Today’s post is from Cuneyt Akay (Greenberg Traurig).
2021 is off to a slow start…at least in terms of FCPA corporate enforcement. The DOJ has only announced one corporate settlement so far in 2021, and the SEC has had no corporate enforcement cases.
Many prognosticators were predicting big things for FCPA enforcement in 2021. A perfect storm was brewing for 2021 FCPA enforcement. Corporate enforcement set a record in 2019, which was then eclipsed in 2020. Financial and economic crises, such as the current conditions caused by the COVID-19 pandemic, tend to increase corruption. In addition, due to government investigations and proceedings being slowed down and paused for a good portion of 2020, the general consensus was that some enforcement actions would carry over into 2021. On top of that, many anticipated a new administration would even be more active in pursuing enforcement of financial crimes and corporate fraud prosecutions.
So, where’s all the action? What’s happened? Were all of the prognosticators (including myself) wrong?
Well, let’s take a step back and look at the bigger picture. The last three years have seen no more than three corporate settlements in the first quarter. During the previous decade, only two years had more than four corporate FCPA settlements in the first quarter – 2016 (which still holds the record for most overall corporate settlements) and 2017. For obvious reasons, 2017 seems to be the best comparison to this year.
In 2017, the DOJ and SEC settled six enforcement actions in the first quarter, but all of those occurred within the first three weeks of the year as the Obama administration was winding down. The first corporate settlement under the Trump administration did not occur until the third quarter of 2017 (the DOJ did announce two “declinations” with disgorgement in the second quarter that year). Similarly, so far this year, the only corporate FCPA settlement occurred during final days of the outgoing Trump administration and we haven’t seen any new case settlements under the incoming Biden administration.
Over the last decade, the first quarter has been a slower quarter for corporate FCPA settlements in general. Plus, the last time administrations changed, we did not have a corporate FCPA settlement until the latter part of the year, which certainly makes sense between the need to fill political appointments and prioritization of the new administration’s agenda items. So, while it is still way too early to draw conclusions about FCPA corporate enforcement in 2021, we are all waiting to see how things play out the rest of the year.