Foreign Corrupt Practices Act Ripples
61 Pages Posted: 24 Apr 2018 Last revised: 12 Jul 2018
Date Written: 2014
An obvious reason to comply with the Foreign Corrupt Practices Act ("FCPA") is that non-compliance can expose a company to a criminal or civil FCPA enforcement action by the Department of Justice ("DOJ") and/or the Securities and Exchange Commission ("SEC'). However, this Article highlights that settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement in this new era.
By coining a new term of art - the "three buckets" of FCPA financial exposure - and through various case studies and examples, this Article demonstrates how FCPA scrutiny and enforcement can impact a company's business operations and strategy in a variety of ways from: pre and post-enforcement action professional fees and expenses; to market capitalization; to cost of capital; to merger and acquisition activity; to impeding or distracting a company from achieving other business objectives; to private shareholder litigation; to offensive use of the FCPA by a competitor or adversary to achieve a business objective or to further advance a litigating position.
Keywords: Foreign Corrupt Practices Act, FCPA, DOJ, Department of Justice, Three Buckets, Financial Exposure, Enforcement, SEC, Securities and Exchange Commission, Criminal, Civil, Business Operations
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