Playing With Ralph Lauren: A Fair Settlement?

by Michael Volkov
Contact

laurenThe FCPA Paparazzi has been at it again – it is fascinating to watch the reaction of practitioners and commentators in the FCPA arena.  You can usually find someone who will agree with any position you want to take.  Paparazzi members are usually all over the map, trying to differentiate their position, their take on the issue, so as to carve out a unique and valuable role in the blogosphere.

The Ralph Lauren settlement is the latest grist for the mill.  For many companies it represents a worst case scenario – a voluntary disclosure for FCPA violations in a single country, Argentina, turns into a global investigation and a civil penalty, and two non-prosecution agreements, one with the SEC and one with the DOJ.

Some have questioned whether the government played fair with Ralph Lauren.  It is hard to second guess Ralph Lauren’s judgment, especially since they were so ably represented by one of the premier practitioners, Tom Hanusik (who I personally know and respect).

Setting aside the FCPA Paparazzi arguments floating in the blogosphere, there are two important take-aways from the Ralph Lauren settlement.

First, the decision by a company to cross into the Justice Department’s hallways and make a voluntary disclosure is a very difficult calculation which requires a balancing of costs and benefits.  The benefit is a reduced penalty.  The cost, however, is determined by multiplying the risk of being caught if the company does not disclose the matter, along with the higher penalty when the matter is not disclosed.

As I have argued for a long time there needs to be more certainty to this calculation.  The Antitrust Division adopted guidelines for penalty reductions to companies which disclose and cooperate their conduct in cartels.  Prosecutors in the 94 judicial districts in the United States hand out plea agreements all the time with defined benefits, and they usually have guidelines and committees to ensure that disclosure and cooperation benefits are awarded to companies or individuals in a consistent manner.lauren3

For some reason, when it comes to FCPA violations, the government is unwilling to define in advance how a company will benefit from voluntary disclosure.  To the extent this leads to uneven settlements, or inconsistent standards, the administration of FCPA justice is undermined.

Second, while the SEC has adopted cooperation guidelines which can result in a non-prosecution agreement, the SEC’s cooperation program has very little utility unless the Justice Department agrees to the same result.  For example, if a company wants to cooperate with the SEC, the potential carrot of a non-prosecution agreement is of little value unless and until the Justice Department agrees not to prosecute the company or the individual.

In a sense, the SEC wants to act like a prosecutor but does not have the magic wand needed to exercise powers normally handled by prosecutors.  I have always questioned the value of the SEC’s cooperation program because it is always limited by the Justice Department’s role and actions in a particular case.

lauren2When all is said and done, the Ralph Lauren case breaks no new ground, nor does it offer any new enforcement or cooperation incentives.  It was a case which was handled consistent with the DOJ/SEC FCPA Guidance, and only underscored the need for defining terms of cooperation and specific benefits for companies and individuals to bring some clarity to an otherwise opaque settlement process.

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.