Whether unexpected or the result of an internal investigation, an enforcement action by the Securities and Exchange Commission (SEC) or Department of Justice (DOJ) can burden even a prepared organization and result in serious financial consequences. With the number of Foreign Corrupt Practices Act (FCPA) enforcement actions proliferating across industry types and organization sizes, and fines growing larger each year, it is increasingly important to execute investigations with speed and efficiency.
The FCPA has two main components: anti-bribery provisions and record keeping and internal controls provisions. The anti-bribery provisions were designed to prohibit companies and individuals from providing anything of value to foreign officials in order to obtain business, to retain business, or to obtain a business advantage. The record keeping and internal controls provisions address the need to keep accurate books and records, to establish internal controls, and importantly to have those internal controls followed. The SEC and DOJ both enforce this law and can impose penalties including fines, restrictions on the ability to participate in activities of a public company and even prison sentences for individuals. The severity of penalties has increased in the last 15 years, and enforcement has snowballed into ever more investigations and a wider range of what is considered questionable conduct.
Fortunately, recent decisions by the SEC and DOJ appear to indicate willingness among the agencies to mitigate or reduce fines if companies investigate quickly and thoroughly, and transparently share information with the investigating body. This type of cooperative approach may significantly impact the financial fallout of such an investigation, but must be approached carefully in order to meet the basic investigative standards required by the regulators.
In a recent article in the National Law Journal, Craig Earnshaw, Senior Managing Director within the London office of FTI Consulting’s Technology practice and Brian Ong, Senior Managing Director within the NYC office of FTI Consulting’s Forensic and Litigation Consulting practice shared their collective insights on regulatory cooperation and self-reporting. For their thoughts and key considerations for corporations that are considering self-reporting, read the National Law Journal article.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.