THIS WEEK IN SECURITIES LITIGATION (April 15 , 2011)

The market crisis, the FCPA and insider trading were again the key focus this week. On Capitol Hill the Senate Permanent Committee on Investigations issued a lengthy, detailed report regarding the causes of the market crisis. This report builds on earlier efforts but contains substantial new evidence. Just prior to the release of the report the Chairman of the SEC and the CFTC were testifying about the implementation of regulations being enacted under the Dodd- Frank Act which is suppose to prevent the reoccurrence of the kind of events detailed in the new report.

Securities enforcement litigation centered on the FCPA and insider trading. DOJ and the SEC added another member to group of ten largest FCPA settlements this week. At the same time the Manhattan U.S. attorney and the SEC brought two more high profile insider trading cases while in District Court in New Jersey a key player in a years long insider trading scheme pleaded guilty to criminal charges.

Market reform

Market report: The U.S. Senate Permanent Subcommittee on Investigations issued its report on the market crisis, Wall Street and The Financial Crisis: Anatomy of a Financial Collapse (here). The report, which is based on hundreds of new document, discusses the findings of the committee after a two year probe regarding the causes of the market crisis. According to the report those include high risk lending by institutions such as Washington Mutual, failures by regulators like the Office of Thrift Supervision and credit rating agencies and conflict riddled deals by large players on Wall Street.

Swaps market place: CFTC Chairman Gary Gensler testified before the Senate Committee on Banking-Housing and Urban Affairs on April 12, 2011. In his testimony Chairman Gensler reviewed current efforts to implement Title VIII of Dodd-Frank regarding enhanced oversight of clearinghouses and, specifically, about the implementation of provisions in the Act regarding the swaps market place (here). SEC Chairman Mary Schapiro testified at the same hearing regarding the new derivatives regulatory framework (here).

Basic principles: SEC Chairman Mary Schapiro, in Remarks before the Society of American Business Editors and Writers on April 8, 2011, discussed the question of basic principles which underlie and guide financial regulation. The Chairman also provided a brief review of recent significant efforts by the agency to improve its overall effectiveness (here).

SEC Enforcement

Financial fraud: SEC v. Higgins, Civil Action No. 3:11-cv-763 (N.D. Tx. Filed April 14, 2011) is a settled action against Rebecca Higgins, a former vice president of marketing at Zale Corporation. According to the complaint, during the period 2004 through 2009 Ms. Higgins caused the company to incorrectly record certain television advertising costs as prepaid advertising when in fact they should have been expenses. Accordingly, the reported expenses for those accounts were materially misstated. Ms. Higgins resolved the case by consenting to the entry of a permanent injunction prohibiting her from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B). She also agreed to pay a $25,000 civil penalty.

Fraudulent note sales: SEC v. Inofin, Inc., No. 1:11-CV-10633 (D. Mass. Filed April 14, 2011) is an action which names as defendant Inofin, a subprime auto loan provider, three of its executives, Michael Cuomo, Kevin Mann and Melissa George, and two salesmen, David Affeldt and Nancy Keough. The complaint claims that the company and the three executives raised at least $110 million from the sale of unregistered notes beginning as early as 2004 from investors in twenty – five states. The sales were based on promises of 9 to 15% returns based on the fact that the money would be loaned to subprime borrowers who are charged 20%. In fact about one third of the money was diverted to other projects of two of the executives. By 2006 the company was also misrepresenting its financial condition as business deteriorated. The two salesmen are charged with selling unregistered securities. The complaint alleges violations of Securities Act Sections 5 and 17(a) and Exchange Act Sections 10(b) and 15(a). Massachusetts filed a parallel action against the defendants who are based in Boston.

Market manipulation: SEC v. East Delta Resources Corp., Civil No. CV10-0310 (E.D.N.Y.) is an action in which the SEC won a summary judgment ruling against defendants and brothers David and Mayer Amsel. The complaint claims that the two brothers manipulated the shares of East Delta. In granting summary judgment the court also entered permanent injunctions prohibiting future violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and imposed a penny stock bar against both brothers and, in addition an injunction based on Exchange Act Section 13(a) against David Amsel. The court has not ruled on the Securities Act Section 5 claim or the Commission’s request for an officer and director bar against David Amsel, or questions regarding disgorgement and civil penalties.

