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Tom Fox: Three enforcement weeks to remember

Jay Rosen wondered in December if companies would be more inclined to resolve outstanding enforcement actions under the outgoing Obama administration or wait to see what might happen under a Trump administration. The answer is now clear.

From December 23rd through this week, DOJ and SEC officials have announced nearly $20 billion in fines and penalties. According to the Financial Times, this amount “exceeds the $15.3 billion from all criminal and civil actions in fiscal 2016.”

This massive amount included actions involving some of the world’s most well-known and ubiquitous corporations — Volkswagen, Takata and Rolls-Royce, as well as forex, Medicare fraud and securities violation resolutions.

This time frame has also seen a flurry of criminal actions against individuals, including indictments and guilty pleas.

The Justice Department also filed some equally massive and seminal corporate enforcement actions, including a 198-page civil complaint (pdf) against Barclays. Of course there are still outstanding investigations such as those involving FCPA allegations and Wal-Mart, and potential Goldman Sachs’ involvement with the 1MDB scandal.

The reasons for the settlements and resolutions vary from corporation to corporation but one overriding reason is certainty. In the outgoing administration, companies had a clear understanding about who they were dealing with and what the expectations would be in settlement negotiations. Even now there are few clues about what will happen under the Trump administration.

Another key factor is timing. The aforementioned Wal-Mart and Goldman Sachs matters will have to be vetted and evaluated by an entire new set of leaders at the Justice Department. Even if Jeff Sessions is confirmed and confirmed quickly, the positions of Assistant Deputy Attorney General, the Assistant General for the Criminal Division, and a wide variety of other senior positions will have to be filled. Each of these new positions will have a considerable number of matters on their respective plates so getting up to speed on resolutions may well take some time.

Tying both of these strands together is the markets. The markets want to see both certainty and timing. No matter what the settlement is, once it is announced, it is known and can be reserved and planned for going forward. Companies almost always receive a stock price bump when they resolve outstanding enforcement issues, no matter what the resolution. These past three weeks’ settlements were no different.

Just as 2016 was a year for the FCPA record books, the first two weeks of January 2017 have also produced new Justice Department settlement records.


Tom Fox is a Contributing Editor of the FCPA Blog. He has practiced law in Houston for 30 years. He’s the creator of the award winning FCPA Compliance and Ethics website. He is the Compliance Evangelist. His best-selling seminal book, “Best Practices Under the FCPA and Bribery Act: How to Create a First Class Compliance Program” (available from Amazon here) is widely viewed as one of the top volumes on the nuts and bolts of compliance.

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