The Foreign Corrupt Practices Act (FCPA) forbids companies and persons from bribing foreign officials to secure business and creates an affirmative duty for companies to maintain valid accounting records. Since 2004, following the passage of the Sarbanes-Oxley Act (SOX), the Securities and Exchange Commission (SEC) has pursued “equitable remedies” under 15 U.S.C. § 78u(d) to disgorge profits from those who have violated the FCPA. Despite apparent legislative acceptance of disgorgement, the Supreme Court put disgorgement’s legality into doubt in two recent decisions. The first, Kokesh v. SEC in 2017, established that disgorgement had to happen within a five-year statute of limitations period. The second, Liu v. SEC in 2020, held that disgorgement might not be allowed as an equitable remedy if, as in FCPA cases, the money disgorged was sent to the Treasury rather than wronged investors.
At the close of 2020, Congress responded to these decisions. To preserve the powers of the SEC to protect U.S. financial markets, Congress passed legislation that expressly granted the SEC disgorgement powers and raised the statute of limitations to ten years for select securities law violations. Despite this new legislation, questions still exist as to whether the SEC must abide by the limitations on its disgorgement powers set out by the Liu decision and which statute of limitations applies to FCPA disgorgement. This Comment argues that disgorgement under the newly revised Section 78u(d) should be allowed for FCPA actions that send money to the Treasury, regardless of whether the limitations imposed by the Liu decision still apply. Further, this Comment asserts that, in light of the uncertainty likely to arise from the new changes to Section 78u(d), Congress should revise the statute to expressly allow the SEC to disgorge profits to the Treasury in FCPA actions with a ten-year statute of limitations. Finally, this Comment argues that the best solution for concerns about the slow pace of SEC enforcement would be new legislation that allows for SEC self-funding derived from FCPA disgorgement remedies.
Jason R. Chohonis,
Patching the Holes in SOX: FCPA Disgorgement after Liu and the NDAA,
Emory L. J.
Available at: https://scholarlycommons.law.emory.edu/elj/vol71/iss4/4