A Focus On SEC Individual Actions

first_img2015HitachiNo 2016Key EnergyNo After a wild week or so in 2017 Foreign Corrupt Practices Act enforcement, back to some 2016 FCPA enforcement statistics.This previous post highlighted various facts and figures from 2016 SEC FCPA enforcement actions against issuers.As highlighted in the prior post, of the 24 corporate SEC FCPA enforcement actions from 2016, 7 (29%) have involved, at present, related SEC charges or findings against company employees.In 2016, the SEC charged or found that 8 individuals violated the FCPA. 2010Eni/SnamprogettiNo This is an interesting figure given that between 1977 and 2004 61% of SEC corporate FCPA enforcement actions did indeed result in related charges against company employees.In other words, for most of the FCPA’s history the majority of corporate SEC FCPA enforcement resulted in related individual accountability, but in the SEC’s modern FCPA enforcement program, the vast majority of corporate SEC FCPA enforcement actions have not resulted in related individual accountability despite the SEC’s rhetoric.It is also interesting to analyze the 25 instances since 2006 where an SEC corporate FCPA enforcement action resulted in related charges against company employees.   With the exception of Baker Hughes, Siemens, KBR/Halliburton, Magyar Telekom, Och-Ziff, and General Cable the corporate SEC FCPA enforcement actions resulting in related charges against company employees occurred in what can only be described as relatively minor (at least from a settlement amount perspective) corporate enforcement actions.  These actions are:  Schnitzer Steel, Immucor, Electronic Data Systems, Faro Technologies, Willbros Group, Nature’s Sunshine Products, United Industrial Corp., Pride Int’l., Noble Corp., Alliance One, Innospec, Watts Water, PBSJ and FLIR Systems, SAP, PTC, Nordion, Analogic, and LAN Airlines,Set forth below is a complete list of SEC corporate FCPA enforcement actions since 2006 and whether the corporate enforcement action resulted in any related individual charges. Beginning in October 2014, I publicly invited the SEC to refute these numbers and support its individual accountability rhetoric after the SEC’s FCPA Unit chief publicly stated that my numbers were false, wrong, deeply flawed, etc. (see here). The SEC has not responded and the invitation still stands. 2006Schnitzer SteelYes 2015PBSJYes 2007YorkNo 2016General CableYes 2010TidewaterNo 2013TotalNo 2016Teva PharmaNo 2008AB VolvoNo 2006Oil States Int’lNo 2010TechnipNo 2007Bristow GroupNo 2011Johnson & JohnsonNo 2007TextronNo 2015Bristol-Myers SquibbNo 2008FaroYes 2013Parker DrillingNo 2007El PasoNo 2011RockwellNo 2008SiemensYes 2014BrukerNo 2009Avery DennisonNo 2008WillbrosYes 2016AnalogicYes 2007ChevronNo 2016SciCloneNo 2016Nu SkinNo 2008Con-WayNo 2012PfizerNo 2013Ralph LaurenNo 2007Lucent Tech.No 2010GlobalSantaFeNo 2011ComverseNo 2009United Industrial Corp.Yes 2016GlaxoSmithKlineNo 2010Royal Dutch ShellNo 2011Magyar TelekomYes 2016NordionYes 2008FiatNo 2008Westinghouse Air BrakeNo 2010InnospecYes 2009UTStarcomNo 2016QualcommNo 2010Alliance OneYes 2010ABBNo 2007Akzo NobelNo 2014Layne ChristensenNo 2016SAPYes 2007Baker HughesYes 2009Novo NordiskNo 2016PTCYes 2010DaimlerNo Ignacio Cueto Plaza (associated with LAN Airlines)Yu Kai Yuan (associated with PTC)Mikhail Gourevitch (associated with Nordion)Lars Frost (associated with BK Medical (Analogic)Jun Ping Zhang (associated with CareFx China / Harris Corp).Daniel Och and Joel Frank (associated with Och-Ziff)Karl Zimmer (associated with General Cable)This post focuses on SEC FCPA individual actions historically.Like the DOJ, the SEC frequently speaks in lofty rhetoric concerning its focus on holding individuals accountable under the FCPA.For instance, in November 2016 the SEC’s Director of enforcement stated that “pursuing individual accountability [in FCPA enforcement actions] is a critical part of deterrence.”Likewise in November 2015 the SEC’s Director of Enforcement stated:“Holding individuals accountable for their wrongdoing