In the Matter of Gualario & Co., Adm. Proc. File No. 3-14340 (April 8, 2011) is a proceeding which names as Respondents Gualario & Co., a registered investment adviser from 1998 through 2009, and Ronald Gualario, the founder, President and CEO of the firm. The Order centers on four key allegations: First, Respondents are alleged to have induced an advisory client of limited means to invest $100,000 of her retirement funds in a promissory note that was suppose to be with Mr. Gualario’s cousin but was in fact for his benefit. Mr. Gualarion had a $50,000 debt with the cousin that the funds repaid after which the note and the remaining funds were transferred to Gualario & Co. Second, in 2006 Respondents raised $1.17 million from the sale of notes to advisory clients. The funds were to start a hedge fund and for working capital. Instead a significant portion of the funds were used in risk options trading in the firm’s proprietary account. Later the firm defaulted on its notes. Third, Respondents launched another hedge fund, raising $7.1 million from five advisory clients based on representations that the funds would be conservatively traded. Again the funds were used and most of them were lost in risky option trading. Finally, Respondents sold limited partnership interest and received transaction based fees without being a broker dealer. The Order alleges violations of Securities Act Section 17(a), Exchange Act Sections 10(b) and 15(a)(1) and Advisers Act Sections 206(1) and (2). The case is in litigation.

Investment fund fraud: SEC v. Fox, Case No. 11-CV-211 (Filed April 8, 2011) is a financial fraud action against Brian Fox, Chairman, CEO and CFO of Power River Petroleum International, Inc. Beginning in 2004 and continuing through 2008 Mr. Fox is alleged to have raised over $43 million by conveying working interests in the oil and gas company to investors who were guaranteed an annual return of 9%. In addition, the investment was to be returned. Mr. Fox and the company booked the proceeds from the transactions as revenue when in fact they were loans. He also booked oil and gas properties as assets which did not belong to the company. The result was significantly inflated revenues and assets. While the company paid the promised returns at first, eventually the obligations from continuing sales outstripped the revenues from the assets the company did own. At that point Ponzi like payments were made to prior investors with funds from new investors. Eventually the company collapsed into bankruptcy and liquidation. The Commission’s complaint alleges violations of Exchange Act Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5). The case is in litigation.

Criminal cases

Insider trading: U.S. v. Skowron (S.D.N.Y. Unsealed April 13, 2011) and SEC v. Skowron, Civil Action No. 10-cv-8266 (S.D.N.Y. Nov. 2, 2010) are, respectively, civil and criminal actions against a former hedge fund manager. The cases center on the allegation that Mr. Skowron obtained inside information from Dr. Yves M. Benhamou, a medical researcher at Human Genome Science Inc., about clinical trials at that company. Dr. Behamou was previously charged with criminal insider trading. He was also the initial defendant in the SEC’s case which now has been amended to include Mr. Skowron. Dr. Behamou has pleaded guilty to conspiracy to commit securities fraud, securities fraud and conspiracy to obstruct justice.

Dr. Behamou began consulting with Mr. Skowron through an expert network. By early 2007 the two men developed a personal relationship according to the court papers. Mr. Skowron gave the Doctor cash payments and paid some of his personal expenses. During drug trials in early 2008 Dr. Benhamou furnished Mr. Skowron with inside information about them which, when later announced, resulted in a significant drop in the share price of Human Genome. Prior to that announcement Mr. Skowron sold the fund’s entire position in Human Genome, avoiding a loss of about $30 million. Later the trader asked his friend to lie to investigators which he did. In the criminal case Mr. Skowron is charges with one count of conspiracy to commit securities fraud, one count of securities fraud and one count of conspiracy to obstruct justice. The SEC’s complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b).

Insider trading: U.S. v. Robinson (D.N.J.) is a criminal insider trading case against Kenneth Robinson, previously identified as “CC-1” in U.S. v. Bauer, and the companion case brought by the SEC against a former law firm associate and professional trader (here). Mr. Roberson pleaded guilty to a three count information charging one count of conspiracy to commit securities fraud and two counts of securities fraud. The date for sentencing has not been set.

