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SEC FCPA Enforcement – 2020 Year In Review

SEC

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 and recently an SEC Commissioner stated that anti-corruption policy is not within the SEC’s area of expertise nor further to the SEC’s mission).

This post goes in-depth into various facts and figures relevant to SEC FCPA enforcement in 2020.

[See here for a similar post for 2019; here for a similar post for 2018; 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 2020, the SEC brought 8 corporate enforcement actions and collected approximately $683 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 law enforcement actions).

Of note, in only 2 enforcement actions (World Acceptance and Goldman) did the SEC find that the company violated the FCPA’s anti-bribery provisions.

By way of comparison:

  • in 2019 the SEC collected approximately $1.03 billion in 13 corporate enforcement actions;
  • in 2018 the SEC collected approximately $382 million in 14 corporate FCPA enforcement actions;
  • 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 2020 was on the high end $400 million (Goldman) and on the low end $8.8 million (Cardinal Health).

Of the 8 corporate enforcement actions brought by the SEC in 2020, 4 (50%) were SEC only.

By way of comparison, of the 13 corporate enforcement actions brought by the SEC in 2019, 6 (46%) were SEC only; of the 14 corporate enforcement actions brought by the SEC in 2018, 9 (64%) were SEC only; 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 8 corporate enforcement actions brought by the SEC in 2020, 8 (100%) were administrative actions. In other words, there was no judicial scrutiny of SEC corporate FCPA enforcement actions in 2020.

  • 92% of SEC corporate FCPA enforcement actions in 2019;
  • 100% of SEC corporate FCPA enforcement actions in 2018;
  • 100% of SEC corporate FCPA enforcement actions in 2017;
  • 83% of SEC corporate FCPA enforcement actions in 2016;
  • 89% of SEC corporate FCPA enforcement actions in 2015;
  • 86% of SEC corporate FCPA enforcement actions in 2014; and
  • 50% of SEC corporate FCPA enforcement actions in 2013.

In 2020,the SEC collected approximately $256 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 2019 the SEC collected approximately $183 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases;
  • in 2018 the SEC collected approximately $171 million in disgorgement and prejudgment interest in no-charged bribery disgorgement cases;
  • 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 $683 million the SEC collected in 2020 corporate FCPA enforcement actions breaks down as follows:

  • approximately in $408 million in civil penalties (this includes the $400 civil penalty in the Goldman matter – by far the largest civil penalty ever imposed in an FCPA enforcement action); and
  • approximately $275 million in disgorgement and prejudgment interest.

In other words, approximately 40% of SEC corporate FCPA settlement amounts in 2020 consisted of disgorgement and prejudgment interest.

By way of comparison:

  • in 2019, 88% of SEC corporate FCPA settlements consisted of disgorgement and prejudgment interest;
  • in 2018, 92% of SEC corporate FCPA settlements consisted of disgorgement and prejudgment interest;
  • 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, 94% of SEC FCPA settlement amounts consisted of disgorgement and prejudgment interest; and
  • in 2010, 96% of SEC FCPA settlement amounts consisted of disgorgement and prejudgment interest.

If one tries to analyze why some SEC FCPA enforcement actions in 2020 included a civil penalty, disgorgement and prejudgment interest (Cardinal Health, Alexion, World Acceptance, J&F), whereas other enforcement actions included only disgorgement and prejudgment interest (Eni, Novartis, Herbalife), whereas other enforcement actions included only a civil penalty (Goldman) good luck and please enlighten us all with your insight.

Corporate vs. Individual Actions

Of the 8 corporate SEC FCPA enforcement actions in 2020, 3 (38%) have involved, at present, related SEC FCPA charges or findings against company employees. Stated, differently 62% of SEC corporate enforcement actions lack any related SEC charges or findings against company employees.

By way of comparison:

  • of the 13 corporate SEC FCPA enforcement actions from 2019, 2 (15%) involved related SEC charges or findings against company
  • of the 14 corporate SEC FCPA enforcement actions from 2018, 1 (7%) involved related SEC charges or findings against company employees;
  • of the 7 corporate SEC FCPA enforcement actions from 2017, 1 (14%) involved related SEC charges or findings against company employees;
  • of the 24 corporate SEC FCPA enforcement actions from 2016, 7 (29%) involved related SEC charges or findings against company employees;
  • in 2015 of the 9 corporate SEC FCPA enforcement actions 2 (22%) involved related SEC charges or findings against company employees;
  • in 2014 of the 7 corporate SEC FCPA enforcement actions, 0 (0%) involved related SEC charges or findings against company employees;
  • in 2013 of the 8 SEC corporate FCPA enforcement actions 0 (0%) involved related SEC charges or findings against company employees;
  • in 2012, of the 8 SEC corporate FCPA enforcement actions 0 (0%) involved related SEC charges or findings against company employees;
  • in 2011, of the 13 SEC corporate FCPA enforcement actions 2 (15%) involved related SEC charges or findings against company employees; and
  • in 2010, of the 19 SEC corporate FCPA enforcement actions 3 (15%)  involved related SEC charges or findings against company employees.

