Foreign Corrupt Practices Act – Recent Developments: DOJ and SEC Reach Settlements with Six Companies; SEC Employs Expansive Jurisdictional Theory to Charge Non-Issuer Defendant; Self-Reporting and Cooperation are Rewarded, But Do Not Guarantee Leniency; DOJ and SEC Appear to Retreat from Use of Corporate MonitorsSullivan & Cromwell LLP - November 8, 2010
On November 4, 2010, the U.S. Department of Justice and the Securities and Exchange Commission announced resolutions with six companies for violations of the Foreign Corrupt Practices Act (FCPA), arising principally from the payment of bribes to Nigerian government officials. The companies agreed to pay aggregate criminal penalties of more than $150 million, as well as $80 million in civil penalties, disgorgement, and interest.
The settlements illustrate not only DOJ and SEC’s aggressive and escalating enforcement of the FCPA, but also an expanded jurisdictional reach. The settlements include guilty pleas by two corporations and charges by the SEC against a non-U.S. issuer. In an apparent departure from DOJ’s recent practices, however, none of the settlements required the appointment of a third-party monitor for any of the companies involved.
The resolutions demonstrate that while the DOJ and SEC continue to reward self-reporting of FCPA violations and cooperation in their investigations, these responses do not guarantee lenient treatment. One of the settling companies—Pride International, Inc.—entered into a deferred prosecution agreement, and its subsidiary agreed to plead guilty, even though Pride itself had discovered the bribery, voluntarily and timely reported the misconduct, conducted a thorough internal investigation and compliance review, and engaged in voluntary remediation.