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Foreign Bribery and the SEC Whistleblower Program

June 1, 2015 — For several years now, the United States Securities and Exchange Commission (“SEC”) has stated that enforcing the United States Foreign Corrupt Practice Act (“FCPA”) is a high priority. Since the enactment of the Dodd-frank Wall Street Reform and Consumer Protection Act and the creation of the SEC’s Whistleblower Program, private individuals may provide inside information to the SEC related to foreign bribery or related recordkeeping and internal controls violations and, in cases where the SEC investigates and recovers $1 million or more as a result, may be entitled to an award.

The FCPA

The FCPA was enacted in 1977, and prohibits issuers , as well as their agents, employees, officers, or directors, from bribing or offering to bribe foreign officials, political parties, or certain third parties in order to gain or retain a business advantage. The FCPA also  requires that issuers keep accurate books and records and maintain internal controls; indeed, several FCPA enforcement actions, including this enforcement action against Allianz SE, concerned these accounting provisions. Because both U.S.-based and foreign companies may be subject to the FCPA if they are required to file periodic reports with the SEC (that is, if they are “issuers” within the meaning of the Act), the SEC investigates and enforces FCPA violations across the world.

The FCPA Whistleblower

Now that the SEC is able to receive and investigate whistleblower tips, complaints, and referrals through its Office of the Whistleblower, private individuals – including those outside of the U.S. – have a framework for and incentive to provide inside information to the SEC about FCPA violations. As of 2014, the SEC has received 436 such tips from whistleblowers concerning FCPA violations since the program began in 2011.
Importantly, while other U.S. whistleblower programs entitle the whistleblower to litigate the matter in the event that the government declines to do so, the SEC program merely provides a procedure for whistleblowers to communicate to, and claim awards from the SEC. The whistleblower is expected to provide as much assistance, information, and insight into the allegations as possible, and when the SEC recovers from the issuer as a result of the whistleblower’s tip, complaint, or referral, he or she may be entitled to an award. Furthermore, SEC whistleblowers are entitled to protection from retaliation, though this protection currently only applies to U.S. whistleblowers, not to those living abroad.
The SEC authorizes whistleblowers to remain anonymous throughout the investigation into the FCPA allegations, and must keep the identity of the whistleblower confidential in most circumstances. Whistleblowers who wish to remain anonymous must be represented by counsel, and must disclose their identity to the SEC prior to receiving an award.

Waters & Kraus Represents Whistleblowers

Our lawyers have been representing FCPA whistleblowers before the SEC since the inception of the agency’s Whistleblower Program. If you need help reporting potential foreign bribery violations, send us an email or call us at 800.226.9880 to learn more about our practice and how we can assist.

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