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Fox’s top five SEC actions in 2015 (with Tom’s practice hints)

2015 continued the trend of FCPA enforcement actions brought by the SEC with no parallel DOJ enforcement action. As you might expect, these SEC enforcement actions turned on violations of the FCPA accounting provision, either the books and records or the internal controls provisions.

Here are my top five:

BNY Mellon: Hiring Children and Other Relatives Can Be an FCPA Violation

Clarifying once and for all that hiring of sons, daughters, and even nephews of foreign government officials can be a violation, the SEC brought what will most probably be the first of several FCPA enforcement actions where banks hired close family relatives to obtain or retain business. Practice Hint — If a close family relative cannot meet your hiring standard, there’s probably not a business justification for the hire.

BHP: High-Risk Hospitality

BHP Billiton was fined the maximum for an accounting provisions violation for its failures in corporate hospitality for the 20008 Beijing Olympics. For any company planning high-dollar hospitality spends for the 2016 Brazil Olympics, this enforcement action lays out what you should and should not do in your compliance program. This is also true for any major sporting event such as the Super Bowl or the World Cup. Practice Hint — If you have a program that includes high-value entertainment, you actually have to follow the protocol.

Bristol-Myers Squibb: Lessons from Remediation

Bristol-Myers Squibb was yet another U.S. company that came to FCPA grief in China through the operation of a joint venture. Yet the company made a significant come back during the investigation through its remediation, which the SEC’s cease and desist order described. Practice Hint — There is much good information in FCPA settlement documents you can use to benchmark your compliance program.

Hitachi: No Good Deed Goes Unpunished

The Japanese trading firm Hitachi Ltd landed in FCPA hot water for having local partners in South Africa who were members of the ruling African National Congress. The enforcement action is a great reminder that the FCPA covers more than foreign government officials and officials of state-owned enterprises. Political parties are also covered, so part of your corporate social responsibility includes payments to political party front groups. Practice Hint — Monitor not only your foreign business partners to see if government officials join such entities but also check to see if those you previously did due diligence upon, changed status and became government officials.

Mead Johnson: The Importance of Your Internal Investigation

Mead Johnson, performed an internal investigation on its China unit in 2011 and came up with no evidence. The SEC then came knocking and a second investigation turned up FCPA violations. Performing an investigation, finding no FCPA violations, only to have a regulator sitting on your shoulder and later finding such evidence is never good. Practice Hint — Perform adequate internal investigations before the government comes knocking, not after.


Thomas Fox is a contributing editor of the FCPA Blog and a Compliance Week columnist. He’s the founder of the Houston-based boutique law firm A popular speaker on compliance and risk-management topics, Fox is also the creator and writer of the widely followed FCPA Compliance Report. His book Lessons Learned on Compliance and Ethics topped Amazon’s bestseller list for international law. He can be contacted here.

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