The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

Articles By Topic

By Topic: SEC Filings

  • From Vol. 3 No.7 (Apr. 2, 2014)

    Audit Committee Responsibilities Before, During and After Internal Investigations: Remediating and Disclosing the Investigation to the Government and the Public (Part Four of Four)

    The end of an internal investigation does not mean the end of work on the matter for a company and the audit committee.  When an internal corruption investigation is completed, “the board should have a full briefing as to the findings, along with recommendations as to what next steps the organization should take,” William Olsen, leader of the Global Investigations and Anti-Corruption Services group at Grant Thornton LLP, told The FCPA Report.  The board and the company must make a series of critical and difficult decisions relating to, among other things, voluntary disclosure to the government, remediation measures and public disclosures.  The role the audit committee should play in these issues can be hard to define.  The FCPA Report is publishing a four-part article series on audit committee responsibilities throughout an internal investigation. This final article in the series suggests best practices for an audit committee after the “meat” of the investigation is done, including whether and how to self-report and other crucial post-investigation decisions on remediation and SEC disclosures.  The first article in the series, “Five Steps to Take Before the Investigation Begins,” detailed the committee's responsibilities, the risks and liabilities it faces and steps it should take before the need to investigate arises. The second article, “Determining When and How to Proceed,” discussed vetting complaints for the audit committee, determining when an investigation is needed and who should lead the investigation. The third article, “Retaining Counsel, Gathering Information and Documenting the Investigation,” discussed what the company and audit committee should do when initiating an investigation; when the company should retain outside counsel and other experts; how the company should gather information relevant to the investigation; and whether and how the company should document the investigation.

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  • From Vol. 2 No.21 (Oct. 23, 2013)

    When and How Companies Should Include FCPA Risk Disclosures in SEC Filings: Compendium (Part Three of Three)

    In the wake of increased FCPA enforcement, more companies are including FCPA risks in the Risk Factors sections of their SEC filings.  FCPA experts disagree on whether the benefits of such disclosure outweigh the disadvantages.  Some recommend that companies include detailed, FCPA specific risk factors in their filings.  Others suggest that companies include more general international risk factors.  To help shed light on this controversial and critical issue, The FCPA Report is publishing a multi-part series addressing the strategy and mechanics of disclosure of FCPA risk in the Risk Factors section of SEC filings.  The first article in the series discussed the SEC rules governing such disclosure and the evolution of the disclosure of risk factors related to international operations, and examined both sides of the debate as to whether such disclosure is necessary and prudent.  The second installment in the series discussed the consequences of including FCPA-specific disclosures and provided insight into drafting risk-based disclosure.  With help from Intelligize’s database and search tools, The FCPA Report has also organized this long-form compendium of actual FCPA and international operations risk factor disclosures from recent SEC filings to complement the series, including links to the relevant SEC filings.  The disclosures are grouped based how much detail the company chose to include about the FCPA.

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  • From Vol. 2 No.20 (Oct. 9, 2013)

    When and How Companies Should Include FCPA Risk Disclosures in SEC Filings (Part Two of Three)

    More and more companies are disclosing FCPA-specific risks in their SEC filings before an FCPA violation is even on their radar.  Some, however, question whether that kind of disclosure is advisable.  FCPA experts are sharply divided on whether the benefits outweigh the disadvantages of such disclosure, and guidance from the government is scarce and vague.  Should an FCPA violation, past or potential, influence this decision?  If a company does disclose FCPA risks, what should it be telling regulators and the public about those risks in its filings?  To help shed light on this controversial but critical issue, The FCPA Report is publishing a multi-part series addressing the strategy and mechanics of disclosure of FCPA risk in the Risk Factors section of SEC filings.  This article, the second in the series, discusses the consequences of including FCPA-specific disclosures and provides insight into drafting risk-based disclosure.  The first article in the series discussed the SEC rules governing such disclosure and the evolution of the disclosure of risk factors related to international operations, and examined both sides of the debate as to whether such disclosure is necessary and prudent.  The third and final article in the series will include a compendium of actual FCPA Risk Factor disclosures from recent SEC filings to aid practitioners in drafting their own disclosures, compiled with help from Intelligize’s database and search tools.  For more on disclosing corruption investigations in SEC filings, see The FCPA Report’s Guide on that topic – Parts OneTwo and Three, and the compendium of relevant disclosures in Part Four.

