Echoes from the ABA White Collar Crime Conference 2022 in San Francisco

On March 3, 2022, white collar practitioners gathered for an ABA conference session on recent Foreign Corrupt Practices Act (“FCPA”) developments and government priorities with Charles Cain, Chief of the FCPA Unit at the Securities and Exchange Commission (“SEC”), and David Last, Chief of the FCPA Unit within the Fraud Section of the Department of Justice (“DOJ”). Although both unit chiefs cited a lower number of total FCPA enforcement actions in 2021 compared to 2020, Cain added that the SEC settled for a similar amount of total monetary relief.  Despite a lower number of actions against corporations, Last called 2021 a “great year” and predicts 2022 will be even stronger. DOJ’s recent enforcement patterns show a focus on Latin America, and Last did not suggest a modification of interest in that region.

Ongoing pandemic-related challenges are not likely to deter the SEC or DOJ from continuing to execute FCPA enforcement priorities. Cain and Last both acknowledged that the early days of the pandemic presented challenges with court logistics and grand jury commencement. They also suggested that gathering evidence, especially from foreign partners, has been tougher in the COVID-19 environment. At the same time, they noted that defense counsel are now well-adapted to remote proceedings, and in-person meetings are ramping up. While hybrid investigations and enforcement proceedings are expected to continue, Cain and Last agreed that conducting hearings, proffers, and settlement discussions in-person has undeniable benefits. Cain and Last are both aiming for higher penalties and increased numbers of individual and corporate FCPA cases in 2022.

DOJ and SEC Priorities in 2022

Coordinated Enforcement and Resolutions. Consistent with the five pillars erected by the United States Strategy on Countering Corruption issued by the White House in December 2021, the DOJ and SEC will continue to focus on coordinating with domestic and international agencies and law enforcement, contributing to multilateral anticorruption architecture, and leveraging foreign assistance resources to advance policy goals. The panel described two modes of coordination:  (1) a $2.9 billion coordinated resolution among the DOJ, SEC, and foreign authorities in the United Kingdom, Singapore, Malaysia with a global financial institution for a conspiracy involving $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain bond underwriting deals; and (2) a $475 million settlement with the SEC and DOJ in the United States and United Kingdom for fraud related to financing an $850 million loan for a fishing project in Mozambique.

Further, future coordinated resolutions with new authorities should be expected, per Last. Cain flagged the Organization for Economic Cooperation and Development (“OECD”) Working Group on Bribery in International Business Transactions’ first of four meetings for the year convening March 7–10, 2022, where the OECD will work to enhance global coordination infrastructure.  Prosecuting complex international schemes requires collaboration with foreign authorities, but both speakers warned that coordinated enforcement also requires behind-the-scenes collaboration and informal information gathering.  “Self-reporting to a single authority is long gone,” according to Cain. Last reminded the audience of the DOJ’s anti-piling-on policy, which strives to prevent duplicative enforcement and collection of penalties for the same misconduct.

In exchange for self-reporting to an array of enforcement authorities, participating in coordinated actions presents potential long term benefits and may assist with ensuring the preclusive effect or finality of a resolution.

Focus on Individual Misconduct. In line with remarks from the Attorney General Merrick Garland at the conference and remarks from Deputy Attorney General Lisa Monaco in October 2021, both the DOJ and SEC are prioritizing prosecution of individuals who commit corporate malfeasance. The theory: holding individuals accountable in the corporate context will help deter large-scale corporate crime.  “Corporations only act through individuals” and “the prospect of personal liability has an uncanny ability to focus the mind,” according to the Attorney General.

Last directed attendees to the DOJ’s October 2021 Guidance Memo on the Corporate Crime Advisory Group and its emphasis on (i) reinstating the “Yates Memo” from 2015, which requires corporations to provide the DOJ all relevant facts relating to responsible individuals — regardless of position, status, or seniority — to qualify for cooperation credit, and (ii) revisions to monitorship guidance. The DOJ is “committed to imposing monitors” when the benefits to the corporation and public of employing a monitor outweigh the high costs and impact on operations of a corporation. Correcting any recent buzz to the contrary, Last stated the DOJ would not lighten up on imposing monitors.

On the civil side, Cain alluded to the SEC’s Admissions Policy under Director of Enforcement Gurbir Grewal, which requires admissions in cases where heightened accountability and acceptance of responsibility are in the public interest.  For example, when an SEC action parallels a criminal conviction or settlement agreement with admission of wrongdoing, the SEC does not accept “no admit, no deny” settlement terms. Cain emphasized that Mary Jo White’s admissions policy has not changed, which means that the SEC will require admissions in cases where (i) a large number of investors have been harmed or the conduct was otherwise egregious, (ii) the conduct posed a significant risk to the market or investors, (iii) admissions would aid investors in deciding whether to deal with a particular party in the future, and (iv) reciting unambiguous facts would send an important message to the market about a particular case. Inherent squishiness aside, expect greater pushback on “no admit, no deny” settlement terms by the SEC, especially as the government pursues greater coordination with international criminal authorities and the stakes are raised as a result.

Other Lessons Learned. The speakers made clear that FCPA violations tend to cluster around related violations, such as wire fraud, money laundering, commodities fraud, and technical SEC rule violations.  Last hinted that we can expect to see invocation of the Travel Act (18 U.S.C. § 1952) in the near future in addition to whatever other charges the factual circumstances support.

Both speakers warned that compliance program presentations should include a companies’ most knowledgeable operations personnel, or if they are not in attendance, defense counsel should be very well-versed in the innerworkings of compliance beyond the slide deck. Both unit chiefs highlighted recent FCPA actions against Credit Suisse Group AG, Deutsche Bank, and Amec Foster Wheeler.  General counsel would be wise to study those actions and update existing compliance programs as necessary.