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

Avakian

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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Are SEC Tolling Agreements Actually Enforceable?

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A guest post from Russell Ryan (King & Spalding and former Assistant Director of the SEC’s Division of Enforcement).

Most readers of FCPA Professor are well aware that tolling agreements are commonplace in Foreign Corrupt Practices Act investigations.  Investigations in this space are notoriously lengthy and protracted, in part because misconduct can remain hidden for years and a good portion of the relevant evidence and witnesses is typically located overseas.

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Supreme Court Decides SEC Disgorgement Case

supremecourt

Yesterday, the Supreme Court issued this opinion in Liu v. SEC.

At issue was 15 USC 78u(d)(5) which states in pertinent part that “in any action or proceeding brought or instituted by the Commission under any provision of the securities laws … any Federal court may grant .. any equitable relief that may be appropriate or necessary for the benefit of investors.” The specific question presented was whether the Securities and Exchange Commission may seek and obtain disgorgement from a court as ‘equitable relief’ for a securities law violation.

In addition to punishing securities law violations through civil proceedings in federal court, the SEC also uses administrative proceedings and 15 USC 77h-1(e) states that “in any cease-and-desist proceeding … the Commission may enter an order requiring accounting and disgorgement, including reasonable interest.” This provision was not before the Court in Liu and this is important to understand as approximately 90% – 100% of SEC FCPA enforcement actions against issuers in the modern era are administrative actions.

Thus, when the FCPA Blog states in this post that the decision in Liu will make “a significant change to how corporate FCPA settlements will be reached with” the SEC – this is not accurate as very few modern SEC enforcement actions against issuers result in federal court actions and the specific statute at issue in Liu.

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Other SEC Commissioners Have Objected To Corporate FCPA Enforcement Actions

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Yesterday’s post highlighted how during her tenure as SEC Commissioner Hester Peirce has objected (in whole or in part) to approximately 65% of the corporate FCPA enforcement actions.

While no other SEC Commissioner comes close to matching Peirce’s objections, set forth below are several other instances in which SEC Commissioners have objected (in whole or in part) to corporate FCPA enforcement actions.

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