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  • From Vol. 2 No.19 (Sep. 26, 2013)

    When and How Companies Should Include FCPA Risk Disclosures in SEC Filings (Part One of Three)

    When, if ever, should a multi-national, publicly traded company discuss its FCPA risks in the “Risk Factors” section of its 10-K, 10-Q or offering prospectus?  Is such disclosure, before there is an FCPA violation on the company’s radar, necessary or prudent?  If a company does disclose FCPA risks, what should it be telling regulators and the public about those risks in its filings?  FCPA experts are sharply divided on whether the benefits outweigh the disadvantages of such disclosure.  Guidance from the government is scarce and hard to discern.  To help shed light on this controversial but critical issue, The FCPA Report is publishing a multi-part series addressing the strategy and mechanics of disclosure of FCPA risk in the Risk Factors section of SEC filings.  This article, the first in the series, discusses the SEC rules governing such disclosure and the evolution of the disclosure of risk factors related to international operations.  It also examines both sides of the debate as to whether such disclosure is necessary and prudent.  For more on disclosing corruption investigations in SEC filings, see The FCPA Report’s Guide on that topic – Parts One, Two and Three, and the compendium of relevant disclosures in Part Four.

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  • From Vol. 2 No.16 (Aug. 7, 2013)

    Estimating Loss: When and How to Calculate and Disclose Financial Reserves for FCPA Settlements (Compendium of SEC Filings)

    When a public company is negotiating an FCPA settlement with the government, it must consider its concurrent obligation to set and publicly disclose a financial reserve for that settlement.  This raises various issues.  How early should a company set a reserve?  When should the company disclose that reserve?  What language should the disclosure include?  The FCPA Report has published a three-part series (see part onepart two and part three) addressing crucial issues companies face when considering whether and how to compute and disclose financial reserves for FCPA settlements.  With help from Intelligize’s database and search tools, The FCPA Report has also organized this long-form compendium of actual FCPA reserve-related disclosures from recent SEC filings to complement the series.  The disclosures are grouped based on when in the investigation the company established a reserve, as follows: (1) Reserve Disclosure Made During Early Discussions with the Government; (2) Reserve Disclosures Made During the Course of the Government Investigation; and (3) Reserve Disclosures Made on the Eve of Settlement.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings when a company is considering setting a reserve in anticipation of an FCPA settlement.  To maximize the value of this compendium as a practice tool, this compendium also contains links to each of the filings discussed and quoted.

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  • From Vol. 2 No.15 (Jul. 24, 2013)

    Estimating Loss: When and How to Calculate and Disclose Financial Reserves for FCPA Settlements (Part Three of Three)

    When a company is involved in FCPA settlement negotiations with the government, it must consider whether those negotiations are likely to lead to a probable and estimable financial loss.  If so, the company may be required to reserve funds for the potential settlement and disclose its reserve in SEC filings.  When is setting a reserve appropriate?  How should that reserve be calculated?  When is disclosure of the reserve necessary?  This article is the third in a multi-part series addressing these and related crucial issues.  In particular, this article discusses how to calculate a reserve and how to craft the disclosures accompanying the setting of a reserve.  The first installment in the series discussed the accounting principles governing the setting of the reserve, examined when during an investigation a company should set a reserve and described who should be involved in setting the reserve.  The second article in the series discussed the issues a company should consider before setting a reserve, the risks related to setting reserves and the risks of miscalculating the reserve.  The final installment in the series will be a compendium of actual FCPA reserve-related disclosures from recent SEC filings compiled with help from Intelligize’s database and search tools.

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  • From Vol. 2 No.14 (Jul. 10, 2013)

    Estimating Loss: When and How to Calculate and Disclose Financial Reserves for FCPA Settlements (Part Two of Three)