FCPA

U.S. v. Depuy, Inc., (D.D.C. Filed April 8, 2011); SEC v. Johnson & Johnson, Civil Action No. 1:11-cv-00686 (D.D.C. Filed April 8, 2011). The cases are based on payments by Johnson &Johnson subsidiaries to publically employed health care providers in Greece, Poland and Romania. Kickbacks were paid on behalf of company subsidiaries to the former government of Iraq under the U.N. Oil for Food Program. They began the year before J&J purchased the company in 1998 and continued until 2006. During that period the company earned $24,258,072 in profits on sales obtained through bribery. In Poland employees of MD&D Poland, a J&J subsidiary, bribed publicly employed doctors and hospital administrators to obtain business. From 2000 through 2006 the company earned $4,348,000 in profit from sales made through bribery. In Romania J&J subsidiary J&Jd.o.o. paid bribes through local distributors to obtain business. Over a seven year period beginning in 2000 this scheme yielded the company $3,515,500 in profits from the bribery. Finally, Johnson & Johnson participated in the U.N. program through two subsidiaries, Cilag AG International and Janssen Pharmaceutica N.V. During the program the subsidiaries sold pharmaceuticals to an arm of the Iraqi Ministry of Health known as Kimadia and paid kickbacks of $857,387 which were not properly recorded in the books and records of the company.

To settle with DOJ the company entered into a deferred prosecution agreement with respect to its subsidiary Depuy Inc. That company was charged in a two count information alleging conspiracy and violations of the FCPA. In addition, J&J agreed to pay a criminal fine of $21.4 million. To settle with the SEC the company consented to the entry of a permanent injunction prohibiting future violations of the anti-bribery and book and records and internal control provisions of the FCPA. J&J also agreed to pay $38,227,826 in disgorgement and $10,438,490 in prejudgment interest. The resolution with DOJ reflects the extraordinary cooperation and self-reporting of the company as well as the fact that it will also have to pay a criminal fine in the U.K.

FINRA

Undisclosed fees: Jefferies & Company, Inc. agreed to pay a $1.5 million fine for failing to disclose additional commissions it earned on the sale of auction rate securities in discretionary accounts. Two Jefferies brokers involved in the transactions were also fined $20,000 each in addition to being suspended for five business days. According to the regulator, from August 1, 2007 to March 31, 2008, the firm did not disclosure to corporate customers over whose accounts it had discretion that it obtained additional commissions on the ARS selected. Jefferies was also directed to repay $425,000 in fees and commissions earned from the sale of ARS to this group of customers.

Inadequate procedures/supervision: Santander Securities of Puerto Rico was fined $2 million and directed to review its trading and procedures with regard to the sale of certain structured products. The regulator found that from September 2007 through September 2008 the brokers selling structured products and reverse convertibles had inadequate guidance and training with regard to these securities. The firm had inadequate supervisory policies. As a result these securities were sold to persons for whom they were not suitable. Significant customer losses resulted. The broker has reimbursed more than $7 million to its customers.

Suitability/procedures: UBS Financial Services agreed to pay a fine of $2.5 million and to pay restitution of $8.25 million to certain customers in connection with the sale of Principal-Protection Notes of Lehman Brothers Holdings. The notes were sold from March to June 2008 as the credit crisis was unfolding and prior to the bankruptcy of Lehman. Customers were not adequately warned of the credit risk in purchasing the Lehman issued notes and of the issuer credit risk. Some registered representatives failed to understand the risks and therefore misinformed investors.

SEC ENFORCEMENT TRENDS 2011: The New Era of FCPA Enforcement

This is the ninth in a series of articles that will be published periodically analyzing the direction of SEC enforcement.

Spurred on by a very positive report on its enforcement efforts by the OCED, the Department of Justice has declared that this is a “new era” of FCPA enforcement. The result is more cases, a continuous stream of record breaking amounts paid in settlement, an expansive approach to the interpreting the statutes and more prosecutions of individuals.

Record setting payments

The hallmark of corporate FCPA settlements is the spiraling cost of settlement. That cost begins with what is paid to the enforcers. The current top ten largest settlements as compiled by the FCPA blog (here) range from the $800 million in 2008 by Siemens to settle with DOJ and the SEC (with more was paid to resolve charges with other regulators) to the $70 million paid by Johnson & Johnson in April 2011. In between are: 2) KBR in 2009 at $579 million; 3) BAE in 2010 at $400 million; 4) Snamprogetti Netherlands B.V. in 2010 at $365 million; 5) Technip S.A. in 2010 at $338 million; 6) JGC Construction in 2011 at $218.8 million; 7) Daimler AG in 2010 at $185 million; 8) Alcatel-Lucent in 2010 at $137 million; and 9) Panalpina in 2010 at $81.8 million.

