Foreign Corrupt Practices Act enforcement, it is not just about the DOJ. Granted, as a civil enforcement agency its sticks are less sharp than the DOJ’s, but the SEC also claims a significant piece of the FCPA enforcement pie (query whether it should – but that is a subject for another day – for instance as discussed in “The Story of the Foreign Corrupt Practices Act” the SEC wanted no part in enforcing the FCPA’s anti-bribery provisions).
Today’s post is a year in review of SEC FCPA Enforcement. (See here for a similar post for 2012; here for a similar post for 2011; and here for a similar post for 2010). Stay tuned for a similar post on DOJ FCPA enforcement in 2013.
Settlement Amounts
In 2013, the SEC collected approximately $300 million in 8 corporate FCPA enforcement actions.
By comparison, in 2012 the SEC collected approximately $118 million in 8 corporate FCPA enforcement actions. In 2011 the SEC collected approximately $148 million in 13 corporate FCPA enforcement actions. In 2010, the SEC collected approximately $530 million in 19 corporate FCPA enforcement actions.
The range of SEC FCPA enforcement actions in 2013 was, on the high end, $153 million in the Total enforcement action, and on the low end, $735,000 in the Ralph Lauren enforcement action. Of the $300 million the SEC collected in 2013 corporate FCPA enforcement actions, approximately $219 million (73%) were in two enforcement actions (Total – $153 million and Weatherford – $66 million).
Two corporate FCPA enforcement actions from 2013 were SEC only (Philips Electronics and Stryker).
Of the 8 corporate enforcement actions from 2013, 3 enforcement actions were administrative actions (Philips Electronics, Total, and Stryker) and 1 action (Ralph Lauren) was a non-prosecution agreement. In other words, there was no judicial scrutiny of 50% of SEC FCPA enforcement actions from 2013. The settlement amounts in these actions comprised approximately 57% of the SEC’s $300 million collected in 2013 corporate FCPA enforcement actions.
In 2013, the SEC collected approximately $208 million in disgorgement and prejudgment interest in enforcement actions that did not charge anti-bribery violations (either administrative actions that did not charge any FCPA violations or settled civil complaints that did not charge anti-bribery violations). In other words, approximately 69% of the $300 million the SEC collected in 2013 FCPA enforcement actions was no-charged bribery disgorgement. This is noteworthy because many question, and rightfully so, whether disgorgement is an appropriate remedy in cases that do not charge FCPA anti-bribery violations. See here for a prior post on so-called “no-charged bribery disgorgement” cases. In 2012, the SEC collected approximately $57.4 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases. In 2011 the SEC collected approximately $51 million in disgorgement and prejudgment interest in n0-charged bribery disgorgement cases.
The $300 million the SEC collected in 2013 FCPA enforcement actions breaks down as follows:
$3.5 million in a civil penalty (Stryker);
$1.9 million in a civil penalty for lack of cooperation (Weatherford); and
$294.6 million in disgorgement and prejudgment interest.
Thus, 98% of SEC FCPA settlement amounts in 2013 consisted of disgorgement and prejudgment interest. By way of comparison, in 2012 86% of SEC FCPA settlement amounts consisted of disgorgement and prejudgment interest. In 2011, disgorgement and prejudgment interest comprised 94% of SEC FCPA enforcement settlement amounts. In 2010, disgorgement and prejudgment interest comprised 96% of SEC FCPA enforcement settlement amounts.
If one tries to analyze why some SEC FCPA enforcement actions in 2013 included a civil penalty, disgorgement and prejudgment interest (Stryker), whereas other enforcement actions included only disgorgement and prejudgment interest (Philips Electronics, Parker Drilling, Ralph Lauren, Diebold, Weatherford, and ADM), whereas other enforcement actions included only disgorgement (Total), good luck and please enlighten us all with your insight.
Corporate vs. Individual Actions
Of the 8 SEC corporate FCPA enforcement actions from 2013, 0 (0%) have involved, at present, related SEC charges against company employees. In 2012, 0 of the 8 corporate (0%) FCPA actions involved related SEC charges against company employees. In 2011, 2 of the 13 (15%) corporate SEC FCPA enforcement actions involved related SEC charges against company employees. In 2010, 3 of the 19 (15%) corporate SEC FCPA enforcement actions involved related SEC charges against company employees.
