Investigations & Enforcement: Emerging Trends in FCPA Enforcement

June 13, 2019 posted by

[Applause] welcome to SMC critical insights I'm Laura Oswald partner and Sullivan and Cromwell Zef CPA and anti-corruption practice based in the Palo Alto office and I'm Brendon Cohen also a partner in the firm's FCPA and anti-corruption practice and I am also president in Palo Alto today we're going to talk about the f CPA and before 2017 there was speculation that the Trump administration would be a less active or there were questions about whether the Trump administration would be a less active enforcer of the f CPA and in January prior to the inauguration there was a flurry of activity 9 of the 32 cases that would ultimately be filed in 2017 were filed in those three weeks and then after the inauguration there was a five-month hiatus with nothing filed no fcpa actions filed but then activity picked up again in the remaining cases that were filed in 2017 were filed post five months post the inauguration and they generally were in a mount and kind of case amount of sanction kind of case size of case comparable to what you would see in a typical well I guess we would have called a typical year prior to 2017 and by the end of the year an amount of penalties and sanctions and disgorgement had been levied that were very much in line with what you'd expect to see in kind of an average year down from 2016 but 2016 was a very high year for sanctions and penalties in the FCPA so aside from those sort of high level statistics lor did we see any trends have we seen any trends emerging in FCPA enforcement over the last year or two there have been a few things that we've noticed the first is the continued pattern of a new form of resolution that we saw first in 2016 being the declination with disgorgement so prior to that time the DOJ had declined to prosecute actions and we think seeing things like non prosecution agreements and deferred prosecution agreements but now we have this new concept of a declination with disgorgement understand the do J's position on this is that even if they declined to prosecute if they found that a company has achieved ill-gotten gains they're not going to allow that to kind of remain with the company regardless of their cooperation the DOJ has used this resolution tool as a means to promote its emphasis on cooperation and by publicly acknowledging cases where it's declining to move forward is trying to encourage companies to come forward and cooperate consistent with its past guidance we saw this in 2017 in both the Lind and CDM Smith enforcement actions in those cases the companies discouraged profits of more than 15 million but we're not subject to additional enforcement penalties and get to also disclose that they were not subject to prosecution as a result of their cooperation the second trend that I think we've seen building for several years now in which continued in 2017 was the pattern of international cooperation we saw that in the Talia and couple enforcement actions this year with multiple international jurisdictions working alongside the SEC and DOJ and prosecuting those actions teleo is quite remarkable with the SEC listing agencies in ten other countries as assisting in its efforts to bring an enforcement action against Telia this changes the dynamics for companies that are contemplating self reporting into one that's not just about whether or not you report to the DOJ and SEC in the United States but whether you need to report to agencies and other jurisdictions and which of the companies operate and whether those other jurisdictions may already be investigating and may essentially bring the DOJ and SEC into the fold the third trend will call it which has turned out to be maybe not such a district dink trend yet but which we anticipate becoming a bigger deal is the prosecution of individuals and 2015 the DOJ issued the Yeates a memo which emphasized the importance of and the DOJ focus on individual prosecutions and reiterated that guidance late in 2017 the statistics on enforcement's against individuals in 2017 however remain consistent with past trends however we expect this to be an emerging area of focus and demonstrated difference in the prosecutions the delay being caused by the fact that it takes a lot longer it is typically taken a lot longer for individual actions to materialize and those are the cases that are typically litigated but we've seen an example already in 2018 with the single enforcement action in the FCPA space announced to date being a DOJ case against an individual and in a matter that's been under prosecution since at least 2014 so we'd be remiss if we didn't mention that students of the FCPA and practitioners of the fcpa and people who are just interested in how the fcpa has been enforced over the years should go direct their browser to fcpa dot where they will find the fcpa Clearing House which is a joint project between Sullivan and Cromwell and Stanford Law School and that collects every single resolution of every fcpa enforcement action as well as a bunch of basically every other available document related to that enforcement action in a highly searchable database that is invaluable particularly if you're interested in seeing if you can detect trends and you can search in the advanced search function for every kind of resolution any kind of geography any kind of bride payment any kind of industry all those sorts of parameters you might think to search are available for searching in a way that was simply not available prior to the creation of the FCPA Clearing House and a lot of what we just talked about with stuff that we were able to put together rapidly courtesy of the FCPA Clearing House and with that thanks for listening to our podcast for more information about our practice please visit us online at you

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