The Securities Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) share the responsibility of enforcing the Foreign Corrupt Practice Act (FCPA) and its provisions. Investigation, prosecution, and penalization of FCPA violations is possible through the joint effort of these two agencies, along with the cooperation of other regulatory and foreign agencies. For a quick review of FCPA enforcement, penalties, and resolutions, please read on.
Enforcement by the SEC
The SEC Division of Enforcement has published an Enforcement Manual which establishes the procedures and principles which govern how investigations and the filing of civil charges are to be carried out. Upon the discovery of an FCPA violation, the SEC refers to the “Enforcement Manual” in order to determine the action or actions that need to be taken in each specific case.
The SEC becomes aware of illicit business practices by way of a number of means:
- Company reports
- Preliminary or proactive investigations
- Tips provided by other offices or agencies
- Trade publications
- Whistleblowers or informant tips
- Information that surfaces during other investigations
- …and other methods of discovery.
The details of the alleged offensive conduct are then evaluated to determine whether or not to pursue investigative actions. The SEC will consider what regulations or provisions are alleged to have been violated, the nature of the alleged violation, the scope and reach of the alleged violation, whether the alleged violator has a past history of similar offenses, whether or not the alleged violation might be better handled by another agency or authority, and other similar factors.
When the SEC makes the decision to perform an investigation of suspicious or fraudulent foreign business affairs, the investigation may take place either formally or informally. If a formal order of investigation is issued, investigative subpoenas are used to acquire testimony and documents which provide incriminating evidence. In the case of an informal investigation, no such subpoena is issued or necessary.
Enforcement by the United States Department of Justice
When the DOJ becomes aware of suspicious foreign business transactions, it relies upon the Principles of Federal Prosecution and the Principles of Federal Prosecution of Business Organizations, for determining how to handle cases against individuals and corporations. These guidelines are established in Chapter 9-27.000 and 28.000 of the U.S. Attorney’s manual, and they assist DOJ prosecutors in determining whether or not to pursue prosecution, in applying the appropriate charges against the alleged violator, and in developing plea-bargaining options.
In the decision whether or not to prosecute and determining the appropriate penalties for the offense, the DOJ considers factors similar to those which the SEC takes into consideration:
- The scope or reach of the offense
- The grievousness of the offense
- The degree of the offender’s culpability
- Prior criminal charges and convictions
- The offender’s willingness to assist with the investigation
- …and more
The DOJ handles each FCPA violation on a case by case basis. The factors and specifics of each violation determine to what degree the DOJ prosecutes the offenders, whether individuals or on a corporate scale.