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SEC FCPA Enforcement – 2020 Year In Review

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 [1]” 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 [2] for a similar post for 2019; here [3] for a similar post for 2018; here [4] for a similar post for 2017; here [5] for a similar post for 2016; here [6] for a similar post for 2015; here [7] for a similar post for 2014; here [8] for a similar post for 2013; here [9] for a similar post for 2012; here [10] for a similar post for 2011; and here [11] 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:

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.

[12]

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 [13] for a prior post on so-called “no-charged bribery disgorgement” cases.

By way of comparison:

The $683 million the SEC collected in 2020 corporate FCPA enforcement actions breaks down as follows:

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

By way of comparison:

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:

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:

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

Cardinal Health  (Feb. 28)

See here [14] and here [15] 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 [16] and here [17] 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 [18] and here [19] 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 [20] and here  [21]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 [22] and here [23] 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 here [24]here [25]here [26] and here [27] 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 [28] and here [29] 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 here [30]here [31]here [32] and here [33] 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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