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 2018, this post focused more specifically on DOJ enforcement in 2018, and this post goes in-depth into various facts and figures relevant to SEC FCPA enforcement in 2018.
[See here for a similar post for 2017; 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 2018, the SEC brought 14 corporate enforcement actions and collected approximately $382 million in those enforcement actions. (Note: this figure represents net FCPA settlement amounts after accounting for various credits or deductions in certain enforcement actions for related foreign law enforcement actions).
By way of comparison:
- in 2017 the SEC collected approximately $289 million in 7 corporate FCPA enforcement actions;
- 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 2018 was on the high end $143.2 million (Panasonic) and on the low end $500,000 (Elbit Imaging).
Of the 14 corporate enforcement actions brought by the SEC in 2018, 9 (64%) were SEC only.
By way of comparison, of the 7 corporate enforcement actions brought by the SEC in 2017, 4 (58%) were SEC only and of the 24 corporate enforcement actions brought by the SEC in 2016, 14 (58%) were SEC only.
Of the 14 corporate enforcement actions brought by the SEC in 2018, 100% were administrative actions. In other words, there was no judicial scrutiny of any SEC corporate FCPA enforcement actions in 2018.
By way of comparison:
- there was no judicial scrutiny of 100% of SEC corporate FCPA enforcement actions in 2017;
- no judicial scrutiny of 83% of SEC corporate FCPA enforcement actions in 2016;
- in 2015 there was no judicial scrutiny of 89% of SEC corporate FCPA enforcement actions;
- in 2014 there was no judicial scrutiny of 86% of SEC corporate FCPA enforcement actions; and
- in 2013 there was no judicial scrutiny of 50% of SEC corporate FCPA enforcement actions.
In 2018, the SEC collected approximately $171 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 2017 the SEC collected approximately $2 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases;
- 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 $382 million the SEC collected in 2018 FCPA enforcement actions breaks down as follows:
- approximately $29 million in civil penalties; and
- approximately $353 million in disgorgement and prejudgment interest
In other words, 92% of SEC corporate FCPA settlement amounts in 2018 consisted of disgorgement and prejudgment interest.
By way of comparison:
- in 2017, 82% of SEC corporate FCPA settlements consisted of disgorgement and prejudgment interest;
- 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 (Polycom, United Technologies, Sanofi, Beam, Dun & Bradstreet), whereas other enforcement actions included only disgorgement and prejudgment interest (Vantage Drilling, Petrobras, Legg Mason, Credit Suisse), whereas other enforcement actions included only a civil penalty (Eletrobras, Stryker, Kinross Gold, Elbit Imaging) good luck and please enlighten us all with your insight.
Corporate vs. Individual Actions
Of the 14 corporate SEC FCPA enforcement actions in 2017, 1 (7%) has involved, at present, related SEC FCPA charges or findings against company employees.
By way of comparison:
- of the 7 corporate SEC FCPA enforcement actions from 2017, 1 (14%) have involved, at present, related SEC charges or findings against company employees;
- 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; and
- in 2010, 3 of the 19 (15%) corporate SEC FCPA enforcement actions involved related SEC charges against company employees.
Voluntary Disclosures
Of the 14 corporate SEC FCPA enforcement actions from 2018, 6 (43%) was the result of a voluntary disclosure.
By way of comparison:
- of the 7 corporate SEC FCPA enforcement actions from 2017, 1 (14%) was the result of voluntary disclosure;
- 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 2018.
Polycom (December 26th)
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: $16.3 million (disgorgement of $10,672,926, prejudgment interest of $1,833,410, and a civil penalty of $3,800,000)
Origin: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Eletrobras (December 26th)
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: $2.5 million civil penalty
Origin: Foreign law enforcement investigation
Individuals Charged: No
Related DOJ Enforcement Action: No
Vantage Drilling (November 19th)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of FCPA’s internal controls provisions.
Settlement: $5 million in disgorgement
Origin: Foreign law enforcement investigation
Individuals Charged: No
Related DOJ Enforcement Action: No
Stryker (Sept. 28th)
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: $7.8 million civil penalty
Origin: The administrative order states: “in response to the Commission’s investigation, Stryker retained outside counsel and forensic auditors to conduct an internal investigation into the company’s compliance with the FCPA concerning Stryker’s activities in India, China, and Kuwait. (Note: in 2013 Stryker also resolved an FCPA enforcement action).
Individuals Charged: No
Related DOJ Enforcement Action: No
Petrobras (Sept. 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 as well as other securities law provisions.
Settlement: $85.3 million after accounting for credits and deductions for related enforcement actions
Origin: Foreign law enforcement investigation
Individuals Charged: Not by the SEC
Related DOJ Enforcement Action: Yes
United Technologies Corp. (Sept. 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: $13.9 million (disgorgement of $9,067,142, prejudgment interest of $919,392, and a civil money penalty of $4,000,000)
Origin: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: No
Sanofi (Sept. 4th)
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: $25.2 million ($17.5 million in disgorgement, $2.7 million in prejudgment interest, and a civil penalty of $5 million)
Origin: Media reports suggest a voluntary disclosure, however the SEC’s order is silent on this topic
Individuals Charged: No
Related DOJ Enforcement Action: No
Legg Mason (August 27th)
See here for the prior post
Charges: None. Administrative cease and desist order finding violations of FCPA’s internal controls provisions
Settlement: $34.5 million in disgorgement and prejudgment interest
Origin: Pro-active government investigation and subpoena
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Credit Suisse (July 5th)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of FCPA’s anti-bribery and internal controls provisions
Settlement: $29.8 million (approximately $25 million in disgorgement and approximately $4.8 million in prejudgment interest).
Origin: Likely an industry sweep connected to JPMorgan’s FCPA scrutiny
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Beam (July 2nd)
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: $8.2 million (disgorgement of $5,264,340, prejudgment interest of $917,498, and a civil monetary penalty of $2 million)
Origin: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: No
Dun & Bradstreet (April 23)
See here, here, here, 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: $9.2 million (disgorgement of $6,077,820, prejudgment interest of $1,143,664, and a civil money penalty in the amount of $2 million).
Origin: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: No (as highlighted here the DOJ publicly issued a so-called declination letter).
Panasonic (April 30)
See here and here for prior posts
Charges: None. Administrative cease and desist order finding violations of the FCPA’s anti-bribery, books and records, and internal controls provisions. In addition, based on the underlying conduct the SEC also found that Panasonic fraudulently reported revenue and found violations of Section 10(b) and Rule 10b-5 as well as other reporting violations.
Settlement: $143.2 million ($126.0 million in disgorgement and $16.3 million in prejudgment interest).
Origin: The order states: The Company did not receive voluntary disclosure credit because the Company’s disclosures occurred only after the Securities and Exchange Commission (“SEC”) requested documents from Panasonic related to possible violations of anti-corruption laws and several years after the Company and Panasonic first became aware of the allegations of bribery through a whistleblower complaint and civil lawsuit, which the Company took steps to investigate internally but chose not to voluntarily report to the relevant authorities;
Individuals Charged: Yes
Related DOJ Enforcement Action: Yes
Kinross Gold (March 26th)
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: $950,000 civil penalty
Origin: SEC subpoena
Individuals Charged: No
Related DOJ Enforcement Action: No
Elbit Imaging (March 9th)
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: $500,000 civil penalty (an amount reflective of the fact that Elbit is currently winding down its operations).
Origin: Voluntary disclosure
Individuals Charged: No
Related DOJ Enforcement Action: No
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