Farewell to Bum and Bud: Trends in FCPA Compliance and Enforcement

Sometimes the universe converges in ways that are quite eerie. This past weekend was such an instance when the most beloved figure in Houston professional sports passed on to the great hereafter; only to be followed two days later by the most reviled figure in Houston professional sports history. The most beloved was Bum Phillips, head coach of the Houston Oilers during the Luv Ya Blue era, when the Oilers twice reached the AFC Championship game, losing both times to eventual Super Bowl Champion, the Pittsburg Steelers. The most reviled was the owner of the Houston Oilers, Bud Adams, who not only fired Phillips because he was too popular but also huffed and puffed and picked up his franchise and moved it to Nashville when the City of Houston refused his extortionate demands for a new stadium five years after upgrading the Astrodome at his behest. It sure ought to be a great get together to watch some football upstairs this weekend.

Although one was beloved and one was reviled, they both were innovators so today I will look at five trends in both Foreign Corrupt Practices Act (FCPA) compliance programs and Department of Justice (DOJ) and Securities and Exchange Commission (SEC) enforcements.

I. Transaction Monitoring

In April 2012, the DOJ announced that it was declining to prosecute Morgan Stanley for the FCPA violations of one of its Managing Directors, Garth Peterson, even though Peterson himself pled guilty to FCPA violations. This was the first publicly announced Declination to Prosecute by the DOJ. In announcing the Declination, the DOJ listed several factors including the firm’s extensive compliance policies and notifications thereof, internal controls and training meant to prevent FCPA violations, all of which had been acknowledged by Peterson ...

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