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« Zen and the Art of Third Party Compliance | Main | An OECD Enforcement Quiz »

Why Is SEC Enforcement Lagging?

Last year the SEC brought twenty FCPA enforcement actions. And over the past five years, enforcement has averaged nearly seventeen actions a year. (Note: The SEC lumps related cases together and counts them as one enforcement action.)

But so far in 2012, the SEC by its own count has brought only five enforcement actions.

What's up?

FCPA enforcement 'continues to be a high priority area,' the SEC recently said. Just two years ago, the agency's Enforcement Division 'created a specialized unit to further enhance its enforcement of the FCPA.'Source: United States Securities and Exchange Commission

So where have the enforcement actions gone?

Is the SEC busy chasing Madoff-like ponzi schemes? Are Wall Street banks getting all the attention? Is the SEC overwhelmed by Dodd-Frank whistleblower complaints? Is it letting the DOJ do the heavy lifting for FCPA enforcement?

Or is the SEC saving most of its 2012 FCPA enforcement actions for the second half of the year?

At the DOJ, enforcement is on par with prior years (not counting the 22 Africa sting defendants). But because of the SEC slowdown, overall FCPA enforcement is behind the usual pace.

Others have noticed. In its FCPA Summer Review released today, Miller & Chevalier said: 'If the current pace of enforcement continues through the year's end, 2012 will be the slowest year for resolved FCPA enforcement actions since 2006.'

*     *     *

Here's the SEC's own rundown of its enforcement actions so far for 2012:

Orthofix International - SEC charged the Texas-based medical device company with violating the FCPA when a subsidiary paid routine bribes referred to as “chocolates” to Mexican officials in order to obtain lucrative sales contracts with government hospitals. (7/10/12)

Former Morgan Stanley executive - SEC charged Garth R. Peterson with secretly acquiring millions of dollars worth of real estate investments for himself and an influential Chinese official who in turn steered business to Morgan Stanley's funds. He agreed to a settlement in which he is permanently barred from the securities industry and must pay more than $250,000 in disgorgement and relinquish his approximately $3.4 million interest in Shanghai real estate acquired in his scheme. (4/25/12)

Biomet - SEC charged Warsaw, Ind.-based medical device company with violating the FCPA when its subsidiaries and agents bribed public doctors in Argentina, Brazil, and China for nearly a decade to win business. (3/26/12)

Noble Corporation executives - SEC charged three oil services executives with bribing customs officials in Nigeria to obtain illicit permits for oil rigs in order to retain business under lucrative drilling contracts. (2/24/12)

Smith & Nephew - SEC charged the London-based medical device company with violating the FCPA when its U.S. and German subsidiaries bribed public doctors in Greece for more than a decade to win business. The company and its U.S. subsidiary agreed to pay more than $22 million to settle civil and criminal cases. (2/6/12)

Reader Comments (1)

Great post, and an interesting question indeed. Thanks for sharing.

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