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From Securities Regulation Daily, November 20, 2013

SEC’s enforcement co-director discusses focus on FCPA cases

By Jacquelyn Lumb

Andrew Ceresney, the co-director of the SEC’s Division of Enforcement, presented the keynote address at the International Conference on the Foreign Corrupt Practices Act (FCPA) in Washington, D.C. Ceresney said the Division’s focus on the FCPA has yielded great results, with the recovery of over $240 million in disgorgement and penalties over the past 12 months. He credited the SEC’s success with FCPA cases, in part, to its collaboration with the Department of Justice (DOJ) and the FBI.

Sea change. Ceresney said that the past 10 years have yielded a sea change in attitudes with respect to foreign bribery, although some still see bribery as a necessary evil or as the best way to win business. He noted that 10 years ago, few lawyers specialized in FCPA matters, but today most companies have some form of FCPA compliance program. FCPA training is now a common requirement among multinational companies, and FCPA has become an important practice at many law firms.

Guidance. As interest in FCPA cases grew, Ceresney said it became important to provide clear and meaningful guidance on how the government interprets and applies the FCPA. The SEC and DOJ last year issued a resource guide to respond to that need. Ceresney said it is important to continue to find ways to educate and inform the industry about the limits of permissible conduct, whether through guidance or enforcement actions.

International developments. Another important trend in the last 10 years has been the increase in international responses to corruption issues. Ceresney said the SEC has experienced a transformation in its ability to receive meaningful and timely assistance from its international counterparts. Many foreign regulators have taken steps to strengthen their anticorruption laws and increase their enforcement efforts, according to Ceresney.

Countries with strong anti-corruption laws are often great partners in the SEC’s fight against corruption, and Ceresney noted that the SEC’s investigations are increasingly conducted in parallel with foreign governments. He added that often it is only with the assistance of the foreign authorities that the SEC has been able to obtain the evidence needed to prove the FCPA violations.

Individuals. Ceresney also reported that the SEC is focused on FCPA cases against individuals who are responsible for corporate malfeasance, even though those cases can pose unique challenges. He said some recent cases against individuals have fleshed out important areas of FCPA law, which was not well developed. Companies typically settle FCPA cases, he explained.

Ceresney reviewed some of the notable decisions in litigated FCPA actions, which have addressed whether the government needs to identify the intended bribe recipient, the scope of the facilitation payment exception, the contours of personal jurisdiction over foreign defendants residing outside the U.S., and whether the statute of limitations is tolled against defendants not located in the U.S.

Cooperation. Ceresney emphasized the importance of self-reporting and cooperation with FCPA investigations. If the SEC discovers the violations, he assured the conference, the consequences would be worse than if a company self-reported the illegal conduct. He noted that the whistleblower program is picking up steam and provides an inside source for FCPA tips. Given the high dollar value of FCPA monetary relief, Ceresney said the SEC expects FCPA violations to become an increasing area of whistleblower tips. He added that in the last fiscal year, the SEC received 149 such tips.

Cooperation is in everyone’s best interest, Ceresney said. It increases the efficiency and effectiveness of the SEC’s investigations, and benefits all market participants.

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