Recent Trends and Patterns in FCPA Enforcement

After a banner year in 2016 that included a record twenty-seven corporate enforcement actions, the two U.S. enforcement agencies, the DOJ and the SEC, continued this momentum over the course of the first three weeks of 2017. During this short span, the agencies brought six corporate enforcement actions and charges against six individuals. Following this spurt, however, there were no corporate FCPA enforcement actions until the declination with disgorgement in Linde announced on June 20, which was subsequently followed by the declination with disgorgement in CDM Smith announced ten days later on June 30. Although it is tempting to view this as a potential shift in enforcement practices under the Trump administration, the rest of 2017 will be more indicative of whether we are on the cusp of a new era of FCPA enforcement.

Among the highlights thus far from 2017 were:

  • Eight corporate enforcement actions with total sanctions of $272 million. This represents a significant drop from the twelve enforcement actions with total sanctions of $920.8 million that had been brought at this time in 2016;
  • Much like the VimpelCom penalty in 2016, the Rolls-Royce penalty greatly distorts the picture, raising the average corporate sanction for 2017 to $34 million, whereas the true average, with outliers excluded, is slightly over half of this figure ($16.4 million). The median sanction of $12.1 million is broadly in line with those from 2015 ($13.4 million) and 2016 ($14.4 million);
  • The Supreme Court's decision in Kokesh has the potential to dramatically alter the way that the SEC brings FCPA enforcement actions; and
  • Two of the year's enforcement actions have arisen out of breached DPAs, a phenomenon that we may see more of given the large number of DPAs that have been entered into since FCPA enforcement actions significantly increased in the late 2000s.

Enforcement Actions and Strategies Statistics

Thus far in 2017, the DOJ and the SEC have resolved eight FCPA corporate enforcement actions: Mondelez, Biomet, SQM, Rolls-Royce, Orthofix, Las Vegas Sands, Linde, and CDM Smith.

In recent years, the SEC has been far more active than the DOJ in bringing FCPA corporate enforcement actions. In the first half of 2017, however, the DOJ has been slightly more active than the SEC, bringing six enforcement actions as compared to the SEC's four. In two matters (Biomet and SQM), the SEC and DOJ brought parallel enforcement actions, while the other enforcement actions involved standalone enforcement actions brought by the SEC (Mondelez and Orthofix) or the DOJ (Rolls-Royce, Las Vegas Sands,1 Linde, and CDM Smith).

Of the FCPA enforcement actions against individuals, 2017 has seen nine individuals charged by the DOJ and the SEC in connection with four separate FCPA enforcement actions. The DOJ has also been the more active agency for these individual enforcement actions, having brought seven of the nine. It is worth noting, however, that only five—each brought by the DOJ—are truly new (Bahn, Sang, Harris, Woo, and Chi). The remaining two DOJ cases (Comerma and Beech) are outgrowths of the 2015 case of Rincon, while the two SEC cases (Cohen and Baros) are outgrowths of the 2016 Och-Ziff corporate enforcement action.

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Footnote

1 The DOJ's enforcement action in Las Vegas Sands came approximately eight months after the SEC brought a similar enforcement action in April 2016.

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