The U.S. State Department has regulated international defense trade brokering activities involving the United States since 1997. The brokering rules are widely viewed as inscrutable and elastic, even to the most seasoned practitioners. And though the State Department has long promised much needed regulatory clarification, little has been forthcoming. Meanwhile, in May 2011, the State Department entered into a consent agreement with global defense giant, BAE Systems plc, to settle alleged brokering violations. The settlement, which is record breaking both in terms of penalties and the volume of misconduct alleged, has sent shock waves throughout the defense industry. But while the settlement documents raise numerous interpretive questions about the brokering rules, they provide scant, if any, meaningful guidance. This article examines the BAE case and its implications for parties subject to the U.S. defense brokering rules.
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