Two Recent Decisions Provide Rare Guidance on the FCPA’s Reach Over Foreign Nationals

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Two recent district court decisions have shed light on the reach and scope of the U.S. Foreign Corrupt Practices Act (FCPA) over foreign nationals: SEC v. Straub and SEC v. Sharef. For companies and individuals operating abroad, these cases provide rare judicial guidance on the reach of the FCPA’s anti-bribery and record-keeping provisions. Together, they reaffirm U.S. regulators’ long-standing position that the FCPA has broad applicability to foreign nationals, while also setting the outer limits of the civil scope of the FCPA.

In the first opinion, SEC v. Straub, No. 11 Civ. 9645 (RJS) (S.D.N.Y. Feb. 8, 2013), the court held that foreign nationals who signed false statements that were eventually incorporated into SEC filings were subject to the FCPA. Just as significantly, the court found that the FCPA’s statute of limitations did not run while the foreign national defendants were not physically present in the United States.

Defendants in Straub were three executives of a Hungarian telecommunications company whose stock was traded on U.S. exchanges, Magyar Telekom. In 2005, defendants allegedly engaged in a scheme to bribe public officials in Macedonia. Defendants instructed company officials to record the bribes to Macedonian officials as sham fee-based contracts for consulting and marketing services. During the course of the scheme, defendants also certified to the company’s auditors that the company’s financial records were complete and accurate and that they were not aware of any violations of the law. These certifications were later used in filings with the SEC.

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Topics:  Anti-Bribery, Bribery, DOJ, Enforcement, FCPA, Foreign Nationals, Personal Jurisdiction, Recordkeeping Requirements, SEC, SEC v Sharef, SEC v Straub, Statute of Limitations

Published In: Civil Procedure Updates, General Business Updates, Criminal Law Updates, International Trade Updates, Securities Updates

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.

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