Largest SEC Only FCPA Enforcement Actions
So-called “issuers” under the Foreign Corrupt Practices Act (that is companies with shares traded on a U.S. exchange or otherwise with reporting obligations to the Securities and Exchange Commission) are subject to both Securities and Exchange Commission and Department of Justice FCPA enforcement.
However, many FCPA enforcement actions against issuers are SEC only and lack a DOJ component. Although FCPA enforcement agencies rarely have to “prove” an FCPA case against issuers (rather issuers typically resolve an enforcement action through a resolution vehicle not subjected to any meaningful judicial scrutiny), theoretically the DOJ in a criminal action has a much higher burden of proof (beyond a reasonable doubt) compared to the SEC in a civil action (preponderance of the evidence).
Regardless of the reasons for SEC enforcement actions against issuers that lack a DOJ component, set forth below are the 20 largest SEC only FCPA enforcement actions.
If The SEC Were An Issuer …
The FCPA’s books and records and internal control provisions require issuers (generally FCPA speak for publicly-traded companies) to: (i) “make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer;” and (ii) devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (among other things) transactions are executed in accordance with management’s general or specific authorization, transactions are recorded as necessary to maintain accountability of assets, and access to assets is permitted only in accordance with management’s general or specific authorization.
The SEC enforces these provisions against issuers – often in expansive ways.
The SEC, of course, is not an issuer, but every so often it is interesting to spend a few moments in “hypothetical land.” (See this prior post). What if the SEC were an issuer?
Relevant to this question, last week the SEC announced – using the bland headline “Commission Statement Relating to Certain Administrative Adjudications” – in pertinent part as follows:
A Focus On SEC Individual Actions
This previous post highlighted various facts and figures from 2021 SEC FCPA enforcement actions against issuers.
This post focuses on SEC FCPA individual actions – both in 2021 and historically.
Like the DOJ, the SEC frequently speaks in lofty rhetoric concerning its focus on holding individuals accountable under the FCPA.
As highlighted here, in 2021 the SEC’s Chairman stated: “Accountability — whether individual or institutional — is an important part of the SEC’s enforcement agenda. We’ll use all of the tools in our toolkit to investigate wrongdoing and hold bad actors accountable …”.
SEC FCPA Enforcement – 2021 Year In Review
Foreign Corrupt Practices Act enforcement, it’s not just about the DOJ.
Granted, as a civil enforcement agency the SEC’s sticks are less sharp than the DOJ’s, but the SEC also claims a significant piece of the FCPA enforcement pie (query whether it should – but that is a subject for another day – for instance as discussed in “The Story of the Foreign Corrupt Practices Act” the SEC wanted no part in enforcing the FCPA’s anti-bribery provisions and in recent years an SEC Commissioner stated that anti-corruption policy is not within the SEC’s area of expertise nor further to the SEC’s mission – see here).
This post goes in-depth into various facts and figures relevant to SEC FCPA enforcement in 2021. Compared to prior years, this year in review post and the statistics therein (like many from 2021) are less than enlightening given the small number of corporate enforcement actions in 2021.
Does The SEC Even Need A Specific FCPA Unit?
When you run a daily website such as this for 12 years there is sometimes a cycle of coverage.
For instance, over the years November posts typically include the fact that the FCPA “tips” are a minor component of the SEC’s whistleblower program (despite predications to the contrary) as well as this post questioning – based on the SEC’s own data – whether the SEC even needs a specific FCPA unit.
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 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.