Non-U.S. companies traded on the United States stock exchanges, take notice: you may be receiving increased attention from the U.S. Securities and Exchange Commission’s (“SEC’s”) anti-bribery arm.
This client alert by members of Reed Smith’s anti-corruption team explains how recent statements by the SEC’s leadership – including the new Chief of the SEC’s FCPA Unit – signal the American regulator’s intent to “level the playing field” by stepping up its investigations and enforcement of companies worldwide, and what non-U.S. issuers can do to prepare.
The Foreign Corrupt Practices Act (“FCPA”)1 is a U.S. law prohibiting all “issuers” – U.S. and foreign public companies listed on stock exchanges in the United States, or that are required to file periodic reports with the SEC – from making or promising to make corrupt payments to non-U.S. government officials to obtain or retain business, and requiring all issuers to maintain accurate books and records and reasonable internal controls. The SEC is responsible for civil enforcement of the FCPA over issuers and anyone acting on their behalf, with potential penalties in the millions of dollars.
In recently naming Charles E. Cain as Chief of the SEC’s specialized FCPA Unit, elevating him from an Acting Chief role he’d held since April 2017, the SEC’s announcement2 highlighted five enforcement items from Mr. Cain’s résumé – none of which involved a U.S.-based corporation or individual.3
Given the many noteworthy actions that the SEC brought against U.S.-based corporations during the years when Mr. Cain was Deputy Chief and then Acting Chief of the 40-attorney FCPA Unit, the omission of any actions against U.S.-based entities and the inclusion of only actions against non-U.S. entities in the SEC’s announcement of Mr. Cain’s promotion sends a potential message about the Unit’s priorities going forward.