In 2019, the overall number of corporate enforcement actions was slightly higher than in 2018, with twenty-five actions brought, compared to twenty-four in 2018. The number of individuals charged, using our parameters, increased markedly, with forty individuals charged or indictments unsealed in 2019 and two major jury verdicts in trials in long-running cases, United States v. Hoskins and United States v. Lambert. The cases in 2019 tended to be highly concentrated, with thirteen corporations accounting for all of the corporate enforcement actions, and individual enforcement actions concentrated in the PetroEcuador, Corpoelec, and PdVSA bribery schemes. Total corporate penalties this year nearly equaled the previous year—totaling $2.904 billion in 2019 and $2.908 billion in 2018. Over $1 billion of the 2019 penalties are related to the late-year enforcement action against Telefonaktiebolaget LM Ericsson, which represents one of the largest FCPA enforcement actions in history. Prior to this announcement, the sole outlier in 2019 had been MTS at $850 million. While over half of the year's penalties were thus attributed to outliers, the average excluding outliers remained fairly high compared to recent years, indicating that the remaining penalties were relatively evenly distributed amongst the other enforcement actions.
As we explain in this year-end Trends & Patterns, among the highlights from 2019 were:
- Twenty-five corporate enforcement actions, with total sanctions of approximately $2.9 billion, make 2019 a fairly typical year, ever-so slightly above 2018 in terms of number of FCPA enforcement actions and just slightly below 2018 for total corporate penalties. The year's enforcement actions were highly concentrated and the penalties were more evenly spread amongst defendants;
- Like recent years, two outlier enforcement actions (MTS, Ericsson) in 2019 had a significant effect on the average corporate sanction. Including the $850 million sanction against MTS and the $1.06 billion in penalties against Ericsson, the average corporate sanction in 2019 was over $207 million. Excluding MTS and Ericsson, the average drops to just under $82.8 million, a difference of about $124 million. The difference between the true average and average excluding outliers continues a pattern we have observed since 2016: in 2018, the true average was $171 million while the average excluding outliers was $18 million, in 2017 the true average was $151.2 million while the average excluding outliers was $83.3 million, and in 2016 the true average was $223.4 million while the average excluding outliers was $13.2 million;
- The median sanction of $25.2 million is up from 2018, when it was notably lower ($9.2 million) compared to recent years. 2019's median is more in line with the typical medians since 2015 ($29.2 million in 2017, $14.4 million in 2016, and $13.4 million in 2015);
- The SEC's nearly exclusive reliance on administrative proceedings, outside of the civil courts, to pursue enforcement actions against corporations and individuals, potentially in connection to recent and pending court decisions impacting the SEC's ability to obtain disgorgement;
- A trend towards confluence between economic sanctions and foreign corruption, with the Office of Foreign Assets Control designating numerous individuals based on alleged corruption, including involvement in bribery schemes in recent FCPA enforcement actions;
- The DOJ continued its recent trend of updating various enforcement policies, announcing: (i) minor revisions to the Corporate Enforcement Policy; (ii) a formalization of the Evaluation of Corporate Compliance Programs guidance; and (iii) guidelines on assessing inability to pay. However, the effect of the FCPA Corporate Prosecution Policy, announced late in 2017, was less apparent in 2019 than 2018, with only one formal declination issued by the DOJ, compared to three in 2018; and
- In the U.K., the Serious Fraud Office also issued updates to its guidance on corporate cooperation, with the SFO's director, Lisa Osofsky, emphasizing the importance and value of cooperation.
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