[1]The author of this post is Quinnie Lin, a Law Clerk at Miller & Chevalier.
Senior FCPA enforcement officials from the U.S. Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) discussed enforcement trends and priorities at this year’s ACI International Conference on the Foreign Corrupt Practices Act on November 30 and December 1, 2016. The DOJ Chief of the Criminal Division’s Fraud Section, Andrew Weissmann, and Chief of the Fraud Section’s FCPA Unit, Daniel Kahn, and the SEC’s FCPA Unit Chief, Kara Brockmeyer, offered their thoughts. The speakers clarified that their remarks reflected their own views and not the views of their respective agencies. This is the sixth year that the FCPAméricas Blog has summarized what FCPA enforcement officials are saying at ACI (see overviews from 2011 [2], 2012 [3], 2013 [4], 2014 [5], and 2015 [6]).
Whistleblower Complaints Are Significant. Ms. Brockmeyer noted that FCPA whistleblower complaints to the SEC continue to increase. In 2016, the SEC received 238 whistleblower tips for FCPA issues, what she called “a significant amount.” She also explained that, since the whistleblower rules went into effect, most whistleblowers have reported internally to a company first. They often do not make reports to the SEC until they feel a concern that the company is not taking the issue seriously.
Financial Services Industry Under Focus. The government speakers made it clear that the financial services industry will continue to be a focus for enforcement. They cited FCPA actions against BNY Mellon, Och-Ziff, and JP Morgan as clear examples. Ms. Brockmeyer said that, in the past, she had remarked that it is an industry that has not given adequate attention to FCPA risk. She contrasted the industry’s approach to compliance with that of other industries, like national resources and pharmaceuticals, that in general have prioritized compliance. Mr. Kahn noted that the economy is increasingly global, meaning that many firms in the industry have FCPA exposure they might not have had in the past.
International Cooperation on the Rise. Mr. Kahn said that the DOJ is seeing an increased level of enforcement cooperation among countries, stating that “it’s a credit to all of those jurisdictions.” He said that the OECD Anti-Bribery Convention has been one of the most effective international agreements, with member states “doing their part.” He cited the participation of Dutch authorities in the Vimpelcom enforcement action as an example. He named Saudi Arabia and Cyprus as example of countries that are meeting their commitments under mutual legal assistance treaties. He said that more coordinated resolutions, where certain jurisdictions address some conduct and the U.S. addresses other conduct, should be expected in the future. Similarly, Ms. Brockmeyer said that the SEC has obtained assistance from two dozen jurisdictions in the last year. She cited the 3rd International Anti-Bribery Conference hosted by the SEC, DOJ, and FBI in 2016 as an example of the dramatic evolution in cooperation. Attendees from over 100 countries participated to learn how to investigate foreign bribery. She said that the growth in sophistication of the dialogue from the first conference to the third was notable. While the first year consisted of a discussion about how the United States investigates cases, the third had become an opportunity for multiple jurisdictions to explore how investigations can be effective under their different legal systems. She said, “The more that countries know how to address bribery using their own tools, the fairer the playing ground.”
Monitorships Continue to Be Important. Mr. Kahn acknowledged an uptick in the imposition of independent compliance monitors in FCPA enforcement actions. But he said that this does not necessarily reflect a change in policy. He explained that the purpose of monitors is to prevent reoccurrence of misconduct. He added that, just because a company receives a monitor does not necessarily mean it has a poor compliance program. In some cases the company might just have a new program in place and the monitor creates an opportunity to test it and prove that it is working. He said that this enforcement approach reflects increased scrutiny applied today by the DOJ and SEC of compliance programs.
Remediation as Critical to Settlements. Mr. Weissmann said that remediation of prior compliance issues is a key component of receiving favorable settlement outcomes, but added that many companies are still missing this point. He said that, when a company learns it has a problem, one of the immediate areas within its control should be fixing the underlying issues. Companies should know that remediation will be well received by enforcement officials. He cited the LAN Airlines and JP Morgan FCPA actions as examples of the impact of full remediation. LAN Airlines received a three-year monitor when it failed to discipline a senior employee who was involved in the alleged misconduct, while JP Morgan avoided a monitor when it disciplined and imposed financial sanctions on responsible individuals.
The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author’s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.
© 2016 FCPAméricas, LLC