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 …”.
As highlighted here, in 2020 the SEC’s Co-Director of Enforcement stated: “[A] critical part of our program continues to be seeking to deter wrongdoing by holding individuals accountable
As highlighted here, in 2018 the SEC’s Co-Director of Enforcement stated:
“We have also continued to focus on individual accountability by pursuing charges against individuals for misconduct in the securities markets, including registered individuals, executives at all levels of the corporate hierarchy, including CEOs, CFOs and other high-ranking executives, and gatekeepers.”
As highlighted here, in 2017 the SEC’s Co-Director of Enforcement stated:
“Of course, companies cannot engage in bribery without the actions of culpable individuals. The Enforcement Division is broadly committed to holding individuals accountable when the facts and the law support doing so. […] Individual accountability drives behavior more than corporate accountability, a point which is supported by both logic and experience. The Division of Enforcement considers individual liability in every case it investigates; it is a core principle of our enforcement program.”
Likewise, in 2016 the SEC’s Director of Enforcement stated that “pursuing individual accountability [in FCPA enforcement actions] is a critical part of deterrence.” Likewise, in 2015 the SEC’s Director of Enforcement stated:
“Holding individuals accountable for their wrongdoing is critical to effective deterrence and, therefore, the Division considers individual liability in every case. […] The Commission is committed to holding individuals accountable and I expect you will continue to see more FCPA cases against individuals.”
Likewise, in 2014 the SEC’s Director of Enforcement stated:
“I always have said that actions against individuals have the largest deterrent impact. Individual accountability is a powerful deterrent because people pay attention and alter their conduct when they personally face potential punishment. And so in the FCPA arena as well as all other areas of our enforcement efforts, we are very focused on attempting to bring cases against individuals. […] [I]ndividual accountability is critical to FCPA enforcement — and imposing personal consequences on bad actors, including through bars and monetary sanctions, will continue to be a high priority for us.”
SEC rhetoric aside, what do the numbers actually show?
In 2021, the SEC did not bring an FCPA enforcement action against any individual. As highlighted in this prior post, the current time gap between individual SEC FCPA enforcement actions has been approximately 15 months – the longest in nearly a decade.
Since 2000, the SEC has charged or found that 86 individuals violated the FCPA. The breakdown is as follows.
- 2000 – 0 individuals
- 2001 – 3 individuals
- 2002 – 3 individuals
- 2003 – 4 individuals
- 2004 – 0 individuals
- 2005 – 1 individual
- 2006 – 8 individuals
- 2007 – 7 individuals
- 2008 – 5 individuals
- 2009 – 5 individuals
- 2010 – 7 individuals
- 2011 – 12 individuals
- 2012 – 4 individuals
- 2013 – 0 individuals
- 2014 – 2 individuals
- 2015 – 2 individuals
- 2016 – 8 individuals
- 2017 – 3 individuals
- 2018 – 3 individuals
- 2019 – 6 individuals
- 2020 – 3 individuals
- 2021 – 0 individuals
Of the 75 individuals charged with civil FCPA offenses by the SEC since 2006:
- 7 individuals were in the Siemens case;
- 4 individuals were in the ABB case;
- 4 individuals were in the Willbros Group case;
- 4 individuals were in the Alliance One case;
- 4 individuals were in the Och-Ziff case;
- 3 individuals were in the Maygar Telekom case; and
- 3 individuals were in the Noble Corp. case.
- 3 individuals were in the Cognizant Technologies case.
In other words, approximately 45% of the individuals charged by the SEC with FCPA civil offenses since 2006 have been in just 8 core actions.
Considering that there has been 168 corporate SEC FCPA enforcement actions since 2006, this is a rather remarkable statistic. Of the 168 corporate SEC FCPA enforcement actions, 135 (approximately 80%) have not resulted in any related SEC charges against company employees.
This is an interesting figure given that between 1977 and 2004, 61% of SEC corporate FCPA enforcement actions did indeed result in related charges against company employees.
In other words, for most of the FCPA’s history the majority of corporate SEC FCPA enforcement resulted in related individual accountability, but in the SEC’s modern FCPA enforcement program, the vast majority of corporate SEC FCPA enforcement actions have not resulted in related individual accountability despite the SEC’s rhetoric.
It is also interesting to analyze the 33 instances since 2006 where an SEC corporate FCPA enforcement action resulted in related charges against company employees. With the exception of Baker Hughes, Siemens, KBR/Halliburton, Magyar Telekom, Och-Ziff, General Cable, Panasonic, Goldman and Herbalife the corporate SEC FCPA enforcement actions resulting in related charges against company employees occurred in what can only be described as relatively minor (at least from a settlement amount perspective) corporate enforcement actions.
These actions are: Schnitzer Steel, Immucor, Electronic Data Systems, Faro Technologies, Willbros Group, Nature’s Sunshine Products, United Industrial Corp., Pride Int’l., Noble Corp., Alliance One, Innospec, Watts Water, PBSJ and FLIR Systems, SAP, PTC, Nordion, Analogic, and LAN Airlines, Halliburton, SQM, Cognizant and Westport Fuel.
Set forth below is a complete list of SEC corporate FCPA enforcement actions since 2006 and whether the corporate enforcement action resulted in any related individual charges. Beginning in October 2014, I publicly invited the SEC to refute these numbers and support its individual accountability rhetoric after the SEC’s then FCPA Unit chief publicly stated that my numbers were false, wrong, deeply flawed, etc. (see here). The SEC has not responded and the invitation still stands.
|2006||Oil States Int’l||No|
|2007||Electronic Data Systems||Yes|
|2007||Delta & Pine||No|
|2008||Westinghouse Air Brake||No|
|2009||Helmerich & Payne||No|
|2009||United Industrial Corp.||Yes|
|2010||Royal Dutch Shell||No|
|2011||Johnson & Johnson||No|
|2012||Smith & Nephew||No|
|2014||Smith & Wesson||No|
|2016||Las Vegas Sands||No|
|2018||Dun & Bradstreet||No|
|2019||Westport Fuel Systems||Yes|
|2021||Amec Foster Wheeler||No|