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Volume X, Number 221

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Highlights from the DOJ and SEC’s Updated FCPA Resource Guide

On July 3, 2020, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) released the second edition of their joint Resource Guide to the U.S. Foreign Corrupt Practices Act (the Guide). The second edition does not break new ground. The revisions consist primarily of incorporating new DOJ guidance into the Guide, an expanded discussion of successor liability, new sections on forfeitures and coordinated resolutions, and guidance related to new case law, all of which are addressed in this alert.

Incorporating New DOJ Guidance

The second version of the Guide incorporates discussion of policies that the DOJ has issued since the Guide was last updated. Specifically, it provides a summary of the policies and how they have been applied by the DOJ.

For example, the Guide now includes a section on the DOJ’s FCPA Corporate Enforcement Policy (CEP). The CEP provides that when companies voluntarily self-disclose misconduct, fully cooperate with the investigation, and institute timely and appropriate remedial measures, the DOJ will have a presumption of declining prosecution or, depending on the circumstances, will provide a recommended reduction in penalties. The Guide also provides three recent examples of CEP declinations.

Similarly, the Guide now includes a summary of the DOJ’s Memorandum on the Selection of Monitors in Criminal Division Matters. This policy provides guidance regarding whether the DOJ will impose a monitor as part of a corporate resolution, which broadly includes weighing (1) the potential benefits of a monitor for the company and the public and (2) the cost and impact of the monitor on the company.

Discussion of Successor Liability

The Guide includes revised commentary regarding corporate successor liability. The Guide recognizes that in the mergers and acquisitions context, “robust pre-acquisition due diligence” may not always be possible.  Under the revised guidance, a path to declination remains open. In those cases, the DOJ and SEC will consider whether the post-acquisition due diligence is thorough, whether an effective compliance program has been implemented, and whether the conduct was voluntarily disclosed in a timely manner. This new section also includes updated examples of enforcement cases involving successor liability.

New Sections on Penalties

DOJ and SEC added two new sections to the “FCPA Penalties, Sanctions and Remedies” chapter of the GuideThe first addresses forfeitures and disgorgements. It briefly notes that the purpose of disgorgement is not punishment, but an equitable remedy to prevent the perpetrator from profiting by its own misconduct. The new section cites the U.S. Supreme Court case SEC v. Liu for the proposition that that disgorgement is permissible when the amount does not exceed net profits. It also notes the Supreme Court’s decision in Kokesh v. SEC indicating that the five-year statute of limitations under 28 U.S.C. § 2462 applies to the civil disgorgement remedy.

The second addition describes the U.S. regulators’ policy of avoiding duplicative penalties for the same conduct in cases where foreign authorities are resolving cases with the same company. It outlines the factors that determine whether and how much credit should be given for penalties imposed in a coordinated resolution. These include the egregiousness of the company’s misconduct, statutory mandates, risk of delay of final resolution, and the adequacy and timeliness of the company’s disclosure and cooperation with DOJ.

New Case Law 

The Guide adds analysis of two cases: Esquenazi and Hoskins. The FCPA broadly defines foreign officials to include officers or employees of a “department, agency, or instrumentality of a foreign government.” The Guide’s inclusion of the Eleventh Circuit Esquenazi factors to determine if an entity is an “instrumentality” is significant because the FCPA does not define “instrumentality.” In the absence of a controlling definition, Esquenazi provided a “non-exhaustive list” of factors to determine whether the government controls an entity and whether the entity performs a function the government treats as its own. The Guide carefully notes that numerous courts, including the court in Hoskins, have approved final jury instructions providing a similar non-exclusive list of factors to be considered.

The Guide also uses Hoskins to demonstrate the government’s broad view of jurisdiction over agents. Specifically, the Guide includes the ruling from the Second Circuit in Hoskins which concluded that those not directly covered by the FCPA could not be held liable for aiding and abetting or conspiring to violate the FCPA anti-bribery provisions. The Guide also points out that there is at least one conflicting ruling which rejected the reasoning in Hoskins, and that Hoskins speaks only to the anti-bribery provisions and not the accounting provisions of the FCPA which apply to “any person.”

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume X, Number 191


About this Author

Cuneyt A. Akay Anti-Corruption Attorney Greenberg Traurig Denver, CO

Cuneyt A. Akay is an anti-corruption lawyer focused on helping clients comply with the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act. Cuneyt designs, builds, and implements effective compliance programs for clients around the world. Cuneyt’s experience includes conducting internal investigations, performing compliance risk assessments, handling pre-and post-acquisition compliance due diligence, training staff and third parties on compliance requirements, and assisting in the monitoring and auditing of anti-corruption programs.

Cuneyt also represents clients in complex...

Sandra Gonzalez International Corporate Lawyer Greenberg Traurig Law Firm Austin

Sandra D. Gonzalez focuses her practice on international corporate compliance matters and more specifically, the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act. Sandra assists clients around the world to design, build, and implement anti-corruption compliance policies and procedures consistent with the elements of an “effective compliance program” under U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) guidelines. Sandra has advised clients on corruption issues in an array of scenarios including, assisting with internal investigations, designing and performing compliance assessments and risk assessments, performing compliance due diligence in mergers and acquisitions, training company personnel, and advising on relationships with third parties. Sandra has advised clients in a variety of industries including: telecommunications, real estate, retail, oilfield equipment, financial banking, aerospace, and hospitality. To be sustainable, an anti-corruption compliance program must be practical, flexible and adaptable, so that compliance resources are targeted to high risk areas. Sandra assists clients to tailor a compliance program to meet these goals.

Michael Marinelli, Greenberg Traurig Law Firm, Austin, Washington DC, Corporate Law and International Trade Attorney

Michael X. Marinelli has wide-ranging experience advising clients on the federal regulation of international transactions. He focuses his practice on the Foreign Corrupt Practices Act (“FCPA”), as well as U.S. export control regulations, including the EAR, the ITAR, and the economic sanctions regimes enforced by the Office of Foreign Assets Control (OFAC).

Michael counsels clients in multiple industries, including aerospace, energy, telecommunications, consumer electronics, software and life sciences, on complying the broad array of statutes and...

Adelaida Vasquez Mihu Compliance Attorney Greenberg Traurig Houston, TX

Adelaida focuses her practice on international compliance matters and counsels companies doing business in international markets. Adelaida advises on a host of compliance and transactional due diligence issues arising out of various government regulations, including the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act. In addition to analyzing corruption risks in corporate transactions, she assists clients in designing and building anti-corruption programs, assesses existing anti-corruption programs and advises on post-acquisition integration of anti-corruption programs....

Tyler D. Coombe Litigation Attorney Greenberg Traurig Denver, CO

Tyler D. Coombe is a shareholder in the firm's Litigation Practice and White Collar Defense & Special Investigations Practice, focusing on complex commercial litigation, international law, anti-corruption, corporate internal investigations and compliance, electronic discovery and data management, and labor and employment. As a member of the firm's class action defense team, he has assisted in the defense of numerous wage and hour class actions in state and federal courts across the United States for a Fortune 50 company. Mr. Coombe has also represented major corporate clients in...