Page 79 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

employees, agents, or stockholders for violations of unlawful activity,” and holding that disgorgement
the anti-bribery and the accounting provisions. 374 is permissible equitable relief when it does not
For violations of the anti-bribery provisions, exceed a wrongdoer’s net profits and is awarded for
corporations and other business entities are victims. 380
subject to a civil penalty of up to $21,410 per

violation. 375 Individuals, including officers, directors, Coordinated Resolutions and
stockholders, and agents of companies, are Avoiding “Piling On”
similarly subject to a civil penalty of up to $21,410 In resolving cases against companies, DOJ and
per violation, 376 which may not be paid by their SEC strive to avoid imposing duplicative penalties,
employer or principal. 377 forfeiture, and disgorgement for the same conduct.
For violations of the accounting provisions in DOJ and SEC attempt to similarly credit fines,

district court actions, SEC may obtain a civil penalty penalties, forfeiture, and disgorgement of foreign
not to exceed the greater of (a) the gross amount of authorities resolving with the same company for
the pecuniary gain to the defendant as a result of the same conduct. In a case involving a publicly-
the violations or (b) a specified dollar limitation. The traded Brazilian petrochemical company, DOJ, SEC,
specified dollar limitations are based on the nature Brazilian authorities, and Swiss authorities credited

of the violation and potential risk to investors, one another in imposing fines and disgorgement. 381
ranging from $9,639 to $192,768 for an individual DOJ has coordinated resolutions with foreign
and $96,384 to $963,837 for a company. 378 SEC may authorities in more than 10 cases, and SEC has
obtain civil penalties both in actions filed in federal coordinated resolutions with foreign authorities in
court and in administrative proceedings. 379 at least five. 382 DOJ has memorialized this practice
of coordinating resolutions to avoid “piling on” in
Forfeiture and Disgorgement the Justice Manual, which instructs prosecutors
In addition to criminal and civil penalties, to “endeavor, as appropriate, to coordinate with
companies may also be required to forfeit the and consider the amount of fines, penalties, and/

proceeds of their crimes, or disgorge the profits or forfeiture paid to other federal, state, local, or
generated from the crimes. While the purpose of foreign enforcement authorities that are seeking
a penalty or fine is to punish and deter misconduct, to resolve a case with a company for the same
the purpose of forfeiture and disgorgement is misconduct.” 383 In determining whether and how
primarily to return the perpetrator to the same much to credit another authority, prosecutors are to

position as before the crime, ensuring that the consider, among other factors, “the egregiousness
perpetrator does not profit from the misconduct. of a company’s misconduct; statutory mandates
However, in Kokesh v. SEC, the Supreme Court ruled regarding penalties, fines, and/or forfeitures;
that the civil disgorgement remedy is subject to the the risk of unwarranted delay in achieving a final
same five-year statute of limitations as a penalty resolution; and the adequacy and timeliness of a
under 28 U.S.C. § 2462. Following Kokesh, in SEC v. company’s disclosures and its cooperation with the

Liu, the court again addressed the disgorgement Department, separate from any such disclosures
remedy stating, “[e]quity courts have routinely and cooperation with other relevant enforcement
deprived wrongdoers of their net profits from authorities.” 384

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