Voluntary Disclosures

Of the 8 corporate SEC FCPA enforcement actions from 2020, 3  (38%) were the result of a voluntary disclosure.

By way of comparison:

  • of the 13 corporate SEC FCPA enforcement actions from 2019, 6 (46%) were the result of voluntary disclosure;
  • of the 14 corporate SEC FCPA enforcement actions from 2018, 6 (43%) were the result of voluntary disclosure;
  • 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;
  • of the 8 corporate SEC FCPA enforcement actions in 2012 4 (50%) were the result of corporate voluntary disclosures; and
  • of the 13 corporate SEC FCPA enforcement actions in 2011 11 (85%) were the result of corporate voluntary disclosures.

This remainder of this post provides an overview of SEC FCPA enforcement in 2020.

Cardinal Health  (Feb. 28)

See here and here for prior posts

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $8.8 million ($5.4 million in disgorgement, $916,887 in prejudgment interest and a civil penalty of $2.5 million).

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: No

Eni  (April 17)

See here and here for prior posts

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $24.5 million in disgorgement and prejudgment interest ($19.75 million in disgorgement and $4.75 million in prejudgment interest).

Origin: Voluntary disclosure. As stated by the company: “In 2012, Eni contacted the U.S. Department of Justice (DoJ) and the U.S. SEC in order to voluntarily inform them about this matter, and has kept them informed about the developments in the Italian Prosecutors’ investigations and proceedings. Following Eni’s notification, both the U.S. SEC and the DoJ started their own investigations regarding this matter.”

Individuals Charged: No

Related DOJ Enforcement Action: No

Novartis (June 25)

See here and here for prior posts.

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $112.8 million ($92.3 million in disgorgement and $20.5 million in prejudgment interest)

Origin: Based on the company’s disclosure, apparent foreign law enforcement investigation and/or subpoeneas and document requests from the DOJ/SEC.

Individuals Charged: No

Related DOJ Enforcement Action: Yes

Alexion Pharmaceuticals  (July 2)

See here and here for prior posts

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $21.5 million ($14.2 million in disgorgement, $3.7 million in prejudgment interest, and a $3.5 million civil penalty)

Origin: The company previously disclosed a May 2015 subpoena from the SEC and an October 2015 voluntary request for information from the DOJ

Individuals Charged: No

Related DOJ Enforcement Action: No

World Acceptance Corp (Aug. 6)

See here and here for prior posts.

Charges:  None (administrative order findings violations of the FCPA’s anti-bribery, books and records and internal controls provisions)

Settlement: $21.7 million ($17.8 million in disgorgement, $1.9 million in prejudgment interest, and a $2 million civil penalty)

Origin: Voluntary disclosure

Individuals Charged: No

Related DOJ Enforcement Action: No

Herbalife (Aug. 28)

See hereherehere and here for prior posts.

Charges:  None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)

Settlement: $67.3 million (approximately $58.7 million in disgorgement and approximately $8.6 million in prejudgment interest)

Origin: The company previously disclosed: “The SEC has requested from the Company documents and other information relating to the Company’s anti-corruption compliance in China and the Company is conducting its own review. The Company has discussed the SEC’s investigation and the Company’s review with the Department of Justice. The company is cooperating with the SEC’s investigation and cannot predict the eventual scope, duration, or outcome of the matter at this time.”

Individuals Charged: Yes

Related DOJ Enforcement Action: Yes

J&F Investimentos (Oct. 14th)

See here and here for prior posts.

Charges:  None (administrative order finding causation of violations of the FCPA’s books and records and internal controls provisions)

Settlement: $26.8 million in disgorgement

Origin:  Brazil law enforcement action

Individuals Charged: Yes

Related DOJ Enforcement Action: Yes

Goldman Sachs  (Oct. 22nd)

See hereherehere and here for prior posts.

Charges:  None (administrative order findings violations of the FCPA’s anti-bribery, books and records and internal controls provisions)

Settlement: Net $400 million civil penalty (after accounting for credits and offsets for related foreign law enforcement actions).

Origin: SEC investigation in the aftermath of related Malaysia and other international law enforcement investigations related to 1Malaysia Development Bhd. or 1MDB.

Individuals Charged: Yes

Related DOJ Enforcement Action: Yes

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