The Resource Guide also notes that โa number of countries have implemented foreign bribery laws and significantly increased their enforcement efforts.โThe FCPA StatuteThe Foreign Corrupt Practices Act of 1977 (โFCPAโ), which amended the Securities and Exchange Act of 1934 (โExchange Actโ), consists of: (1) three anti-bribery provisions, each of which addresses a different scenario: 15 U.S.C. ยง 78dd-1, ยง 78dd-2, and ยง 78dd-3 (โProhibitionsโ); and (2) two accounting provisions, 15 U.S.C. ยง 78m(b)(2)(A) and ยง 78m(b)(2)(B). These accounting provisions complement the anti-bribery provisions because public companies must account for the assets, typically cash, which they allegedly use to pay bribes in these unlawful transactions.
7 15 U.S.C. ยง 78dd-2(h)(1).8 15 U.S.C. ยง 78m(b)(2).9 15 U.S.C. ยง 78m(b)(7).10 Id.11 15 U.S.C. ยง78m(b)(2).
Although the crackdown mainly focuses on Chinese officials and citizens, companies engaged in the Chinese financial sector should be mindful of this latest development. In violation of 15 U.S.C. ยงยง 78m(b)(2)(B), 78m(b)(5), and 78ff(a). Memorandum & Order, United States v. Ng, Case No. 1:18-cr-00538-MKB, ECF No. 202 (E.D.N.Y. Apr. 8, 2022).
Essentially, the term โissuerโ refers to any public company with shares traded on a U.S. exchange. Securities Exchange Act of 1934, ยง 13(b)(2), ch. 404, 48 Stat. 894 (as amended through Pub. L. No. 111-72 (2009)) (codified as amended at 15 U.S.C. ยง 78m(b)(2) (1998)). Note that this is not limited to U.S.-listed companies, but can also include foreign companies that are knowingly trading American Depository Receipts (โADRsโ) on U.S. exchanges.3 Securities Exchange Act of 1934, ยง 13(b)(2)(A) (codified as amended at 15 U.S.C. ยง 78m(b)(2)(A)).4 Securities Exchange Act of 1934, ยง 13(b)(2)(B) (codified as amended at 15 U.S.C. ยง 78m(b)(2)(B)).
The Petitioners contend that the following issues are grounds for a Petition for Review:Whether the [SECโs] economic analysis of Rule 13p-1 and Form SD is inadequate, in violation of 15 USC 78c(f), 15 USC 78w(a)(2) and 5 USC 603.Whether the [SECโs] refusal to adopt a de minimis exception to Rule 13p-1 is erroneous, arbitrary and capricious, or an abuse of discretion.Whether the [SECโs] interpretation of 15 USC 78m(p)(2)(B) as including non-manufacturers who โcontract to manufactureโ products is erroneous, arbitrary and capricious, or an abuse of discretion.Whether the [SECโs] interpretation of โdid originateโ in 15 USC 78m(p)(1)(A) as โreason to believeโฆmay have originatedโ is erroneous, arbitrary and capricious, or an abuse of discretion.
