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Investigations

March 14, 2018

SEC Following DOJ Lead in Granting Leniency to Self-reporting Companies

By Matthew G. Lindenbaum, Steven H. Joseph

In its first Foreign Corrupt Practices Act (“FCPA”)[1] case in six months, the SEC agreed to a favorable settlement with a company that self-reported and cooperated with the agency, echoing the conciliatory approach to corporate entities that the Department of Justice recently adopted. The SEC’s approach in this case echoes DOJ’s FCPA policy of granting leniency to corporate entities to reward cooperation and encourage self-reporting.

On March 12, 2018, Elbit Imaging Ltd. announced a settlement with the SEC related to potential bribes in connection with property transactions in Romania and the United States. In 2016 and 2017, Elbit, an Israeli holding company with subsidiaries that include real estate investors and developers, self-reported that internal investigations revealed $27 million in payments between 2007 and 2012 to “consultants” and “sales agents” with no record of work performed. The SEC charged Elbit with violations of the FCPA’s books-and-records provision because the payments were allegedly falsely recorded as legitimate business expenses for services rendered. Notably, there was no evidence that the payments were actually used to bribe foreign officials. Elbit approached the SEC with a settlement offer that resulted in Elbit paying $500,000 in civil penalties without admitting or denying the charges.

In its Administrative Order, the SEC explicitly credited Elbit’s self-reporting, cooperation, and remedial efforts for its decision to cap the company’s penalties.

In determining to accept the Offer, the Commission considered remedial acts that Respondent promptly undertook, its self-reporting, and its cooperation afforded to the Commission staff, including having conducted a thorough internal investigation, voluntarily providing detailed reports to the staff, fully responding to the staff’s requests for additional information in a timely manner, and providing translations of certain documents.

We covered this DOJ FCPA policy and related guidance in a recent article on this blog. The SEC’s approach in this case suggests that this conciliatory approach to corporate entities may cut across agencies under the current administration. Companies conducting their own investigations will want to consider this trend as they investigate potential wrongdoing.

Nelson Mullins’s White Collar Defense and Government Investigations Group can help your company navigate the ever-changing landscape of government regulations and oversight. Please contact us for advice on FCPA compliance, internal investigations, and government investigations.


[1] The FCPA makes it illegal for any company traded on a U.S. stock exchange to bribe a foreign official, to fail to keep accurate books and records, and to fail to maintain adequate internal accounting controls. 



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