DOJ and SEC Release Second Edition of FCPA Resource Guide

6 min

On July 3, 2020, the U.S. Department of Justice (DOJ or the Department) and U.S. Securities Exchange Commission (SEC) published the Second Edition of their joint Resource Guide to the U.S. Foreign Corrupt Practices Act (Resource Guide or Guide). Last week's update was the first new edition of the Resource Guide since its release in 2012 and the only revision in the past five years. The Second Edition of the Guide is substantially similar to the First Edition but with significant updates memorializing previously announced changes in DOJ policy and discussion of case law affecting the way the Department brings and charges cases.

The Resource Guide policy updates provide practitioners with additional guidance on the government's approach to the evaluation of corporate compliance programs, the application of the Foreign Corrupt Practices Act (FCPA) in mergers and acquisitions (M&A) transactions, and the imposition of corporate monitors, as well as memorializes the DOJ's FCPA Corporate Enforcement Policy. The updated case law included in the Guide provides valuable insight on the DOJ's approach to the Second Circuit's United States v. Hoskins decision regarding the FCPA's jurisdiction over foreign nationals based on conspiracy or accessory liability, as well as case law addressing the scope of the SEC's disgorgement power, the applicable statute of limitations for violations of the accounting provisions, and the requirements for criminal violations of the books-and-records and internal controls provisions.

Resource Guide Policy Updates

Evaluation of Corporate Compliance Programs

The Second Edition of the Guide incorporates the DOJ's Evaluation of Corporate Compliance Programs (ECCP). First introduced in 2017 and most recently updated in June 2020, the ECCP describes how prosecutors are to evaluate a company's compliance program in making corporate charging and settlement decisions. The updated Resource Guide focuses on the three "fundamental questions" prosecutors are expected to pose in evaluating a company's compliance program: (1) is the compliance program well designed?; (2) is the compliance program adequately resourced and empowered to function effectively?; and (3) does the compliance program work in practice?

FCPA in M&A Transactions

The updated Resource Guide includes much-needed guidance for practitioners in the context of M&A due diligence and integration. The guidance acknowledges the potential benefits of corporate M&A, specifically when a target is incorporated into an acquirer's "robust compliance program" in a timely manner. Additionally, the guidance recognizes that thorough pre-acquisition due diligence is not always practicable. In such cases, the DOJ and SEC will consider the timeliness and thoroughness of an acquirer's post-acquisition due diligence and compliance integration in determining whether successor liability is appropriate where violations are later uncovered.

Corporate Monitors

The revised Guide contains previously issued guidance on the factors prosecutors should consider in deciding whether to implement a monitor. The analysis begins with a cost-benefit analysis of the imposition of a monitor, weighing the potential benefits of an independent monitor "for the corporation and the public" against "the cost of a monitor and its impact on the operations of a corporation." The Resource Guide additionally focuses on four specific factors regarding the misconduct and remedial efforts of the corporation: (1) the existence of manipulation of company books and records and circumvention of compliance procedures in the underlying misconduct; (2) the pervasiveness of the misconduct, including the involvement of senior management; (3) the company's investment in remedial compliance measures; and (4) testing of the remedial measures and internal controls.

FCPA Corporate Enforcement Policy

The updated Resource Guide incorporates the DOJ Corporate Enforcement Policy, which, in 2017, formalized DOJ's FCPA "Pilot Program." The Corporate Enforcement Policy provides for a presumptive declination of prosecution for FCPA violations if a company "voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates" the misconduct. If a company is not eligible for a full declination due to recidivism or other aggravating circumstances, voluntary disclosure may still result in substantial cooperation credit and reduction of penalties of up to 50% from the low end of the Sentencing Guidelines.

DOJ Refinements from Case Law and Statutory Interpretation

Hoskins: Agency and Accessory Liability for Foreign Nationals

In 2018, the Second Circuit ruled in United States v. Hoskins that a foreign national cannot be found liable for violating the anti-bribery provisions of the FCPA under conspiracy or accomplice liability theories if that individual could not otherwise be held directly liable under the statute. The FCPA "does not impose liability on a foreign national who is not an agent, employee, officer, director or shareholder of an American issuer or domestic concern—unless that person commits a crime within the territory of the United States." The updated Guide recognizes that "at least in the Second Circuit," the Hoskins decision will limit DOJ's charging decisions but notes that a district court in the Northern District of Illinois has rejected the reasoning of Hoskins. The Resource Guide also explains that Hoskins does not limit conspiracy or aiding and abetting liability for the FCPA's accounting provisions, which apply to "any person" rather than to the specific categories of persons and activities enumerated in the anti-bribery provisions.

Kokesh and Liu: Disgorgement of Ill-Gotten Gains

The revised Guide also reflects two recent Supreme Court decisions narrowing the scope of the SEC's ability to seek disgorgement, including in FCPA enforcement actions. The Guide first cites the Court's 2017 decision in Kokesh v. SEC, which held that disgorgement was considered a "penalty" subject to the five-year statute of limitations of 28 U.S.C. § 2462. The Second Edition of the Guide also mentions the Court's recent decision in Liu v. SEC, which upheld the SEC's ability to seek disgorgement as an equitable remedy up to the limit of a defendant's net profits from the wrongdoing, and that the proceeds should be awarded for the benefit of the victims of the crime.

Statute of Limitations and Requirements for Criminal Violations of the Accounting Provisions

The Resource Guide memorializes two significant developments regarding the application of the books-and-records and internal controls provisions of the FCPA, which have combined to become one of the primary enforcement tools used by the SEC where the facts are insufficient to establish violations of the anti-bribery provisions. First, the updated Guide states that while substantive violations of the anti-bribery provisions of the FCPA are subject to a five-year statute of limitations under 18 U.S.C. § 3282, criminal violations of the FCPA accounting provisions are classified as "securities fraud offenses" and are subject to the six-year statute of limitations provided for in 18 U.S.C. § 3301. Second, the Second Edition of the Guide clarifies that criminal penalties for violations of the FCPA accounting provisions are limited to situations in which the defendant knowingly and willfully fails to maintain accurate books and records or implement an adequate system of internal accounting controls.


The Second Edition of the Resource Guide compiles the departmental policy and judicial developments in the FCPA of the last several years and provides valuable insight into the government's expectations and enforcement priorities. Companies and individuals with questions about the changes in the FCPA Resource Guide discussed above, or other revisions not included in this alert, should contact one of Venable's several experienced FCPA attorneys.