Yesterday’s post went in-depth into the recent motions to dismiss filed in SEC v. Cohen & Baros (a rare instance in which the SEC is being put to its burden of proof in a Foreign Corrupt Practices Act enforcement action).
As highlighted in the post, the disputed legal issues largely center around statute of limitations and (as relevant to Baros a foreign national defendant) general personal jurisdiction issues as well as specific FCPA jurisdictional issues.
There are several previously decided cases cited in the parties’ briefs that are relevant to the issues in dispute and to get you up to speed on these issues, this post highlights those cases (all previously covered by FCPA Professor).
As highlighted here, in Kokesh v. SEC the Supreme Court unanimously rejected the SEC’s position and held that disgorgement “in the securities-enforcement context is a ‘penalty’ within the meaning of [28 U.S.C.] 2462 and so disgorgement actions must be commenced within five years of the date the claim accrues.”
As highlighted here, in Gabelli v. SEC the Supreme Court unanimously rejected the SEC’s expansive interpretation of 28 U.S.C. 2462 in cases involving civil penalties.
As highlighted here, in SEC v. Steffen a federal trial court judge dismissed FCPA claims against a foreign national defendant after concluding, as an initial threshold matter, that personal jurisdiction over Steffen exceeded the limits of due process. In short, the judge stated:
“If this Court were to hold that Steffen’s support for the bribery scheme satisfied the minimum contacts analysis, even though he neither authorized the bribe, nor directed the cover up, much less played any role in the falsified filings, minimum contacts would be boundless. […] [U]nder the SEC’s theory, every participant in illegal action taken by a foreign company subject to U.S. securities laws would be subject to the jurisdiction of U.S. courts no matter how attenuated their connection with the falsified financial statements. This would be akin to a tort-like foreseeability requirement, which has long been held to be insufficient.”
As highlighted here and here, in SEC v. Straub (also an action involving foreign national defendants) a federal trial court judge issued rulings relevant to statute of limitations issues and personal jurisdiction issues. Relevant to the statute of limitations, the court rejected the SEC’s argument on summary judgment that it may pursue FCPA violations that occurred outside of the limitations period on the basis that those violations were similar in character to and part of the same alleged “scheme” as violations that occurred within the limitations period.
As highlighted here, in U.S. v. Hoskins (yet another action involving a foreign national defendant) a federal trial court judge trimmed the DOJ’s enforcement action against Hoskins by granting in part his motion to dismiss whcih asserted that the complaint charged a legally invalid theory of criminal conspiracy in that the evidence did not establish that he was subject to criminal liability as a principal by being an “agent” of a “domestic concern.” The DOJ has appealed and, as highlighted here, the case is currently pending in the Second Circuit where the issue before the court, as stated in the DOJ’s brief, is as follows:
“Whether a foreign person (who does not reside in the United States) can be liable for conspiring or aiding and abetting a U.S. company to violate the Foreign Corrupt Practices Act if that individual is not in the categories of principal persons covered in the statute.”
The Second Circuit heard oral arguments in the case in March 2017.
In short, as to the disputed issues relevant in Cohen & Baros, the government has for the most part already lost on those issues which makes the Cohen & Baros matter all the more interesting to follow.
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