Limiting The FCPA’s Reach — Squaring Two Recent Decisions

by Michael Volkov
Contact

foreignglobeYou can always count on the FCPA paparazzi.  When things are quiet in the FCPA world, they will take a mountain and turn it into a molehill.  They have nothing better to write about; they have nothing better to focus on then two recent district court decisions addressing the issue of jurisdiction over foreign individuals.

The headlines reported that the government had suffered a major setback in its assertion of personal jurisdiction over one defendant.  A closer look at the cases reveals a fact-intensive ruling which appears to reflect the court’s consideration of the defendant’s personal circumstances.

While the two cases reached different results, the principle inquiry in both centered on the defendants’ respective roles in the review and filing of false reports with the SEC.  For FCPA practitioners, the cases represent an important area to develop facts and legal arguments when defending a foreign individual.

In SEC v. Straub, Judge Richard Sullivan denied defendants’ motions to dismiss on personal jurisdiction grounds, finding that the two officers from Magyar Telekom, PLC allegedly directed bribes to Macedonian government officials and made false representations and filings with the SEC.  Judge Sullivan relied on the fact that the Magyar officers made false and misleading statements to the auditors in the preparation of the company’s financial statements.  Specifically, the officers signed management representation letters affirming that Magyar’s books and records were accurate.  Judge Sullivan ruled that the SEC had met its burden of establishing that the exercise of jurisdiction met constitutional due process standards since the defendants’ engaged in conduct designed to violate US securities regulations.

In SEC v. Steffen, Judge Shira Scheindlin granted a motion to dismiss one of the former Siemens officers from the pending case for alleged bribes in Argentina.  Judge Scheindlin noted there was no evidence that the defendant participated directly in the review or preparation of false filings made by Siemens to the SEC.foreign reach

According to the SEC, Steffen violated the FCPA by pressuring another Siemens employee in Argentina to authorize the payment of bribes, resulting in falsified quarterly and annual filings with the SEC.  in rejecting the SEC’s position, Judge Scheindlin noted that Steffen did not authorize the bribes, did not direct a cover-up, or played any role in the false filings.

Judge Scheindlin also cited several other consideration which supported the court’s decision to dismiss, including the defendant’s age (74), his lack of ties to the US, and his lack of language proficiency.  These real-life factors may have been at the bottom of the court’s rationale for dismissing the case.

The impact of these cases is likely to be limited.  Of course, some commentators are arguing that Judge Scheindlin’s ruling is a significant limitation on the government’s civil enforcement authority.  Such a view ignores the facts underlying the decision, and the numerous decision upholding the government’s broad enforcement powers.

The government continues to exercise broad criminal authority and there is nothing to suggest that FCPA enforcement will be limited by this decision.

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.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

Written by:

Michael Volkov
Contact
more
less

The Volkov Law Group on:

Readers' Choice 2017
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 using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*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.
Feedback? Tell us what you think of the new jdsupra.com!