FCPA Enforcement Actions Down, Declinations Up

Foreign Corrupt Practices Act (FCPA) enforcement cases have been down this year and they may be down in part because of a rise in the number of declinations.


That’s according to a report from Miller & Chevalier.

The second quarter of 2015 saw relatively few resolved FCPA enforcement actions, which followed a similarly slow first quarter of the year.

Including the five FCPA actions brought in the second quarter of 2015, federal enforcement officials have brought eight resolved enforcement actions to date this year, the lowest mid-year total in a decade.

“This slow-down seems to be attributable in part to a greater emphasis on declinations by the U.S. enforcement agencies, particularly the U.S. Department of Justice,” the report finds. “However, coupled with this drop in resolved enforcement is also an apparent decline in newly disclosed FCPA investigations.”

“Caution should be taken when making inferences about current enforcement levels though, as the statistics for any given quarter are not necessarily indicative of larger trends and the pace of enforcement frequently picks up as the year goes on. For example, in the fourth quarter of 2014, the FCPA enforcement agencies resolved 16 actions, which amounted to half of all the resolved actions that year.

The report found that the drop in resolved enforcement this year, particularly on the Department of Justice side, corresponds with a prominent increase in declinations over the same time period last year.

The Department’s decision not to bring parallel FCPA dispositions alongside several SEC enforcement actions this year appears to reflect a conscious Department strategy to more frequently decline enforcement, where appropriate, the authors said.

Miller & Chevalier identified nine declinations in the first half of 2015, a tally that already approaches the total number of known declinations for 2014 and is on pace to match or exceed every other year on record except 2013.

The report identified only one FCPA investigation initiated by the enforcement agencies this past quarter, bringing the total for the year to four.

“While these totals appear low when compared against known investigative activity from recent years, it is too early to tell whether they suggest a decline in investigations initiated on the part of the agencies,” the report found.

According to the report, the low number of known investigations might suggest that many companies have implemented stronger compliance mechanisms.

“A more likely explanation is that companies are reluctant to disclose a government investigation if they do not have to, especially if they are conducting a confidential internal investigation and cooperating in an attempt to gain credit from the agencies,” the authors wrote. “This reduction could also indicate that the agencies are simply initiating fewer cases than they have in years past, that companies are being more selective in what they choose to voluntarily disclose to U.S. enforcement authorities, and/or that companies are taking a more narrow view of what types of investigations are material enough to warrant reporting in a securities filing.”

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