Last week saw a significant Foreign Corrupt Practices Act (FCPA) enforcement action against employees of a US broker-dealer, who are alleged to have bribed a Venezuelan government official to direct brokerage to the firm. The case is one of only a handful of financial services industry FCPA enforcements and is a reminder of the government’s interest in extending the law’s reach to all economic sectors. This client publication summarizes recent events and provides suggestions on how the banking and finance sector can manage its FCPA risks.

Background

On May 7, 2013, the DOJ and SEC announced charges against two Miami-based brokers—Tomas Alberto Clarke Bethancourt and Jose Alejandro Hurtado—at the New York financial services firm Direct Access Partners LLC (DAP). The government’s investigation appears to have originated in a 2010-2011 SEC examination of DAP that ultimately resulted in Clarke and Hurtado being accused of paying bribes worth at least $5 million to Maria de los Angeles Gonzalez de Hernandez, a senior official at the Venezuelan state economic development bank, Banco Desarrollo Económico y Social de Venezuela (BANDES), in exchange for diverting valuable financial trading business to DAP. As part of the scheme, Hurtado and Clarke received millions of dollars in salary, bonuses and finder’s fees, a portion of which were funneled to Gonzalez either by way of Hurtado’s spouse or through a Panamanian entity controlled by Clarke. The charging documents suggest that officials were initially suspicious of Hurtado because he was among the highest earning employees at the firm, receiving approximately $4.4 million in compensation in 2010 after being employed by DAP for only one full year.