nder SEC Rule 10b-5(b), resolving a circuit split concerning whether private securities fraud claims could be based on an issuerโs failure to disclose information required under Item 303 of SEC Regulation S-K.Legal BackdropSection 10(b) of the Securities Exchange Act of 1934 makes it โunlawful for any person โฆ [t]o use or employ, in connection with the purchase or sale of any security โฆ [,]any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.โ 15 U.S.C. ยง 78j(b). The SEC implemented this prohibition in Rule 10b-5(b), which makes it unlawful for issuers of registered securities to โmake any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.โ 17 C.F.R. ยง 240.10b-5(b).Separately, Section 13(a) of the Exchange Act requires issuers to file periodic informational statements. 15 U.S.C. ยงยง 78m(a)(1), 78m(b)(1). These statements contain the information required by Item 303 of Regulation S-K, including a โ[d]escri[ption of] any known trends or uncertainties that have had or that are reasonably likely to have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations.โ 17 C.F.R. ยง 229.303(b)(2)(ii).Factual Background and Procedural HistoryMacquarie Infrastructure Corporation (โMacquarieโ) owns a subsidiary that operates large โbulk liquid storage terminalsโ in the United States. Op., at *2. One of the commodities stored in these terminals is No. 6 fuel oil, a fuel oil that typically has a sulfur content of around 3%. Id. In 2016, the United Nationsโ International Maritime Organization formally adopted IMO 2020, a regulation that capped the sulfur content of fuel oil used in shipping at 0.5% by the beginning of 2020. Id.Following the adoption of IMO 2020, Macquarie purportedly did not discuss that regulation in its disclosures. Id. at *2-
[5] See note 2, supra..[6] Complaint at 10 โ 13, U.S. v. Espaillat, Mag. No. 18-1522 (D. N.J. 2018).[7] Id.[8] 15 U.S.C. ยง 78m(b)(2)(B)(i) & (iii) (level of reasonable assurances required under these provisions is defined as such โdegree of assurance as would satisfy prudent officials in the conduct of their own affairs.โ 15 U.S.C. ยง 78m(b)(7)).[9] SEC Report, supra note 2, at 2.
und, beyond a reasonable doubt, a conscious purpose to avoid enlightenment.โโ) (quoting United States v. Zimmerman, 832 F.2d 454, 458 (8th Cir. 1987)); United States v. Jewell, 532 F.2d 697, 700 (9th Cir. 1976) (upholding jury instruction that a defendant โknowinglyโ possessed marijuana even if he was not actually aware that it was in his car if โhis ignorance in that regard was solely and entirely a result of his having made a conscious purpose to disregard the nature of that which was in the vehicle, with a conscious purpose to avoid learning the truth.โ); United States v. Gallo, 543 F.2d 361, 367 (D.C. Cir. 1976) (recognizing that โ[i]t may be true in a given case, such as where the notice was clear and was wilfully ignored, that evidence of such facts may be considered by the jury as part of the proof that an accused possessed the requisite knowledgeโ). 54) See15 CFR ยง 746. 55) 18 U.S.C. ยง 545. 56) The Human Trafficking Institute, โ2019 Human Trafficking Reportโ at 51, 84. 57) See 15 U.S.C. ยง 78m(b)(2)(A) (books and records provision); 15 U.S.C. ยง 78m(b)(2)(B) (internal accounting controls provision); see alsoA Resource Guide to the U.S. Foreign Corrupt Practices Act, Second Edition, at 38โ47. 58) SeeExecutive Order 13785; see alsoExecutive Order 13786. 59) See FCPA Resource Guide, Second Edition, at 71; see alsoUnited States v. Jeong, 624 F.3d 706, 710-12 (5th Cir. 2010) (โArticle 4.3 states that two signatories with concurrent jurisdiction over a relevant offense must, โat the request of one of them,โ consult on jurisdiction.โ).
834, 836 (2003) ("With the Sarbanes-Oxley Act of 2002, companies . . . [must] make certain real-time disclosures. . . . Issuers . . . [must] 'disclose . . . on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer, in plain English . . . as the Commission determines, by rule. . . .' 15 U.S.C. ยง78m(l). . . . [A] failure to do so can give rise to civil liability. . . . These disclosures include: (1)A change in control . . . ; (2)The company's acquisition or disposition of a significant amount of assets; (3)The company's bankruptcy or receivership; (4)A change in the company's certifying accountant; (5)The resignation of a company director; and (6)A change in the company's fiscal year. 15 U.S.C. ยง78m(l).").See also SEC Release Nos. 33-8400; 34-49424; File No. S7-22-02, Final Rule: Additional Form 8-K Disclosure Requirements and Acceleration of Filing Date (Aug. 23, 2004), explaining why and how the Commission changed Form 8-K's reporting requirements:Under the previous Form 8-K regime, companies were required to report very few significant corporate events.
231 42 U.S.C. ยง 1320a-7(a).2 42 U.S.C. ยง 1320a-7(b).3 See 15 U.S.C. ยง 78m(b)(2)(A)โ(B).4 See 15 U.S.C. ยง 78m(b)(5); 15 U.S.C. ยง 78ff(a).