CORPORATE CRIME REPORTER
Corporate Crime Bar Gives Thumbs Up to Morgan Stanley FCPA Declination
26 Corporate Crime Reporter 23, May 31, 2012
Last month, Garth Peterson, a former Morgan Stanley managing director in China, pled guilty to a crime under the Foreign Corrupt Practices Act (FCPA).
The Securities and Exchange Commission (SEC) also brought and settled an action against Peterson.
But corporate crime defense bar stood up and noticed the case, not because of Peterson was charged and pled guilty.
They noticed because his corporate boss – Morgan Stanley – was not charged.
“The significance of the Department’s and the SEC’s announcements lies not in the charging of Peterson for his alleged misconduct, but in the agencies’ statements that they had declined to bring an enforcement action against Morgan Stanley related to Peterson’s conduct based, in part, on Morgan Stanley’s pre-existing compliance program as well as on its self-disclosure and robust cooperation,” wrote Debevoise partners Paul Berger, Sean Hecker, Bruce Yannett and associate Elizabeth A. Kostrzewa in an FCPA update released last week.
The Department declined to bring an enforcement action against Morgan Stanley after considering “all available facts and circumstances” including Morgan Stanley’s pre-existing compliance program.
The Debevoise team wrote that although the Department has in the past emphasized that the “existence and implementation” of a compliance program is a “significant” factor in whether to charge a corporation with an FCPA violation, it has not been the Department’s practice to announce publicly its declination decisions.
“This is in large part due to the Department’s concerns that a company or individual that has been investigated and not prosecuted would be prejudiced by revelation of the fact of the investigation itself,” the Debevoise team wrote. “Thus, the Department’s announcement in the Peterson case that it had declined to bring an enforcement action against Morgan Stanley, and its publicly crediting the company’s pre-existing compliance program in this manner, is an
objectively significant development.”
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