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Expect no letup in FCPA enforcement, SEC chairman says

Thomson Reuters Accelus - Wed, 13 Feb 2013 12:16 GMT
Author: Compliance Complete
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By Stuart Gittleman, Compliance Complete The Securities and Exchange Commission is redoubling its efforts against foreign bribery and corruption, Chairman Elisse Walter said at a training conference Monday. Walter spoke to representatives of over 50 law enforcement and financial regulatory agencies from both developed and developing nations across the globe. The meeting followed a court ruling Friday by Manhattan federal judge Richard Sullivan letting the SEC pursue bribery charges under the Foreign Corrupt Practices Act against three former executives of Magyar Telekom, a Hungarian unit of Deutsche Telekom. If the two companies made false filings, as the SEC complaint alleged, for their American depositary receipts that were listed on U.S. exchanges, the SEC would have jurisdiction over transactions involving Macedonian officials, Sullivan said. Fighting corruption and cronyism is the right thing to do and the course that benefits non-U.S. countries' citizens, and it also helps U.S. firms that do business abroad, Walter said. "Increasing investment and encouraging growth in any one nation benefits all of its neighbors and trading partners. Stable financial markets fueling growing economies can create a virtuous cycle of international trade and investment that benefits us all." Corruption and cronyism, and opportunities for legal and regulatory arbitrage, also put competitive obstacles ahead of U.S. firms, Walter added, saying, "Failure to enforce laws can put honest companies at a disadvantage, harming those that play by the rules." The SEC and the Department of Justice, its crime-fighting partner, have imposed billions of dollars in sanctions against U.S. and non-U.S. entities over FCPA violations, including of the books-and-records provisions that particularly harm U.S. investors, Walter said. "Bribery means losing control of or deliberately falsifying books and records. Often, key executives or board members are kept in the dark, limiting their ability to make informed decisions about the company's business. Engaging in corrupt practices means weakening or circumventing internal control mechanisms, leaving a company less able to detect and end not just corruption but other questionable practices. A company that has lost its moral compass is in grave danger of losing its competitive roadmap as well, while shareholders are kept in the dark," Walter said. President Barack Obama has nominated Mary Jo White, former Debevoise white-collar defense lawyer and Manhattan U.S. Attorney, to succeed Walter in the SEC's top spot. White's prosecutors targeted white collar and complex securities and financial institution fraud, corporate criminal liability, public corruption and money laundering, as well as terrorism, organized crime, drug trafficking and racketeering. They dismantled the largest, most violent gangs in New York City, the biography on her former law firm website said. The Senate Banking is expected to hold a hearing on whether White can protect investors against the greediest gangs in the world while shepherding rulemaking and other regulatory priorities through a politically divisive environment, but has not set a date yet.

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