A Focus On SEC Individuals Actions

Like the DOJ, the SEC frequently speaks in lofty rhetoric concerning its focus on holding individuals accountable under the FCPA or other laws.

Set forth below are representative quotes from SEC officials over the years.

• “[A] critical part of our program continues to be seeking to deter wrongdoing by holding individuals accountable.”
• “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.”
• “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.”
• “Pursuing individual accountability [in FCPA enforcement actions] is a critical part of deterrence.”
• “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.”
• “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.”
• “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.”

SEC rhetoric aside, what do the numbers actually show?

In 2022, the SEC did not bring an FCPA enforcement action against any individual.

As highlighted in this prior post, in 2021 the SEC also did not bring an FCPA enforcement action against any individual.

In fact, the last time the SEC brought an individual FCPA enforcement action was in October 2020 – a gap that is now approaching 2.5 years.

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
• 2022 – 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 175 corporate SEC FCPA enforcement actions since 2006, this is a rather remarkable statistic.  Of the 175 corporate SEC FCPA enforcement actions, 142 (approximately 81%) 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.

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