The question our readers most want answered — after we tell them bloggers have no way to predict Powerball winners — is, Who’s covered by the Foreign Corrupt Practices Act? It’s always the jurisdiction thing — and for good reason. How, for gosh sakes, does the FCPA reach from Washington to the four corners of the earth and back again? It’s unnatural — until you know how it works. Then it’s just plain terrifying.
So to keep the FCPA’s jurisdiction straight, we take inspiration from the Justice Department. That means we think about it by categories. Here’s how:
Category One: Issuers. An “issuer” is a corporation that has issued securities that have been registered in the United States or who is required to file periodic reports with the SEC. See 15 U.S.C. §§ 78c(a)(8), 78dd-1(a). All issuers are covered by the FCPA, wherever they are.
Category Two: Domestic concerns. A “domestic concern” is any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States, or a territory, possession, or commonwealth of the United States. See § 78dd-2(h)(1). All domestic concerns are covered by the FCPA, wherever they are. Helpful hint: If your lawyer calls you a domestic concern, it’s more likely to be a warning than an insult.
Category Three: Parent companies. U.S. parent corporations (issuers or domestic concerns) may be held liable for the acts of their foreign subsidiaries if they (the U.S. parent) authorized, directed, or controlled the activity in question, as can U.S. citizens or residents, themselves domestic concerns, who were employed by or acting on behalf of such foreign-incorporated subsidiaries.
Category Four: Foreign companies and individuals. A foreign company or person is subject to the FCPA if it, he or she takes any act in furtherance of a corrupt payment while within the territory of the United States. See § 78dd-3(a), (f)(1). When a foreign company or person acts on U.S. soil, the FCPA applies. Note, however, that the Justice Department interprets Category Four much more expansively. The government’s position –untested in court — is that there’s FCPA jurisdiction whenever a foreign company or national (wherever they are) causes an act to be done within the territory of the United States by any person acting as that company’s or national’s agent.
Those are the categories. As we said, they’re inspired by the Justice Department — specifically the United States Attorneys’ Manual, Title 9, Criminal Resource Manual §1018 “Prohibited Foreign Corrupt Practices” (November 2000).
And now, back to our Powerball picks.
View CRM §1018 here.