In 2013, the SEC did not otherwise charge any individuals with FCPA offenses. (See here for a prior post titled “What is an FCPA Enforcement Action”).
Voluntary Disclosures
Of the 8 corporate SEC FCPA enforcement actions in 2013, 3 enforcement actions (38%) (Ralph Lauren, Diebold, and ADM) were the result of corporate voluntary disclosures. 3 enforcement actions (38%) (Parker Drilling, Total and Stryker) appear to have been based on corporate disclosures following an industry sweep. 1 enforcement action (Philips Electronics) was based on a previous foreign law enforcement investigation, and 1 enforcement action (Weatherford) was based on the Iraqi Oil for Food program.
This remainder of this post provides an overview of corporate SEC FCPA enforcement in 2013.
ADM (Dec. 20th)
See here for the prior post.
Charges: Settled civil complaint charging violations of the FCPA’s books and records and internal controls provisions
Settlement: $36.5 million (disgorgement of $33.4 million plus prejudgment interest of $3.1 million)
Disclosure: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Weatherford International (Nov. 26th)
See here for the prior post.
Charges: Settled civil complaint charging violations of the FCPA’s anti-bribery provisions, books and records provisions, and internal controls provisions.
Settlement: Approximately $65.6 million (approximately $63.7 million in disgorgement and a $1.9 million civil penalty for lack of cooperation early in the investigation.
Disclosure: The enforcement action was the result of the DOJ and SEC’s investigation of the company in connection with the Iraq oil-for-food program
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Stryker (Oct. 24)
See here for the prior post.
Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal control provisions.
Settlement: $13.2 million (disgorgement of $7.5 million, prejudgment interest of $2.3 million, and a civil penalty of $3.5 million)
Disclosure: According to the company’s disclosure – “in October 2007, the Company disclosed that the SEC has made an informal inquiry of the Company regarding possible violations of the Foreign Corrupt Practices Act in connection with the sale of medical devices in certain foreign countries.”
Individuals Charged: No
Related DOJ Enforcement Action: No
Diebold (Oct. 22nd)
See here for the prior post.
Charges: Settled civil complaint charging violations of the FCPA’s anti-bribery provisions and books and records and internal controls provisions.
Settlement: $22.9 million in disgorgement and prejudgment interest
Disclosure: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Total (May 29th)
See here for the prior post.
Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery provisions and books and records and internal control provisions.
Settlement: Approximately $153 million in disgorgement.
Disclosure: The company disclosed as follows. “In 2003, the SEC followed by the DOJ issued a formal order directing an investigation in connection with the pursuit of business in Iran by certain oil companies, including among others, Total.”
Individuals Charged: No.
Related DOJ Enforcement Action: Yes.
Ralph Lauren (April 22nd)
See here for the prior post.
Charges: None. Non-prosecution agreement.
Settlement: Approximately $735,000 ($593,000 in disgorgement and $141,845 in prejudgment interest).
Disclosure: Voluntary disclosure.
Individuals Charged: No.
Related DOJ Enforcement Action: Yes.
Parker Drilling (April 16th)
See here for the prior post.
Charges: Settled civil complaint charging violations of the FCPA’s anti-bribery provisions, and books and records and internal controls provisions.
Settlement: Approximately $4 million ($3.05 million in disgorgement and approximately $1.04 million in prejudgment interest)
Disclosure: Industry sweep connected to Panalpina enforcement action
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Philips Electronics (April 5th)
See here for the prior post.
Charges: None. Administrative cease and desist order finding violations of the FCPA’s books and records and internal control provisions.
Settlement: Approximately $4.5 million (approximately $3.1 million in disgorgement and approximately $1.4 million in prejudgment interest)
Disclosure: Polish law enforcement investigation prompted the company to conduct an internal investigation which it then disclosed to DOJ and SEC.
Individuals Charged: No.
Related DOJ Enforcement Action: No.
