We begin the New Year with a three-part series on the FCPA: (1) A review of FCPA enforcement in 2016; (2) Trends from 2016 FCPA enforcement; and (3) Predictions for FCPA enforcement in 2017. From the narrow perspective of FCPA enforcement, the Justice Department and the SEC have demonstrated yet again the maturation of their respective aggressive FCPA enforcement programs. As in 2014 (but not...
There are a number of important lessons from the Och-Ziff enforcement action, some of which are related to the private equity and hedge fund industry and some of which apply across all businesses. SEC regulations require public companies to design and implement a system of internal controls. As FCPA enforcement has increased, companies have to question how to design and implement an effective system of...
The Och-Ziff settlement has now set the stage for the Justice Department and the SEC to focus its enforcement eye on the private equity and hedge fund industry. The Och-Ziff action was initiated in response to the SEC’s industry inquiry launched in 2011. The SEC issued inquiry letters to approximately 10 separate private equity/hedge funds, and investment banks. The results of these inquiries are unknown...
The Och-Ziff enforcement action is replete with examples of failures in due diligence and transaction monitoring compliance. Och-Ziff’s bribery schemes were elaborate and intricate and involved complex transactions, particularly in the Democratic Republic of the Congo (DRC), designed to funnel large bribery payments. In the DRC, Och-Ziff executed the scheme primarily through two senior employees and an Israeli partner (DRC Partner), who were committed to...
The Justice Department and the Securities Exchange Commission delivered a powerful FCPA enforcement message to private equity and hedge funds. Och-Ziff settled with the DOJ and SEC for total penalties of $412 million. The comprehensive enforcement action and settlement included: (1) a 3 year deferred prosecution agreement (“DPA”); (2) a criminal plea to four criminal counts, two FCPA conspiracy counts, and a books and records...
Since 2010, the Justice Department and the SEC have been “investigating” a number of private equity and hedge funds for FCPA violations. The launch of the inquiries was a big deal with lots of fanfare and focus on private equity corruption risks. In time, nothing happened. Well, that is about to change. DOJ and the SEC are getting close to announcing a large settlement with...
