In the Crossfire Why Private Equity Firms, Investment Funds & Their Managers Should Beware of the Foreign Corrupt Practices Act


Lance Armstrong and the world of competitive cycling has come under great scrutiny in recent days with the domination of the U.S. Postal team now undermined by the systematic doping that appears to have helped spur the team to victory year after year. Cheating, or getting an unfair edge over the competition, is antithetical to the American public’s view of sports, where an equal playing field is considered the ethical baseline. The Foreign Corrupt Practices Act (FCPA), which prohibits commercial bribery of foreign government officials, is the U.S. Anti-Doping Association’s equivalent for U.S. firms engaged in overseas investment activity. Designed to eliminate corruption in the global marketplace, the FCPA has become a priority enforcement tool for the U.S. government to ensure a level commercial field by punishing the rule-breakers.

It is long past time for private equity firms and investment funds to learn the rules. In physics, it is said that to every action there is always an equal and opposite reaction. This maxim applies with equal force to the private investment industry’s increasing expansion into emerging markets in underdeveloped economies. While this extraterritorial activity has exposed hedge funds and private equity firms to a host of lucrative investment opportunities, it has also exposed the firms and their senior managers to potential criminal liability under the FCPA.

Originally published in the Wall Street Lawyer - May 2013 Volume 17 Issue 5.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BakerHostetler | Attorney Advertising

Written by:


BakerHostetler on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.