FCPA Trends and Patterns

Danforth Newcomb and Philip Urofsky of Shearman and Sterling have updated their  FCPA Digest of Cases and Review Releases and Recent Trends and Patterns in FCPA Enforcement (.pdf).

In addition to a general increase in FCPA enforcement activity in recent years, four distinctive new trends can be seen. First, both the frequency and severity of enforcement have increased in recent years. While there are fluctuations over short periods, over the past five years there is clearly the trend toward more aggressive investigations and enforcement proceedings by the DOJ and the SEC, including a steady increase in proceedings brought against individuals. These proceedings are also resulting in more severe punishments in the form of fines for corporations and jail time for individuals.

The second trend is the use of more creative methods in resolution of criminal cases. In recent years, the DOJ has increasingly used non-prosecution (or deferred prosecution) agreements in FCPA matters apparently to provide a reward to defendants who voluntarily disclose and cooperate in the DOJ’s investigation and, of course, to provide an incentive to other companies to do likewise.

Third, the DOJ and the SEC have increasingly included a requirement that a company retain an independent compliance monitor as part of any settlement – whether it be a plea, deferred prosecution, or civil settlement. In the past year, however, the DOJ has issued guidance on the circumstances in which a monitor is appropriate and the manner in which one should be selected. In addition, in several recent cases, the DOJ has chosen not to impose a monitor apparently in recognition of the company’s own credible remedial steps.

The final development is a spike in enforcement actions resulting from self-reporting of FCPA problems discovered as part of merger or acquisition activity. This may be somewhat of a self-fulfilling prophecy as more parties are worried about successor liability arising from prior corrupt conduct by the acquired company.

Time may show each of these trends to be mere anomalies in a larger anti-corruption movement, but at this point, one thing is clear: this is a period of rapid change in anticorruption enforcement activity.