Eight of the largest amounts paid to settle FCPA charges are from settlements in 2010 and early 2011. The unmistakable nature of this trend is emphasized by the fact that the composition of the top ten list has changed twice in the first few months of 2011. To be sure these cases are frequently based on what DOJ and the SEC has characterized as pervasive patterns of misconduct and/or multiple violations over a period of years. Siemens (here) and Diamler (here), for example, involved pervasive patterns of multiple violations – essentially corporate cultures which utilized bribes as a business tool according to prosecutors. KBR, Tehnicup, Snamprogetti (here) and JGC (here) were involved in the years long TSKJ conspiracy to secure contracts through bribery.

At the same time not all of the cases in the top ten rise to the level of Siemens or the TSKJ conspiracy. Johnson and Johnson for example (here) is based on a much more limited fact pattern had extensive FCPA procedures which helped root out conduct that was limited to a few subsidiaries.

Despite the large settlement payments, each sum was reduced by the cooperation of the company with the exception of the amount paid by BAE. That credit is most evident in the calculation of the criminal fine which in many cases is at an agreed level below the range calculated under the sentencing guidelines.

In contrast, assessing the impact of cooperation on the charging process rather than the calculation of the fine is difficult. In some instances DOJ acknowledges the impact of the cooperation on that process. For example, in its press release announcing the settlement with Johnson & Johnson, the Department specifically stated that the resolution of the case with a deferred prosecution agreement relating to one the company subsidiary resulted from the extraordinary cooperation of the company. More typically, the underlying court papers or DOJ’s press release discusses the cooperation of the company without specifying its impact on the actual charges brought.

The SEC frequently does not comment on the cooperation of the company or its impact on the settlement. The agency has over the years repeatedly made statements promising credit for cooperation. Yet it is typically difficult to assess the impact of cooperation on a settlement with the Commission. Indeed, the settlement of many SEC FCPA cases where there is a parallel criminal inquiry tend to be the same: consent to an FCPA injunction and the payment of disgorgement and prejudgment interest.

For business organizations huge settlement payments are only the beginning of the costs paid to resolve FCPA cases. To earn cooperation credit the company typically undertakes an extensive internal investigation, terminates the employees involved and revamps many of its procedures. In a number of cases a corporate monitor is appointed for a period of years. In some cases such as Siemens and Johnson & Johnson the company helps develop other investigative leads for enforcers.

While it is difficult to assess the total cost of these efforts some indication is given by the Siemens settlement papers. At the time of settlement the company had paid for 1.5 million professional hours in connection with the investigations and other procedures which earned cooperation credit. That figure of course does not include many costs such the huge amounts of executive time involved in the matter. That total cost may have lead to Siemens, ABB and others to delist their securities from trading in the U.S., a trend which the U.S. Chamber of Commerce argues may make the U.S. markets uncompetitive.

Selected recent FCPA cases

DOJ and the SEC have brought a series of FCPA actions in recent months in addition to the mega cases in the top ten. These include:

Mergers: Two recent cases involving FCPA liability arising out of a merger are SEC v. Alliance One International, Inc., Civil Action no. 01:10-cv-01319 (D.D.C. filed Aug. 6, 2010) and SEC v. General Electric Company, Case No. 1:10-CV-01258 (D.D.C. filed July 27, 2010). Alliance One was formed from a merger of Diamon, Inc. and Standard in May 2005. Between 2000 and 2004 Diamon, in conjunction with Universal Corporation, paid about $800,000 in bribes to the Thailand Tobacco Monopoly to secure about $11.5 million in sales contracts for certain Universal subsidiaries. During the same period Dimon and Standard paid bribes to government officials of the Thailand Tobacco Monopoly totaling $1.2 million to obtain about $18.3 million in sales contracts. In addition, from 1996 through 2004 a subsidiary of Dimon paid about $3 million in bribes to officials of the Kyrgyzstan government to purchase tobacco. Diamon also made improper payments to tax officials in Greece and Indonesia and paid for inappropriate gifts, travel and entertainment to officials in the Asian Region, including China and Thailand. None of these payments were properly recorded.

