Last month, two federal judges in the Southern District of New York reached differing conclusions about the minimum contacts required for U.S. courts to exercise personal jurisdiction over foreign defendants in civil enforcement cases prosecuted by the Securities and Exchange Commission (SEC) under the Foreign Corrupt Practices Act (FCPA). This alert briefly attempts to harmonize these decisions and offer some practical insights about what they mean for foreign employees of companies – whether foreign and domestic – whose securities are publicly traded in U.S. markets.
As most FCPA observers are aware, the SEC shares overall FCPA enforcement responsibility with the U.S. Department of Justice. Generally speaking, the SEC has civil jurisdiction in cases involving “issuers” (companies with SEC-registered securities or SEC filing obligations) and their personnel, whereas the DOJ has co-extensive jurisdiction in issuer cases and sole jurisdiction both in non-issuer civil cases and in all criminal cases. While it is widely assumed that corporate issuers – whether physically based in the U.S. or not – voluntarily subject themselves to civil FCPA jurisdiction in U.S. courts by virtue of accessing the U.S. capital markets and filing reports with the SEC, substantial doubt exists concerning whether and to what extent foreign employees of such issuers similarly subject themselves to personal jurisdiction in the U.S. courts simply by accepting employment with an issuer. The two recent cases from New York provide rare and useful judicial guidance on that issue.
Please see full alert below for more information.
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