In recent public statements, DOJ and SEC officials have stated that they are focusing more on individual FCPA enforcement actions.
For instance, in this recent Financial Times article about DOJ FCPA enforcement, Assistant Attorney General Leslie Caldwell stated “we’re really focusing on individuals.” (Interestingly and as an aside, in the same article Caldwell stated: “In more than half of all countries it’s very difficult to do business without being faced with the potential of a FCPA violation . . . we recognize it’s a significant problem.”).
Likewise, in this recent interview DOJ Fraud Section Chief Andrew Weissmann, in explaining some of the reasons for the slowdown in corporate FCPA enforcement actions in 2015 stated that “part of the answer is that we are prosecuting more individuals.”
Over at the SEC, Andrew Ceresney (Director of the SEC’s Enforcement Division) recently stated that the SEC’s general focus on individual prosecutions “also applies to FCPA cases.”
The notion that the FCPA enforcement agencies are focusing more on individual enforcement is certainly part of the current narrative and many in the FCPA’s echo chamber are falling for this narrative hook, line and sinker.
However, it’s NOT true that the FCPA enforcement agencies are focusing more on individual enforcement. Indeed, the following number demonstrate the opposite.
DOJ
From 2007 – 2015 on average the DOJ brought 12.6 individual enforcement actions per year with a median of 10 individual enforcement actions per year.
The 2010 manufactured Africa Sting individual enforcement action against 22 individuals obviously distorts the average statistic. Removing the Africa Sting enforcement action, the average is 10.2 individual enforcement actions per year with a median of 10 individual enforcement action per year.
In 2015, the DOJ brought FCPA enforcement actions against 8 individuals. While the difference between 10 (the median over the past nine years) and 8 is obviously not huge, it is nevertheless a meaningful percentage deduction. More pertinent, in 2015 there were fewer individual DOJ enforcement actions than in 2014 and in 2014 there were fewer individual DOJ enforcement actions than in 2013.
Another way to assess the DOJ’s rhetoric about individual FCPA enforcement actions is by comparing over time the percentage of corporate enforcement actions that also involve related individual enforcement actions.
As highlighted in this prior post, in the FCPA’s modern era approximately 75% of corporate DOJ FCPA enforcement actions have not (at least yet) resulted in any DOJ charges against company employees. Compare this statistic to the fact that from 1977 to 2004 approximately 90% of DOJ criminal corporate FCPA enforcement actions RESULTED in related charges against company employees. The article “Measuring the Impact of NPAs and DPAs on FCPA Enforcement” provides an analysis for the reason behind the material flip.
By this measure, DOJ individual enforcement actions are at an all-time low. In short, no matter which way you slice or dice it, it is just NOT true that the DOJ is focusing more on individuals.
SEC
The same is true with the SEC and running these numbers is not impacted by the manufactured Africa Sting action.
From 2007 – 2015, on average the SEC brought 4.8 individual enforcement actions per year with a median of 5 individual enforcement actions per year.
In 2015, the SEC brought FCPA enforcement actions against 2 individuals. While the difference between 5 (the median over the past nine years) and 2 is obviously not huge, it is nevertheless a significant percentage reduction. More pertinent, in 2014 there was likewise 2 SEC FCPA enforcement actions against individuals and in 2013 there was 0 SEC enforcement actions against individuals.
Another way to assess the SECs rhetoric about individual FCPA enforcement actions is by comparing over time the percentage of corporate enforcement actions that also involve related individual enforcement actions.
As highlighted in this prior post, in the FCPA’s modern era approximately 80% of corporate SEC FCPA enforcement actions have not (at least yet) resulted in any SEC charges against company employees. Compare this statistic to the fact that from 1977 to 2004 approximately 60% of SEC corporate FCPA enforcement actions RESULTED in related charges against company employees.
In short, no matter which way you slice or dice it, it is just NOT true that the SEC is focusing more on individuals.
Either DOJ or SEC enforcement officials who deliver the rhetoric about individual prosecutions are unaware of the above statistics or are aware of the above statistics, but just don’t care. Either way, it is troubling.