Alliance settled with the SEC by consenting to the entry of a permanent injunction prohibiting future violations of the anti-bribery and books and records and internal control provisions of the FCPA. Alliance also agreed to pay disgorgement of $10 million and to retain an independent monitor. The company settled with DOJ, entering into a non-prosecution agreement and agreeing to pay a $9.45 million criminal fine. See also SEC v. Universal Corporation, Inc., Civil Action no. 1:10-cv-01318 (D.D.C. Filed Aug. 6, 2010)(FCPA case based on substantially the same conduct and settled on similar terms).

In General Electric, the company was named as a defendant along with two subsidiaries. The complaint centers on violations by two GE subsidiaries and two companies which GE acquired after the alleged violations. According to the complaint, from 2000 to 2003 two GE subsidiaries made about $2.04 million in kickback payments in the form of computer equipment, medical supplies and services to the Iraqi Health Ministry as part of the U.N. program. The kickbacks were made through agents in the form of “after sales service fees” on the sale of products to Iraq. Similarly, the two companies which later became GE subsidiaries paid about $1.55 million in cash kickback payments to Iraqi under the U.N. program.

To settle the action with the SEC, each of the three defendants consented to the entry of a permanent injunction prohibiting future violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B). GE also agreed to disgorge $18,397,949 in wrongful profits, pay prejudgment interest and a civil penalty of $1 million. The settlement reflects the cooperation of the defendants according to the SEC.

Grease payment: Facilitation or grease payments are not bribes. Under the Act payment to an official to expedite the completion of what are otherwise ministerial duties is not a violation of the anti-bribery provisions. The question of grease payments was involved in In the matter of NATCO Group, In., Adm. Proc. File No. 3-13742 (filed Jan. 11, 2010); SEC v. NATCO Group, Inc., Civil Action No. 4:10-CV-98 (S.D. Tex. Filed Jan. 11, 2010). These cases focus on Huston based NATCO and its subsidiary TEST Automation & Controls which has an office in Kazakhstan. TEST won a contract in Kazakhstan. The subsidiary hired local Kazakh workers and expatriates. During an audit of TEST in 2007 Kazakh Immigration prosecutors claimed that the expatriate workers did not have proper documentation and threatened to impose fines and either jail or deport the workers if the company did not pay the fines. Accordingly, TEST reimbursed two payments but did not properly record them. In addition, a TEST consultant who did not have the proper license, but had close ties to the Ministry of Labor, requested cash to facilitate obtaining a visa. The consultant provided the company with bogus invoices for the necessary amount of money. Those invoices were necessary under local law to withdraw the sum from the bank. Later they were reimbursed by TEST despite knowledge of their true purpose. The company settled with the SEC, consenting to the entry of a cease and desist order based on FCPA books and records and internal control charges and the payment of a $65,000 penalty

Gifts, travel and entertainment. There is no guidance in the statute regarding gifts. In contrast, the 1988 amendments to Act added an affirmative defense for reasonable and actual expenditures for travel and lodging expenses directly related to promotions and demonstrations for products and the execution or performance of a contract.

A criminal case brought last year centered on a gift of two snowmobiles. In U.S. v. Mercator Corp., (S.D.N.Y. Filed Aug 6, 2010) the defendant merchant bank pleaded guilty to one count of making corrupt payments in violation of the FCPA. The bank acted as an adviser to the government of Kazakhstan in connection with the sale of part of the oil and gas wealth of the country. It was dependent on the good will of three senior government officials. Those officials had the ability to influence whether Mercator obtained and retained lucrative business and would be paid. To maintain its lucrative contracts, in November 1999 Mercator purchased two snowmobiles and shipped them to Kazakhstan for deliver to one of the officials.

SEC v. UTStarcom, Inc., Case No. CV-09-6094 (N.D. Cal. Filed Dec. 31, 2009) involved the payment of travel and entertainment expenses. There the SEC claimed that the telecommunications company paid about $7 million for 225 foreign trips by employees of a Chinese state owned company. While the trips, made between 2002 and 2007, were to be for training, the Commission claimed that in fact they were largely entertainment. The complaint also alleged that there were expenditures for executive training programs in the U.S. and field trips to nearby tourist destinations. In addition, the company provided $10,000 in French wine and $13,000 in other entertainment expenditures to employees of a government owned telecommunications customer in Thailand. In Mongolia, $1.5 million was paid to an agent for a so-called “license fee” when in fact the actual fee was only $50,000 and the balance was used to make improper payments to a government official.

