This recent Wall Street Journal Risk & Compliance Journal headline stated “SEC Stays on the FCPA Sidelines” and states in relevant part:
“The Securities and Exchange Commission has largely stayed on the sidelines of anti-bribery enforcement so far this year … The agency has brought just two enforcement actions tied to the Foreign Corrupt Practices Act in the first six months of the year, compared to 13 brought by the Justice Department.”
For starters, there have not been 13 FCPA enforcement brought by the DOJ this year and, once again, it is only through creative counting methods that some industry participants are able to reach numbers. As noted in this recent post, thus far this year the DOJ has brought 3 corporate enforcement actions (HP related entities, Alcoa and Marubeni) and 3 core individual enforcement actions (5 individuals in connection with Indian mining licenses, 3 individuals associated with PetroTiger and 2 individuals added to the 2013 case involving individuals associated with broker-dealer Direct Access Partners). As highlighted several times on these pages, the most reliable way to keep FCPA statistics is using the “core” approach (i.e. the Indian mining licenses case is one “core” action, etc.), an approach endorsed by the DOJ and an approach that is a commonly accepted method used in other areas.
Regardless of counting method, comparing DOJ FCPA enforcement to SEC FCPA enforcement is not a valid comparison because – sticking with the “sidelines” reference – the DOJ and SEC “play” on different fields.
As demonstrated visually below, the SEC has FCPA jurisdiction over only issuers and associated person (78dd-1 – a relatively narrow slice of the range of “persons” subject to the FCPA).
The DOJ, by contrast, has FCPA jurisdiction over issuers and associated persons (78dd-1), as well as domestic concerns (78dd-2 – all U.S. companies regardless of form of business organization and U.S. persons) and persons other than issuers or domestic concerns (78dd-3 – literally any company in the world or any person in the world to the extent certain jurisdictional requirements are met).
In 2014, when the DOJ and SEC are playing on the same field – that is issuer FCPA enforcement actions – there is perfect 2 for 2 overlap as the SEC also brought enforcement actions against HP and Alcoa. (Marubeni is not an issuer). Even if it wanted to, the SEC could not bring FCPA charges against individuals in the Indian mining license enforcement action, individuals associated with PetroTiger or individuals associated with Direct Access Partners (although the SEC did bring non-FCPA charges against certain of the Direct Access Partners individuals because the entity was a broker-dealer).
In short, it is not that the SEC is staying on the “sidelines,” rather it is not allowed under the FCPA to step onto the same “playing field” as the DOJ.
In case you are wondering, in 2013 the DOJ brought 6 issuer FCPA enforcement actions (ADM, Weatherford, Diebold, Total, Ralph Lauren and Parker Drilling) and in all 6 of those DOJ issuer actions there were also related SEC enforcement actions against those same issuers. In 2013, the SEC brought an additional 2 issuer enforcement actions (Stryker and Philips) that the DOJ theoretically could have joined, but here, it is not surprising that the SEC, a civil law enforcement agency, brought more issuer cases than the DOJ, a criminal law enforcement agency. To complete the analysis from 2013, there was 1 DOJ enforcement action (Bilfinger) involving a non-issuer and thus the SEC was not allowed on that “playing field”).
