When you run a daily website such as this for 14 years there is sometimes a cycle of coverage.
For instance, over the years November posts typically include the fact that the FCPA “tips” are a minor component of the SEC’s whistleblower program (upcoming) as well as this post questioning – based on the SEC’s own data – whether the SEC even needs a specific FCPA unit.
In fiscal year 2010, the Securities and Exchange Commission created a specialized FCPA Unit (one of only five in its enforcement division “dedicated to particular highly specialized and complex areas of securities law“).
Given that the SEC’s FCPA Unit is only one of five specialized units within the enforcement division, one might think that the FCPA Unit has a heavy workload.
However, based on the SEC’s own enforcement statistics, FCPA enforcement actions comprise a minuscule percentage of its overall enforcement actions.
As highlighted in the below graphic from the SEC’s recent FY2024 Annual Report, FCPA enforcement actions constituted 0% of the SEC’s overall enforcement actions over its past fiscal year. (This number is obviously rounded “down” as the SEC’s did bring two FCPA enforcement actions during its fiscal year (which ends on September 30th a time period different than calendar year 2024 – thus far there have been five FCPA enforcement actions).
The small percentage of FCPA enforcement actions as a total of overall SEC enforcement actions in FY2024 was not an aberration.
In FY2023, FCPA enforcement actions comprised just 1% of the SEC’s overall enforcement actions; in FY2022, FCPA enforcement actions comprised just 1% of the SEC’s overall enforcement actions; in FY2021, FCPA enforcement actions comprised just 1% of the SEC’s overall enforcement actions; in FY2020 FCPA enforcement actions comprised just 2% of the SEC’s overall enforcement actions; in FY2019 FCPA enforcement actions comprised just 3% of the SEC’s overall enforcement actions; in FY2018 FCPA enforcement action comprised just 3% of the SEC’s overall enforcement actions; and in FY2017 FCPA enforcement actions comprised just 4% of the SEC’s overall enforcement actions.
In short, based on the SEC’s own data, FCPA enforcement actions comprise a minuscule percentage of its overall enforcement actions.
What happens in those enforcement actions is also relevant in addressing the question of whether the SEC really even needs a specific FCPA unit.
In any given year, approximately 50% of corporate SEC FCPA enforcement actions are the result of corporate voluntary disclosures. (See here).
Even if an SEC corporate FCPA enforcement action is not the result of a voluntary disclosure, nearly every company the subject of SEC scrutiny cooperates with the SEC. For instance, in the Deere enforcement action the SEC stated:
“[Deere’s] cooperation included providing translations of certain relevant documents, making current and former employees available to the Commission staff, including witnesses located overseas, and timely providing the details of facts developed during its internal investigation, including the sharing of forensic accounting analysis, relevant emails and company documents, and information pertaining to current and former employees.”
Because issuers nearly always cooperate, never once in FCPA history has the SEC (including its FCPA Unit formed in 2010) been put to its burden of proof and when the SEC has been put to its ultimate burden of proof in individual FCPA enforcement actions, it has never prevailed. (See here).
Is the SEC’s FCPA Unit otherwise busy bringing individual FCPA enforcement actions?
Nope not really.
In fact, over the past four years the SEC has brought just one individual enforcement action. (See here).
According to the SEC, “the FCPA Unit has approximately three dozen attorneys and forensic accountants …”.
Given the above dynamics, does the SEC really need three dozen people to (in many instances) process corporate voluntary disclosures and/or otherwise resolve matters against cooperating companies in the general absence of judicial scrutiny? Could these SEC personnel be better allocated to cases that comprise a much larger slice of the SEC overall enforcement pie?
These are serious questions.
And in posing the questions, recognize that the SEC never wanted any part in enforcing the FCPA’s anti-bribery provisions. To learn more about this, see the article “The Story of the Foreign Corrupt Practices.” (See also here including links embedded therein).
