FCPA: Personal Jurisdiction Over Non-U.S. Persons

For a FCPA violation to be subject to an enforcement action, the extraterritorial reach of the FCPA’s provisions are well known. In this regard, the recent decision in Sec. and Exch. Comm. v. Sharef, No. 11 Civ. 9073 (SAS) (S.D.N.Y., filed Feb. 19, 2013), may be correctly interpreted as limiting to some degree the jurisdictional reach of the FCPA. But a careful reading of the decision demonstrates how relatively limited activity on the part of a non-U.S. person may subject him or her to the personal jurisdiction of a U.S. court.

Of particular import to the court’s analysis was the degree to which someone may have become involved with false financial statements that are filed with the Securities and Exchange Commission (SEC). It looked to whether the non-U.S. person had “directed, ordered, or even been aware of the cover ups” that occurred and to whether this same person “had any involvement in the falsification of SEC filings in furtherance of those cover ups.” It also looked to whether the non-U.S. person’s person with the company “would have made him aware of, let alone involved in falsification of [SEC] filings.”

The court acknowledged that the law is “well-established that signing or directly manipulating financial statements to cover up illegal foreign action, with knowledge that those statements will be relied upon by United States investors” will serve to establish personal jurisdiction over a non-U.S. person. Though it did find there to be sufficient minimum contacts under the facts presented to it, the court suggested a much lower threshold may apply, such as some role in authorizing the bribe, the cover up, or the falsified filings, in order for there to be sufficient minimum contacts for establishing personal jurisdiction.

Previous Post
Global Anti-Bribery Compliance: Proportionate Procedures
Next Post
FCPA: Obstruction of Justice