FCPA Enforcement Actions: Recent Developments and Trends
By Space Coast Daily // October 25, 2023
Enforcement actions related to the Foreign Corrupt Practices Act (FCPA) have been a high priority for the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) in recent years.
The FCPA prohibits companies from bribing foreign officials in order to obtain government contracts or other business. It’s wise to always seek legal help from experts like https://federal-lawyer.com/whistleblower-lawyers/fcpa/ when reporting wrongdoing within.
The SEC created a specialized unit in 2010 to enhance its enforcement of the FCPA, and both the SEC and DOJ have continued to prioritize FCPA enforcement in the years since. The SEC has been particularly active in pursuing FCPA enforcement actions. In fiscal year 2022, the SEC announced several significant FCPA enforcement actions against issuers of securities traded in the U.S. that engaged in bribery and other corrupt practices abroad.
These enforcement actions demonstrate the SEC’s continued commitment to enforcing the FCPA and holding companies accountable for their actions. The DOJ has also been active in pursuing FCPA enforcement actions, and both agencies have worked together on several high-profile cases.
The enforcement of the Foreign Corrupt Practices Act (FCPA) is a joint effort between several entities, including the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ). These agencies work together to investigate and prosecute cases of bribery and corruption involving U.S. companies and individuals.
The SEC is responsible for enforcing the FCPA’s anti-bribery provisions, which prohibit companies and individuals from bribing foreign officials to obtain or retain business. The SEC also enforces the FCPA’s accounting provisions, which require companies to maintain accurate books and records and to implement adequate internal controls.
The DOJ is responsible for criminal enforcement of the FCPA, which can result in significant fines and even imprisonment for individuals found guilty of violating the law. The DOJ’s FCPA Unit works closely with the SEC’s Division of Enforcement to investigate and prosecute cases of bribery and corruption.
Under the leadership of Gary Gensler, the SEC has emphasized its commitment to enforcing the FCPA and holding companies and individuals accountable for corrupt practices. Similarly, Gurbir S. Grewal, the head of the DOJ’s Criminal Division, has emphasized the importance of FCPA enforcement and the need to hold companies and individuals accountable for their actions.
In addition to the SEC and DOJ, other U.S. regulatory entities, such as the Commodity Futures Trading Commission (CFTC), may also play a role in FCPA enforcement. Coordination between these agencies has increased in recent years, as demonstrated by the growing number of joint investigations and enforcement actions.
Penalties and Sanctions
When a company is found to have violated the Foreign Corrupt Practices Act (FCPA), the penalties and sanctions can be severe. The FCPA allows for a variety of monetary and non-monetary penalties, including civil and criminal fines, disgorgement of ill-gotten gains, and pre-judgment interest.
Civil penalties are often imposed by the Securities and Exchange Commission (SEC) and can be substantial. In 2022, the SEC ordered over $6.4 billion in civil penalties, disgorgement, and pre-judgment interest, which is the most on record in SEC history. These penalties are designed to punish companies for their wrongdoing and deter future violations.
Disgorgement is another common penalty for FCPA violations. This is where a company is required to give up any profits it made as a result of the illegal activity. Disgorgement is often used in conjunction with civil penalties and can result in substantial financial losses for the company.
Sanctions are also a common penalty for FCPA violations. These can include restrictions on the company’s ability to do business with certain countries or individuals, as well as other limitations on its operations. In 2022, U.S. regulators imposed just over $1.5 billion in sanctions against corporations in FCPA-related enforcement actions.
Pre-judgment interest is a penalty that is often added to civil fines and disgorgement orders. This is designed to compensate the government for the time value of money that was lost as a result of the illegal activity.
In some cases, the SEC may also seek a civil injunction to prevent the company from engaging in further illegal activity. This is a court order that requires the company to take certain actions to ensure compliance with the law.
Role of Individuals
Individual accountability is critical to FCPA enforcement, and imposing personal consequences on bad actors, including through bars and monetary sanctions, will continue to be a high priority for regulators. The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have been actively pursuing individuals for FCPA violations, and the trend is expected to continue.
Individual defendants in FCPA cases can include officers, CEOs, CFOs, employees, agents, and consultants who engage in corrupt practices. The SEC and DOJ have been particularly focused on insider trading cases, where individuals use non-public information to gain an unfair advantage in the market.
Records and evidence are key in FCPA investigations, and individuals who fail to maintain accurate books and records can face severe consequences. The SEC and DOJ have also been increasingly focused on individual accountability, and have been imposing significant penalties on individuals who engage in corrupt practices.
In 2022, the SEC filed several individual FCPA enforcement actions, including against executives of a multinational corporation who allegedly paid bribes to foreign officials to secure business. The DOJ also brought several high-profile cases against individuals, including a former executive of a global engineering and construction company who pleaded guilty to FCPA violations.
In conclusion, the FCPA enforcement actions have been on the rise in recent years, with a particular focus on bribery schemes involving foreign officials. The DOJ and SEC have been actively pursuing cases against companies and individuals who violate the FCPA, resulting in significant fines and penalties.
The FCPA Whistleblower Program has also played a crucial role in the enforcement efforts, providing incentives for individuals to report violations and assisting the government in uncovering and prosecuting FCPA violations. The program has awarded millions of dollars to whistleblowers who have provided valuable information leading to successful enforcement actions.
Overall, the FCPA remains a critical tool in combating corruption and promoting ethical business practices globally. Companies and individuals must be aware of their obligations under the FCPA and take steps to ensure compliance with the law. Failure to do so can result in severe consequences, including significant financial penalties, reputational damage, and even criminal prosecution.