) recently granted VEON’s (formerly known as Vimpelcom) motion to dismiss  As highlighted in this prior post, in 2016 the telecommunications company resolved an FCPA enforcement action concerning conduct in Uzbekistan by agreeing to a net $397.5 million FCPA settlement.

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Yet Another FCPA-Related Securities Fraud Lawsuit Dismissed

Dismissed

It is as predictable as the sun rising in the east and dogs barking.

In the aftermath of a Foreign Corrupt Practices Act enforcement action (or mere instances of FCPA scrutiny), plaintiffs’ lawyers representing shareholders on a contingent fee basis file securities fraud claims against the company and/or certain officers or directors. Such FCPA-related claims are frequently dismissed, but the claims nevertheless continue to be filed.

In the latest example, U.S. District Court Judge Ann Donnelly (E.D.N.Y.) recently granted a motion to dismiss filed by Mobile Telesystems PJSC (“MTS) and various individual defendants. As highlighted in prior posts here and here, in 2019 Russia-based MTS agreed to resolve an $850 million DOJ/SEC FCPA enforcement action concerning a telecom bribery scheme in Uzbekistan (the same scheme that previously resulted in FCPA enforcement actions against VimpelCom and Telia).

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SQM’s $62.5 Million Ripple

Ripple

Foreign Corrupt Practices Act settlement amounts are one obvious consequence of FCPA non-compliance and tend to generate the most headlines. However, as has been discussed on these pages for years  including in this article “FCPA Ripples”, settlement amounts tend to be a relatively modest consequence of the overall financial ramifications of FCPA scrutiny and enforcement.

Pre-enforcement action professional fees and expenses are often 3-5 times (and sometimes higher) the actual FCPA settlement amount and post-enforcement action professional fees and expenses quickly add up as well.

In addition, many instances of FCPA scrutiny result in shareholder litigation – whether a derivative action against officers and directors for alleged breaches of fiduciary duty and/or a securities fraud action.

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From The Civil Litigation Docket

Judicial Decision

In 2011, Tenaris S.A. (a company headquartered in Luxembourg with American Depository Receipts listed on the New York Stock Exchange) resolved an approximate $9 million Foreign Corrupt Practices Act enforcement action regarding conduct in Uzbekistan (see here for the prior post).

The company’s shares remain traded on the NYSE and in connection with an alleged Argentine bribery scheme the company (along with various executives) were sued by plaintiff shareholders alleging securities fraud.

This post summarizes the allegations in connection with the Argentine bribery scheme as well as a recent decision in the E.D. of N.Y. dismissing certain securities fraud claims against the company while allowing certain claims to proceed. (See 2020 WL 6018919)

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Next Up For Herbalife – The Plaintiffs’ Lawyers

Greedy Lawyers

It is as predictable as the sun rising in the east and dogs barking.

In the aftermath of a Foreign Corrupt Practices Act enforcement action (or mere instances of FCPA scrutiny), plaintiffs’ lawyers representing shareholders on a contingent fee basis announce “investigations” or file securities fraud claims against the company and/or certain officers or directors. Such FCPA-related claims are frequently dismissed, but the “investigations” continue and claims continue to be filed.

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