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SEC Commissioners Peirce And Roisman Hit Internal Controls Home Run

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For years, these pages have highlighted off-the-rails enforcement of the Foreign Corrupt Practices Act’s books and records and internal controls provisions (see here, here, here, here, here, here, here and here among other posts).

Among other things, the prior posts have discussed FCPA legislative history, the FCPA’s statutory text, SEC v. World-Wide Coin Investments (believed to be the only judicial decision to directly address the substance of the books and records and internal controls provisions) and prior FCPA enforcement agency guidance – all in an effort to highlight the difficulty of reconciling existing legal authority and even enforcement agency guidance with certain FCPA books and records and internal controls enforcement theories in recent years.

Last week, SEC Commissioners Hester Peirce and Elad Roisman issued this statement to explain why they voted against the SEC’s recent settled action against Andeavor LLC (see here in which the company agreed to pay $20 million). As highlighted below, Commissioners Peirce and Roisman discussed the same concepts and cited the same authority which have been highlighted on these pages for years and in the process hit an internal controls home run.

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Does The SEC Really Even Need A Specific FCPA Unit?

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In fiscal year 2010, the Securities and Exchange Commission created a specialized unit (one of only five in its enforcement division “dedicated to particular highly specialized and complex areas of securities law“) devoted to enforcing the FCPA.

The question arises however: does the SEC really even need a specific FCPA unit?

The below post highlights how, based on the SEC’s own enforcement statistics, FCPA enforcement actions comprise a minuscule percentage of its overall enforcement actions as well as other quantitative and qualitative factors relevant to the question posed.

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Office Of Management And Budget Releases “Best Practices” For “Fairness In Administrative Enforcement And Adjudication”

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In response to COVID-19, in May 2020 President Trump signed Executive Order 13924 titled “Regulatory Relief to Support Economic Recovery.”

Section 1 stated in pertinent part: “it is the policy of the United States to combat the economic consequences of COVID-19 with the same vigor and resourcefulness with which the fight against COVID-19 itself has been waged.” Among other things, Executive Departments and Agencies (such as the Securities and Exchange Commission) were directed to commit to “fairness in administrative enforcement and adjudication.”

The Executive Order authorized the Director of the Office of Management and Budget (OMB) to issue guidance implementing the order which the OMB recently did in this memo. The OMB’s list of “best practices” include the following that are relevant to the SEC’s enforcement of the FCPA.

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Stephanie Avakian (Director – SEC Division of Enforcement) Speaks On A Variety Of Topics – Rebuttal Points Included

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Recently Stephanie Avakian (Director of the SEC’s Division of Enforcement) gave this speech in which she touched upon a variety of enforcement topics.

This post excerpts certain portions of Avakian’s speech regarding the quality, nature, and effectiveness of SEC enforcement efforts, individual accountability, and the time it takes to complete an investigation and enforcement action.

Starting with the numbers, Avakian stated:

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It’s “Earnings Management” Season At The SEC

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The timing of Foreign Corrupt Practices Act enforcement actions are sometimes difficult to predict.

However, with history as a guide the SEC is likely to announce several corporate FCPA enforcement actions over the next few weeks.

Why? Because the SEC’s fiscal year ends on September 30th.

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