Archive for July, 2011
Tuesday, July 26th, 2011
The Securities and Exchange Commission (SEC) whistleblower program provides for rewards for individuals who provide the government with information about violations of the Foreign Corrupt Practices Act (FCPA) of 1977.
The FCPA was enacted in 1977 in an effort to end the practice of multinational corporations obtaining business abroad by bribing foreign officials. The Act covers any U.S. company or citizen doing business abroad. It covers foreign companies — and their directors, officers, stockholders, employees and agents — with reporting and registration requirements under the Securities and Exchange Acts as well as any foreign person or company acting within the United States.
The FCPA makes it unlawful to bribe a foreign government official to obtain or retain business. The Act prohibits U.S. companies and individuals from paying money or any other sort of inducement, including an offer or promise to pay money or anything of value, to a foreign official with the intent to influence a decision or action affecting that company’s business.
A foreign official is defined as “any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.”
The Department of Justice (DOJ) is the chief enforcement agency, with a coordinate role played by the SEC. The DOJ is responsible for all criminal enforcement and for civil enforcement of the anti-bribery provisions with respect to domestic concerns and foreign companies and nationals. The SEC, on the other hand, is responsible for civil enforcement of the anti-bribery provisions with respect to issuers.
The FCPA provides for criminal and civil penalties. The criminal penalties include fines on officers, directors, stockholders, employees and agents of up to $250,000 and up to five (5) years in prison. Meanwhile, corporations and other business entities can face criminal fines of up to $2 million, or alternatively twice the amount of ill-gotten profits. The civil fines under the FCPA include $10,000 against any violating company and individual. Moreover, the SEC may also require a disgorgement of profits.
In the past few years, prosecutions under the FCPA have dramatically increased. The SEC has established an enforcement unit, targeting violations of the FCPA by U.S. issuers. The DOJ has similarly assigned prosecutors and FBI agents exclusively to the FCPA. The federal authorities have also instituted more aggressive investigative tactics in their pursuit of FCPA violations.
The DOJ and the SEC recently settled with Johnson & Johnson (J&J) for $71 million. J&J agreed to pay $21.4 million in criminal penalties as part of a deferred prosecution agreement. J&J additionally settled a related matter filed by the SEC agreeing to more than $48.6 million in disgorgement of profits and pre-judgment interest. The $71 million aggregate settlement by J&J registers as just the 10th largest FCPA-related settlement since 2008.
The top nine FCPA related settlements are as follows: (1) Siemens for $800 million in 2008; (2) KBR/ Halliburton for $579 million in 2009; (3) BAE for $400 million in 2010; (4) Snamprogetti Netherlands B.V. for $365 million in 2010; (5) Technip S.A. for $338 million in 2010; (6) JGC Corp. for $218.8 million in 2011; (7) Daimler AG for $185 million in 2010; (8) Alcatel-Lucent for $137 million in 2010; and (9) Panalpina for $81.8 million in 2010.
If you have knowledge of an FCPA violation or other securities law violations and would like to discuss the possibility of a whistleblower award under the SEC or CFTC whistleblower programs, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.
Tags: Department of Justice, DOJ, FCPA, FCPA violation, Foreign Corrupt Practices Act, SEC, Securities and Exchange Commission whistleblower program, Securities law violations, whistleblower, whistleblower award, whistleblower reward
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