As we have discussed previously, bribery of foreign government officials is the subject of many cases filed by the SEC under the Foreign Corrupt Practices Act. Those cases, which often bring significant recoveries, will increase in number as a result of rewards to whistleblowers under the new SEC Whistleblower program that we have followed.
The SEC today announced the successful conclusion of an FCPA investigation of Maxwell Technologies, Inc. The SEC announced it had filed a “settled” case through which Maxwell agreed to pay $6.3 million in disgorgement and interest, based on allegations that a Maxwell subsidiary “repeatedly” paid bribes to Chinese government officials. The object was to obtain business from Chinese entities owned by the state.
In a related criminal case, Maxwell reportedly agreed to pay an $8 million criminal penalty in installments.
According to the SEC’s announcement, as a result of this “bribery scheme, Maxwell SA was awarded contracts that generated over $15 million in revenues and $5.6 million in profits for Maxwell.”
FCPA cases should only increase based on the new rewards to SEC Whistleblowers.
I recently had the opportunity to meet and discuss the developing rules for the new SEC Whistleblower program with SEC Chairman Mary Schapiro, Director of Division of Enforcement Robert Khuzami, and SEC staff, as well as separately with each of the other Commissioners Luis A. Aguilar, Kathleen L. Casey, Troy A. Paredes, and Elisse B. Walter. I was impressed by the close attention each is paying to establishing what we hope will be a meaningful SEC Whistleblower program.
So long as industry representatives do not convince the SEC to jettison the proven procedures followed in the most highly successful whistleblower rewards programs under the False Claims Act and the IRS Whistleblower statute, the nation will have an historic opportunity to stop fraud that falls within the SEC’s jurisdiction.