SEC FCPA Enforcement – 2023 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 2023.
Does The SEC Even Need A Specific FCPA Unit?
When you run a daily website such as this for 13 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 (that was yesterday’s post) 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 FCPA Unit (one of only five in its enforcement division “dedicated to particular highly specialized and complex areas of securities law“).
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.
FCPA “Tips” Continue To Be A Minor Component Of The SEC’s Whistleblower Program
The Dodd-Frank Act enacted in July 2010 contained whistleblower provisions applicable to all securities law violations including those under the Foreign Corrupt Practices Act.
In this prior post from July 2010, I predicted that the whistleblower provisions would have a negligible impact on FCPA enforcement. As noted in this prior post, my prediction was an outlier (so it seemed) compared to the flurry of law firm client alerts predicting that the whistleblower provisions would have a significant impact on FCPA enforcement. Many FCPA Inc. participants seemed so eager for a marketing opportunity to sell compliance services, that some even called the generic whistleblower provision the FCPA’s “new” whistleblower provisions.
When Rhetoric Does Not Match Reality
Do SEC enforcement officials realize that words they speak often are contradicted by the reality of SEC’s enforcement program?
For instance, SEC Chair Gary Gensler (pictured) recently gave this speech in which he talked about the SEC’s enforcement enforcement program using five themes: Economic Realities, Accountability, High-Impact Cases, Process, and Positions of Trust.
As to accountability, Gensler stated: [n]othing motivates individuals and firms quite like accountability. We use all of the tools in our toolkit to hold bad actors accountable—including bars, penalties, injunctions, undertakings, and litigating where appropriate.”
Top 20 SEC Disgorgement Amounts In FCPA Enforcement Actions
The Foreign Corrupt Practices Act contains specific penalty provisions for both violations of the anti-bribery and books and records and internal control provisions. However, in the FCPA’s modern era there has been a dramatic shift by the SEC away from the FCPA’s statutory penalties in most corporate enforcement action towards disgorgement.
The 2004 FCPA enforcement action against ABB is believed to be the first FCPA enforcement in which the SEC sought a disgorgement remedy.
Since then, the SEC has secured approximately $5.4 billion in disgorgement (and associated pre-judgment interest) in approximately 160 corporate enforcement actions. Set forth below is the current top 20 list of SEC disgorgement (and associated pre-judgment interest) amounts.