To settle with the SEC the company consented to the entry of a permanent injunction prohibiting future violations of the anti-bribery, books and records and internal control provisions of the FCPA. The company also agreed to pay a $1.5 million penalty. The criminal investigation was resolved with an agreement to pay a $1.5 million criminal fine. DOJ noted that the resolution of the case reflected the cooperation and remedial efforts of the company including self-reporting.

A key focus: Individuals

A key focus of the new era of FCPA enforcement is a focus on individuals. Perhaps the most significant indication of this focus is the nineteen indictments brought against twenty-one individuals in January 2010 from the largest FCPA sting operation in history. See, e.g., U.S. v. Goncalves, Case No. CR-09-335 (D.D.C. unsealed Dec. 19, 2009)(and related cases).

U.S. v. Warwick (E.D. Va.) is an action in which John Warwick pleaded guilty to one count of conspiring to make payments in violation of the FCPA. The case centered on efforts to secure a maritime contract from certain Panamanian government officials for Ports Engineering Consultants Corporation. Mr. Warwick admitted that from 1997 through July 2003 he and others made corrupt payments of more than $200,000 to the former administrator and deputy administrator of the Panama maritime Authority and to a former high ranking elected official of the Panama government.

SEC v. Elkin, Civil Action No. 1:10-cv-0061 (DD.C. Filed April 28, 2010) is a settled FCPA action against individuals formerly employed by Dimon, Inc. discussed above. The defendants are Bobby Elkin, Jr., former country manager for Kyrgystan, Baxter Myers, former Regional finance Director, Thomas Reynolds, former corporate controller and Tommy Williams, a former Senior vice President of Sales. Each defendant settled the action by consenting to the entry of a permanent injunction prohibiting future violations of the anti-bribery and books and records and internal control provisions of the Exchange Act. Defendants Myers and Reynolds also agreed to pay civil penalties of $40,000 each. See also U.S. v. Elkin, Case No. 4;10 CR 00015 (W.D. Va. Filed Aug. 3, 2010)(Mr. Elkin pleaded guilty to a one count information alleging conspiracy to violate the FCPA).

SEC v. Summers, Civil Action No. 4:10-cv-02286 (S.D. Tex. filed Aug. 5, 2010) is a settled FCPA action against Joe Summers, the former country manager for Venezuela for Pride International. From 2003 through 2005 Mr. Summers, according to the complaint, authorized the payment of $384,000 to third parties with the understanding the money was going to state officials to help obtain three oil drilling contracts. Mr. Summers settled the action by consenting to the entry of a permanent injunction prohibiting future violations of Exchange Act Sections 30A and 13(b)(5). He also agreed to pay a civil penalty of $25,000. See also Lit. Rel. 21617.

SEC v. Turne, Civil Action No. 1:10-cv-01309 (D.D.C. Filed Aug. 5, 2010) is a settled FCPA action against two former Innospec, Inc. executives, David Turner and Ousama Naaman. The action centers on payments initially made under the U.N. Oil For Food Program which continued after it ended. Corrupt payments were made in connection with the sale of the chemical Tetra. Between 2000 and 2008 about $6.3 million in bribes were paid while another $2.8 million were promised to secure about $176 million in contracts. The case was settled with the consent by each defendant to the entry of a permanent injunction prohibiting future violations of the anti-bribery and books and records and internal control provisions of the FCPA. In addition, Mr. Naaman agreed to disgorge over $810,000 and pay prejudgment interest along with a penalty of $438,000 which will be satisfied by payment of a criminal fine in a related action previously brought by DOJ. See also Lit. Rel. 21615 (Aug. 5, 2010).

The focus on individuals also means that more cases are going to trial. In 2009 for example, three criminal FCPA cases were tried to verdict. DOJ prevailed in all three cases. Currently thirty-five individuals are awaiting trial on FCPA charges. Overall, the New Era of FCPA enforcement is reflected in the increasing cost of corporate settlements, increasing prosecutions against individuals and the increasing number of FCPA cases going to trial.

Next: Financial fraud