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The SEC has entered into its first deferred prosecution agreement with an individual in an FCPA case. One interesting fact is it’s hard to figure out what this person allegedly did that was wrong. The FCPA Professor notes the only specific allegation about the individual in the DPA is the first paragraph which merely identifies the person. There is no other specific allegation regarding him including how he caused violations of the FCPA’s books and records and internal controls provisions, and the individual did not admit or deny any of the allegations in the DPA.

The SEC stated it entered into the DPA as a result of significant cooperation the individual provided during the SEC’s investigation.

The Professor also notes his belief that the SEC settlements with the issuer and the individual were not the result of the Yates memo. The investigation commenced years before the Yates memo was authored.

But whether or not the action was influenced by the Yates memo, Matt Kelly has some noteworthy observations on how this enforcement posture will influence the compliance function:

 Even worse, however, is the pall these pressures cast over corporate ethics & compliance programs generally. They are, essentially, forcing compliance programs first and foremost to be surveillance and investigation programs—which nobody likes, including the vast majority of employees who are honest and don’t like the Orwellian behavior any more than you do. If that’s the reality we’re creating, forget all those speeches and best practices about the compliance department as your friend and ally; we’re back to the compliance department as “the Office of No.”


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