Foreign Corrupt Practices Act enforcement, it’s not just about the DOJ.
Granted, as a civil enforcement agency the SEC’s 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).
This previous post highlighted various corporate enforcement statistics from 2017 and this post goes in-depth into various facts and figures relevant to SEC FCPA enforcement in 2017. (See here for a similar post for 2016; here for a similar post for 2015; here for a similar post for 2014; here for a similar post for 2013; here for a similar post for 2012; here for a similar post for 2011; and here for a similar post for 2010).
Settlement Amounts and Specifics
In 2017, the SEC brought 7 corporate enforcement actions and collected approximately $289 million in those enforcement actions. (Note: this $289 million figure is a net amount after accounting for various credits and deductions in the Telia enforcement action for a related foreign law enforcement action as well as the FCPA only portion of the Alere enforcement action).
By way of comparison, in 2016 the SEC collected approximately $1.07 billion in 24 corporate FCPA enforcement actions; in 2015 the SEC collected approximately $114.8 million in 9 corporate FCPA enforcement actions; in 2014 the SEC collected approximately $327 million in 7 corporate FCPA enforcement actions; in 2013 the SEC collected approximately $300 million in 8 corporate enforcement actions; 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; and in 2010, the SEC collected approximately $530 million in 19 corporate FCPA enforcement actions.
The range of SEC FCPA enforcement actions in 2016 was, on the high end, $209 million (Telia net), and on the low end, $3.8 million (Alere FCPA portion).
Of the 7 corporate enforcement actions brought by the SEC in 2017, 4 (58%) were SEC only. By way of comparison, of the 24 corporate enforcement actions brought by the SEC in 2016, 14 (58%) were SEC only.
Of the 7 corporate enforcement actions brought by the SEC in 2017, 100% were administrative actions. In other words, there was no judicial scrutiny of any SEC corporate FCPA enforcement actions in 2017.
By way of comparison, there was no judicial scrutiny of 83% of SEC FCPA enforcement actions in 2016; in 2015 there was no judicial scrutiny of 89% of SEC FCPA enforcement actions; in 2014 there was no judicial scrutiny of 86% of SEC FCPA enforcement actions; and in 2013 there was no judicial scrutiny of 50% of SEC FCPA enforcement actions.
In 2017, the SEC collected approximately $2 million in disgorgement and prejudgment interest in enforcement actions that did not charge or find anti-bribery violations. 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.
By way of comparison, in 2016 the SEC collected approximately $73 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases; in 2015 the SEC collected approximately $45 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases; in 2014 the SEC collected approximately $104 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases; in 2013, the SEC collected approximately $208 million in disgorgement and prejudgment interest in 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; and in 2011 the SEC collected approximately $51 million in disgorgement and prejudgment interest in n0-charged bribery disgorgement cases.
The $289 million the SEC collected in 2017 FCPA enforcement actions breaks down as follows:
- $52 million in civil penalties; and
- $237 million in disgorgement and prejudgment interest
In other words, 82% of SEC FCPA settlements in 2017 consisted of disgorgement and prejudgment interest.
By way of comparison, in 2016 96% of SEC FCPA settlements consisted of disgorgement and prejudgment interest; in 2015 51% of SEC FCPA settlements consisted of disgorgement and prejudgment interest; in 2014 99% of SEC FCPA settlement amounts in 2014 consisted of disgorgement and prejudgment interest; in 2013 98% of SEC FCPA settlement amounts consisted of disgorgement and prejudgment interest; 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; and 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 2017 included a civil penalty, disgorgement and prejudgment interest (Halliburton, Orthofix and Biomet), whereas other enforcement actions included only disgorgement and prejudgment interest (Alere and Telia), whereas other enforcement actions included only a civil penalty (SQM and Mondelez International) good luck and please enlighten us all with your insight.
Corporate vs. Individual Actions
Of the 7 corporate SEC FCPA enforcement actions in 2017, 1 (14%) has involved, at present, related SEC charges or findings against company employees.
