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From Securities Regulation Daily, October 30, 2017

Enforcement forum speakers highlight recent FCPA developments

By Amanda Maine, J.D.

Charles E. Cain, acting chief of the SEC’s Foreign Corrupt Practices Act unit in the Division of Enforcement, assured that despite the dramatic drop-off in FCPA cases brought by the SEC this year compared to a record-breaking 2016, nothing has changed regarding the Division’s focus on FCPA enforcement. Cain made his remarks during a panel discussion at the Securities Docket’s recent Enforcement Forum in Washington, D.C. FCPA actions are long, complex cases that take a while, he stated, and advised that that there will be more cases brought in the future.

Amanda Aikman, currently with Morrison & Foerster and a former member of the DOJ Fraud Section’s Foreign Corrupt Practices Act unit, added that Attorney General Sessions has made clear that he will enforce the FCPA. She noted that the FCPA unit is now busy with trials, which requires a huge focus of resources.

FCPA and statutes of limitation. Panel moderator Luke Cadigan of Cooley LLP inquired whether this summer’s Kokesh Supreme Court decision, which unanimously held that disgorgement constitutes a penalty and is therefore subject to a five-year federal statute of limitations, would affect FCPA investigations. Cain said that the staff always wants to complete cases soon, but Kokesh may result in a greater sense of urgency. He added that the SEC can still seek injunctive relief for cases outside the five-year statute of limitations. Daniel O’Connor of Ropes & Gray advised that some companies might be more reluctant to produce documents that predate the statute of limitations.

International cooperation. Cain also highlighted the fact that U.S. enforcement will continue working with their international counterparts, many of which have longer statutes of limitations for foreign corrupt conduct. O’Connor said that there had definitely been an uptick in international cooperation and enforcement in the foreign corrupt practices area; however, China is one jurisdiction that lacks coordination with U.S. officials. Coordination is important to avoid "penalty pile-on" from multiple jurisdictions as well as expending U.S. effort and resources on conduct that does not involve any activity within the U.S., he added.

Cooperation. The panelists also discussed cooperation with authorities regarding FCPA conduct under the DOJ’s pilot program and the SEC’s incentives for self-reporting. According to Aikman, defendants have received lenience from federal sentencing guidelines by cooperating with the DOJ, as well as seven declinations from criminal prosecution, three of which resulted in disgorgement to the SEC. Cain said that he did not think that the DOJ’s pilot program has had a direct impact on the SEC’s enforcement program, but the SEC continues to incentivize self-reporting for cooperation credit.

SEC FCPA focus. Cadigan asked the panelists what kind of FCPA cases authorities tend to pass on. Cain advised that, while there are unique factors in all cases that contribute to whether a certain case will be pursued, situations involving isolated conduct in a robust control environment might be the type of case that the staff will decline to pursue. He also explained that the SEC’s focus on individuals continues to be staff policy, but acknowledged that FCPA cases present specific challenges to that policy, including difficulties in contacting individuals overseas, personal jurisdiction issues, and challenges around gathering evidence.

Responding to a question about FCPA risk assessments, Cain said he would be shocked if a company does not have such an assessment. As to whether FCPA assessments should be formal or if they can be more informal, Cain said that the SEC just wants them to be done, although it is more helpful if the assessment is written down.

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