Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Sunday, December 28, 2008

Weiss on FCPA

The Foreign Corrupt Practices Act, SEC Disgorgement of Profits, and the Evolving International Bribery Regime: Weighing Proportionality, Retribution, and Deterrence, by David C. Weiss, University of Michigan at Ann Arbor, was recently posted on SSRN.  Here is the abstract:

The international framework governing foreign bribery has been in a state of flux during the preceding decade. For the first time since the passage of the Foreign Corrupt Practices Act, countries besides the United States are enforcing statutes prohibiting foreign bribery. Practitioners and academics have not yet analyzed foreign implementing legislation and enforcement levels nor the United States' changing enforcement strategy that has occurred simultaneously with the rise in foreign enforcement. In particular, the Securities and Exchange Commission's use of disgorgement damages has received scant attention despite the fact that it has begun to eclipse the importance of the SEC's express fining authority.

While disgorgement of ill-gotten gains has clear attractions from both retribution and deterrence perspectives, it raises new questions in the Foreigh Corrupt Practices Act context. In addition, as an increasing number of foreign statutes authorize disgorgement of profits in cases of foreign bribery and leverage the extraterritorial application of those laws, foreign enforcement raises serious questions regarding the propriety of disgorgement damages and suggests the necessity for foreign enforcement agencies to work together if multinational firms are to receive fair treatment when facing foreign bribery charges. Ultimately, the SEC's use of disgorgement damages has yet to cause firms unjustifiable multiple exposure for the same conduct, but as each SEC settlement seemingly sets a new benchmark for the size of disgorgement, multinational firms, corporate counsel, international regulators, and Congress should closely monitor the shifting enforcement climate with an eye toward fostering predictability, uniformity, and fairness for firms operating on a transnational scale.

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