is critical to effective deterrence and, therefore, the Division considers individual liability in every case. […] The Commission is committed to holding individuals accountable and I expect you will continue to see more FCPA cases against individuals.”Similarly, in November 2014 the SEC’s Director of Enforcement stated:“I always have said that actions against individuals have the largest deterrent impact. Individual accountability is a powerful deterrent because people pay attention and alter their conduct when they personally face potential punishment. And so in the FCPA arena as well as all other areas of our enforcement efforts, we are very focused on attempting to bring cases against individuals.  […] [I]ndividual accountability is critical to FCPA enforcement — and imposing personal consequences on bad actors, including through bars and monetary sanctions, will continue to be a high priority for us.”Since 2000, the SEC has charged 71 individuals with FCPA civil offenses.  The breakdown is as follows.2000 – 0 individuals2001 – 3 individuals2002 – 3 individuals2003 – 4 individuals2004 – 0 individuals2005 – 1 individual2006 – 8 individuals2007 – 7 individuals2008 – 5 individuals2009 – 5 individuals2010 – 7 individuals2011 – 12 individuals2012 – 4 individuals2013 – 0 individuals2014 – 2 individuals2015 –  2 individuals2016 – 8 individualsAs highlighted by the above statistics, most of the individuals charged – 60 (or  85%) were charged since 2006.  Thus, on one level the SEC is correct when it states that individual prosecutions are a focus of its FCPA enforcement program at least as measured against the historical average given that between 1977 and 1999 the SEC charged 22 individuals with FCPA civil offenses.Yet on another level, a more meaningful level given that there was much less overall enforcement of the FCPA between 1977 and 1999, the SEC’s statements represent hollow rhetoric as demonstrated by the below figures.Of the 60 individuals charged with civil FCPA offenses by the SEC since 2006:7 individuals were in the Siemens case;4 individuals were in the ABB case;4 individuals were in the Willbros Group case;4 individuals were in the Alliance One case;3 individuals were in the Maygar Telekom case; and3 individuals were in the Noble Corp. case.In other words, 42% of the individuals charged by the SEC with FCPA civil offenses since 2006 have been in just six core actions.Considering that there has been 122 corporate SEC FCPA enforcement actions since 2006, this is a rather remarkable statistic.  Of the 122 corporate SEC FCPA enforcement actions, 97 (or 80%) have not (at least yet) resulted in any SEC charges against company employees. 2011IBMNo 2016NortekNo 2007Electronic Data SystemsYes 2011Maxwell Tech.No 2011DiageoNo 2006TycoNo 2011TenarisNo 2008FlowserveNo 2015FLIR SytemsYes 2014Bio-RadNo 2013ADMNo 2015BNY MellonNo 2013StrykerNo 2016BraskemNo 2010TransoceanNo 2010Veraz NetworksNo 2012TycoNo 2011AonNo 2007Dow ChemicalNo 2007Delta & PineNo FCPA Institute – Boston (Oct. 3-4) A unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills through active learning. Learn more, spend less. CLE credit is available. 2016NovartisNo 2013PhilipsNo 2015GoodyearNo 2012AllianzNo 2012Eli LillyNo 2013DieboldNo 2012OracleNo 2011Ball Corp.No 2010NatcoNo 2014AvonNo 2009Helmerich & PayneNo 2014Smith & WessonNo Learn More & Register 2010Alcate-LucentNo 2011Watts WaterYes 2014AlcoaNo 2009Nature’s SunshineYes 2012Smith & NephewNo 2009AGCONo 2006StatoilNo 2016AstraZenecaNo 2011Armor HoldingsNo 2010Pride Int’lYes 2015HyperdynamicsNo 2015BHP BillitonNo 2011TysonNo 2009KBR/HalliburtonYes 2016EmbraerNo 2016VimpelComNo 2010Noble Corp.Yes 2016Akamai TechnologiesNo 2007ImmucorYes 2007Ingersoll-RandNo 2010PanalpinaNo 2016Las Vegas SandsNo 2012OrthofixNo 2016LAN AirlinesYes 2016Johnson ControlsNo 2015Mead JohnsonNo 2009ITT Corp.No 2012BiometNo 2016AbInBevNo 2013Weatherford Int’lNo 2014HPNo 2010UniversalNo 2016JPMorganNo 2010GE/IonicsNo 2016Och-ZiffYes 2010RAE SystemsNolast_img

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