Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

A farewell to Kara Brockmeyer but her legacy continues

Tom Fox | April 18, 2017

Kara Brockmeyer announced her retirement from the Securities and Exchange Commission in April, after a 17-year career with the Commission. Her stint at the Commission coincided with the dramatic rise in enforcement of the Foreign Corrupt Practices Act by both the SEC and Justice Department. From 2011 until her retirement, Brockmeyer led the SEC’s FCPA unit. Brockmeyer was quoted in the SEC Press Release, at the announcement of her retirement, as saying: “It has been an honor and a privilege to work with the incredibly talented and dedicated staff in the FCPA Unit and throughout the Division of Enforcement and the SEC. I am very proud of the results that the unit has achieved over the past five years.” Brockmeyer’s tenure as head of the FCPA Unit is a clear example of how the Commission fulfills its mandate to protect investors in U.S. public companies and provides greater transparency from those companies seeking access to the U.S. capital markets; most particularly through the enforcement of the Accounting Records provisions of the FCPA, including the Books and Records and Internal Controls provisions.

Brockmeyer’s term was one of the most innovative and productive for the Commission in the prosecution of FCPA violations. Under her tenure, the Commission brought its first FCPA enforcement action against a private equity entity, ended the question of whether tangible benefits (other than cash) provided to foreign officials were FCPA violations, and sought to bring a wider range of culpable individuals to justice for their attempts to engage in bribery and corruption. Under Brockmeyer’s tenure, the SEC developed and used Deferred Prosecution Agreements (DPAs) for the first time for the prosecution of an individual and pioneered the use of Non-Prosecution Agreements (NPAs) for FCPA prosecutions by the Commission, thereby expanding the tools available for FCPA enforcement. The numbers under Brockmeyer’s tenure were considerable: 72 FCPA enforcement actions brought by the Commission, with judgments and orders totaling more than $2 billion in disgorgement, prejudgment interest, and penalties.

Yet Brockmeyer’s most lasting legacy—and one of the things that she is most proud of—is her work, together with that of the Justice Department, to develop a more worldwide approach to the investigation and enforcement of anti-corruption laws. This involved working with investigatory bodies and enforcement agencies literally across the globe, to fight the international scourge of bribery and corruption. Perhaps most notably, Brockmeyer founded and served as the co-head of the Enforcement Division’s Cross-Border Working Group, a proactive risk-based initiative focusing on U.S. companies with substantial foreign operations, and serving as a member of the Enforcement Division’s Cooperation Committee and the Enforcement Advisory Committee.

This Cross-Border Working Group, together with a similar group at the Justice Department, led a series of bootcamps for investigators and prosecutors from outside the United States on bribery and corruption investigations techniques and strategies. This group also trained prosecutors on how to prosecute such cases in their own jurisdictions. All of this was accomplished with three conferences dedicated to the training of foreign prosecutors on investigations, best practices around anti-corruption compliance program and cooperation between countries in the sharing of documents and other evidence. Over the past five years, this has helped to create a network of international cooperation in the global war against bribery and corruption. In addition to forming liaisons, this has increased the sophistication of foreign prosecutors in both investigations of bribery and corruption and in understanding compliance programs around anti-corruption laws.

Brockmeyer has been not only a diligent public servant for the SEC’s mandate, but she has worked with the compliance community tirelessly to educate it on SEC investigation and enforcement of the FCPA.

At the ACI 2016 National FCPA Conference, Brockmeyer, on a panel with and Daniel Kahn, chief, FCPA Unit, Fraud Section, Criminal Division at the Justice Department, discussed these bootcamps as a way for U.S. regulators and authorities to garner better professional relationships. In turn, this would lead to more joint and coordinated international investigations to assist the United States in FCPA and other anti-corruption investigations. But this has meant more than simply parallel investigations; it has also resulted in coordinated resolutions. These formal trainings have allowed U.S. regulators to also make inroads into increasing prosecutions of such conduct.

Brockmeyer spoke about five major resolutions in 2016; Och-Ziff, Embraer, VimpelCom, Odebrecht, and JP MorganChase. All of these enforcement actions involved significant cooperation with foreign investigation services. They all have spun off ancillary enforcement actions outside the United States as well. This run of major international cooperation continued into 2017 with the announcement of the Rolls-Royce anti-corruption settlement. As powerful as Brockmeyer’s work over her tenure has been, I think it is the legacy of international cooperation in the fight against corruption which may well be seen as her greatest legacy.

It is this wide-ranging international cooperation that will lead the fight against the international scourge of bribery and corruption, increasing the fight for transparency and justice.

Case in point, during the March 23 confirmation hearing on Jay Clayton’s nomination as chairman of the Securities and Exchange Commission, Sen. Sherrod Brown (D-OH) asked Clayton what his specific plans were for enforcement of the FCPA. Here is how Clayton answered: “U.S. authorities, including the SEC, other financial regulators, and law enforcement agencies, both at home and abroad, play an important role in combating government corruption. I believe the FCPA can be a powerful and effective means to affect this objective. I also believe that international anti-corruption efforts are much more effective at combating corruption if non-U.S. authorities are similarly committed and seek to coordinate. Fortunately, international enforcement efforts appear to be more prevalent than they were a decade ago.”

Clayton’s remarks point toward coordination of enforcement action resolutions, or what Brockmeyer termed the “one pie” concept at the ACI conference. There, she explained that increasingly, enforcement authorities are moving toward one total cost to anti-corruption violators, which would be equitably split up by authorities where the corruption occurred or by the countries that had jurisdiction. This means that companies that self-disclose to multiple regulators and extensively remediate, along the lines laid out in the Justice Department’s Evaluation of Corporate Compliance Programs and FCPA Pilot Program, are more likely to garner credit with U.S. regulators for fines paid to overseas authorities.

All of this means that the SEC under Brockmeyer, together with the Justice Department, has created an active and robust international anti-corruption enforcement regime, which is producing results around the world. Any U.S. company doing business outside the United States must have a compliance program in order to prevent, detect, and remedy any corruption issues. Furthermore, if they want to receive the maximum credit from multiple regulatory bodies, they will need just such a best-in-class compliance program. Just as these actions have driven enforcement, they will also act to drive compliance and compliance programs more fully across the globe as well. For just as companies do not want to run afoul of the FCPA, they do not want to run afoul of similar laws such the U.K. Bribery Act, Brazil Clean Companies Act, France’s Sapin II, or even Chinese domestic anti-corruption laws that caused GlaxoSmithKline such grief in 2014.

Brockmeyer has been not only a diligent public servant for the SEC’s mandate, but she has worked with the compliance community tirelessly to educate it on SEC investigation and enforcement of the FCPA. She has spoken at numerous conferences and other events. It was under her tenure that the SEC, together with the Justice Department, released the seminal review of all things FCPA related in their jointly published “A Resource Guide to the U.S. Foreign Corrupt Practices Act” in November 2012. This document continues to be the best single source reference for the statute, its interpretation, enforcement actions, and declinations up to that date and articulation of the Ten Hallmarks of an Effective Compliance Program.

So, a tip of the hat and hearty applaud for Kara Brockmeyer in thanks for her outstanding service to the SEC, compliance community, and the global fight against corruption. Much continued success to her.