By way of comparison, of the 24 corporate SEC FCPA enforcement actions from 2016, 7 (29%) have involved, at present, related SEC charges or findings against company employees; in 2015 of the 9 corporate SEC FCPA enforcement actions 2 (22%) have involved related SEC charges against company employees; in 2014 of the 7 corporate SEC FCPA enforcement actions, 0 (0%) involved related SEC charges against company employees; in 2013 of the 8 SEC corporate FCPA enforcement actions 0 (0%) involved 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.
Voluntary Disclosures
Of the 7 corporate SEC FCPA enforcement actions from 2017, 1 enforcement action (14%) (Halliburton) was the result of a voluntary disclosure.
By way of comparison, of the 24 corporate SEC FCPA enforcement actions from 2016, 8 enforcement actions (33%) were the result of corporate voluntary disclosures; of the 9 corporate SEC FCPA enforcement actions from 2015, 3 enforcement actions (33%) were the result of corporate voluntary disclosures; of the 7 corporate SEC FCPA enforcement actions from 2014, 4 enforcement actions (57%) were the result of corporate voluntary disclosures; of the 8 corporate SEC FCPA enforcement actions in 2013, 3 enforcement actions (38%) were the result of corporate voluntary disclosures; in 2012 of the 8 corporate SEC FCPA enforcement actions 4 (50%) were the result of corporate voluntary disclosures; and in 2011 of the 13 corporate SEC FCPA enforcement actions 11 (85%) were the result of corporate voluntary disclosures.
This remainder of this post provides an overview of SEC FCPA enforcement in 2017.
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Alere (Sept. 28th)
See here for a prior post
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions. (In addition, the order found violations of other securities law provisions related to revenue recognition and other related practices)
Settlement: Approximately $13 million ($9.2 million civil monetary penalty, disgorgement of $3,328,689, and prejudgment interest of $495,196). The FCPA component of the Alere enforcement action appears to be approximately $3.8 million ($3.3 million in disgorgement and $.5 million in prejudgment interest) and will be recorded as such in FCPA enforcement statistics
Origin: SEC subpoena
Individuals Charged: No
Related DOJ Enforcement Action: No
Telia (Sept. 21st)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of FCPA’s anti-bribery provisions and books and records provisions
Settlement: $457 million in disgorgement reduced to $208 million after accounting for various credits and deductions including for contemplated Swedish and Dutch enforcement actions
Origin: Foreign media reporting
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Halliburton (July 27th)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions
Settlement: $29.2 million ($14 million in disgorgement plus $1.2 million in prejudgment interest and a $14 million penalty)
Origin: Based on the company’s previous disclosures – voluntary disclosure (although the SEC’s order is silent on this topic).
Individuals Charged: Yes
Related DOJ Enforcement Action: No
Orthofix (Jan. 18th)
See here for the prior post
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.
Settlement: $6 million (disgorgement of $2,928,000, prejudgment interest of $263,375, and a civil money penalty in the amount of $2,928,000)
Origin: Company disclosed as part of its ongoing self-reporting obligations undertaken as part of its earlier FCPA enforcement action
Individuals Charged: No
Related DOJ Enforcement Action: No
SQM (Jan. 13th)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.
Settlement: $15 million civil penalty
Origin: The administrative order states: “In 2015, in response to inquiries from Chilean tax authorities and related news articles in the Chilean press, SQM conducted an internal investigation based on allegations that SQM had taken improper tax deductions for payments to certain vendors.”
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Biomet (Jan. 12th)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of FCPA’s anti-bribery, books and records and internal controls provisions.
Settlement: $13 million ($5.82 million in disgorgement plus $702,705 in interest and a $6.5 million penalty)
Origin: Breach of prior DPA
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Mondelez Int’l (Jan. 6th)
See here for the prior post
Charges: None. Administrative cease and desist order finding violations of FCPA’s books and records and internal controls provisions.
Settlement: $13 million civil penalty
Origin: The company previously disclosed: “on February 1, 2011, we received a subpoena from the SEC in connection with an investigation under the FCPA, primarily related to a facility in India that we acquired in the Cadbury acquisition.”
Individuals Charged: No
Related DOJ Enforcement Action: No
Free 90 Minute 2017 FCPA Year In Review Video
A summary of every corporate enforcement action; notable statistics and issues to consider; compliance take-away points; and enforcement agency and related developments. Click below to view the engaging video tutorial.
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