Video 5: Why Do the DOJ and SEC Both Enforce the FCPA?

||Video 5: Why Do the DOJ and SEC Both Enforce the FCPA?

Video 5: Why Do the DOJ and SEC Both Enforce the FCPA?

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Confused why both the DOJ and SEC are involved with FCPA enforcement? Tom succinctly breaks down the FCPA into two parts

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Confused why both the DOJ and SEC are involved with FCPA enforcement? Tom succinctly breaks down the FCPA into two parts: Anti-Bribery Provisions – which criminalizes the conduct of making bribes and the Books and Records and Internal Controls Provisions — requiring companies to maintain accurate books and records. The Department of Justice enforces the anti-bribery provisions of the FCPA, as this violation is a criminal offense. While the FCPA accounting provision applies only to issuers or those that must file with the SEC, thus these violations are enforced by the Securities and Exchange Commission.

FCPA Enforcement

The FCPA has two parts:

  1. Anti-Bribery Provisions – criminalize the conduct of making bribes (or offers to bribe) to non-U.S. officials whether made directly or through a third party. This is enforced by the Department of Justice and
  2. Books and Records and Internal Controls Provisions – require companies subject to the FCPA to maintain accurate books and records and adequate accounting and financial controls. This is enforced by the Securities and Exchange Commission.

The Department of Justice

The Department of Justice enforces the anti-bribery provisions of the FCPA. Violation of the FCPA is a criminal offense and can subject an individual to jail, in addition to fines and penalties.

The Securities and Exchange Commission

The Securities and Exchange Commission enforces what is commonly known as the FCPA accounting. These FCPA accounting provisions apply only to issuers; that is companies that list stock on American-based exchanges or those that must file with the SEC so that are otherwise required to keep accurate books and records. A company may be liable for a violation of the FCPA accounting provisions if its books and records:

  • Omit a transaction, such as a bribe, illegal commission or other improper payment or
  • Are disguised to conceal improper activity or fail to identify the improper nature of a recorded transaction.