    When a publicly traded company is negotiating an FCPA settlement, it must consider reserving funds for the associated loss.  Calculating a reserve becomes necessary when the company faces a probable, estimable and material loss.  Once that occurs, the company will likely be required to make a public disclosure about the reserve, exposing it to a host of potentially adverse consequences, including harm to the company’s reputation, a decrease in stock price and increased exposure to foreign prosecutions.  How should a company involved in settlement negotiations with the government address this sensitive issue?  How should it go about setting such a reserve?  When during those negotiations should the company begin to consider reserving funds for a future settlement?  How should the reserve be calculated?  How should it be disclosed?  The FCPA Report is publishing a multi-part series addressing these crucial issues.  This article, the second in the series, discusses the issues a company should consider before setting a reserve, the risks related to setting reserves and the risks of miscalculating the reserve.  The first installment in the series discussed the accounting principles governing the setting of the reserve, examined when during an investigation a company should set a reserve and described who should be involved in setting the reserve.  See “Estimating Loss: When and How to Calculate and Disclose Financial Reserves for FCPA Settlements (Part One of Three),” The FCPA Report, Vol. 2, No. 13 (Jun. 26, 2013).  The third and final installment will discuss how to calculate a reserve and how to draft the disclosures announcing the reserve.  It will also include a compendium of actual FCPA reserve-related disclosures from recent SEC filings, compiled with help from Intelligize’s database and search tools.

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  • From Vol. 2 No.13 (Jun. 26, 2013)

    Estimating Loss: When and How to Calculate and Disclose Financial Reserves for FCPA Settlements (Part One of Three)

    It is no secret that FCPA settlements can be monstrously expensive.  When faced with such a substantial loss, publicly traded companies often have an obligation to reserve funds in anticipation of a potential settlement and to disclose the amount of that reserve.  How should a company involved in settlement negotiations with the government go about setting such a reserve?  When during those negotiations should the company begin to consider reserving funds for a future settlement?  How should the reserve be calculated?  How should it be disclosed?  The FCPA Report is publishing a multi-part series addressing these and other crucial issues.  This article, the first in the series, discusses the accounting principles governing the setting of the reserve, examines when during an investigation a company should set a reserve and describes who should be involved in setting the reserve.  The second article in the series will discuss the issues a company should consider before setting a reserve and the risks related to setting reserves.  The third installment will discuss how to calculate a reserve and how to draft the disclosures announcing the reserve.  It will also include a compendium of actual FCPA reserve-related disclosures from recent SEC filings compiled with help from Intelligize’s database and search tools.

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    A Guide to Disclosing Corruption Investigations in SEC Filings: Compendium of SEC Filings (Part Four of Four)

    This is the fourth and final article in The FCPA Report’s series on when and how public companies should disclose FCPA and other corruption issues in SEC filings.  In this article, we have organized (with help from Intelligize’s database and search tools) a compendium of actual FCPA-related disclosures from recent SEC filings.  The filings are grouped based on the type of event that triggered the initial disclosure, as follows: U.S. government subpoena; U.S. government inquiry; foreign government investigation; internal compliance discovery; whistleblower allegation; and post-acquisition due diligence.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings relating to an FCPA issue.  To maximize the value of this compendium as a practice tool, this compendium also contains links to each of the filings discussed and quoted.  The first article in the series discussed factors that companies should consider when determining whether a public disclosure is appropriate; what experts a company should retain to help it make appropriate disclosure decisions; and the risks and benefits of disclosing at different stages of an anti-corruption investigation.  The second installment in the series detailed the risks inherent in disclosure and non-disclosure; addressed ways to diminish those risks, including handling media coverage; and discussed best practices when disclosing foreign investigations to the SEC.  The third article in the series provided insight on the most effective language to use in disclosures, and analyzed Wal-Mart’s disclosures at critical decision points in its recent investigation.

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  • From Vol. 2 No.11 (May 29, 2013)

    A Guide to Disclosing Corruption Investigations in SEC Filings (Part Three of Four)

    Many multi-national public companies with robust anti-corruption compliance programs will discover, at some point, evidence of potential fraud that requires an internal investigation.  See “Handling the Challenges of Overseas Anti-Corruption Investigations: Forensic Accountants, Government Expectations, Translators, Upjohn Warnings, Privilege Issues and Recording Interviews,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).  When a publicly traded company performs such an investigation, it is faced with a series of difficult questions.  Among the most vexing and urgent questions are whether and when the company should disclose the investigation in an SEC filing.  Should the company wait until it completes the investigation?  Should it wait until after it has disclosed to the DOJ and the SEC?  How much evidence of actual corruption is needed to justify the filing?  What information should the disclosure include?  When answering these questions, companies must consider the serious consequences of publicly reporting FCPA concerns.  Companies that publicly disclose such information may face civil lawsuits, stock price volatility, reputational issues, damage to employee morale and productivity, loss of current government contracts and debarment from future contracts.  See “Doing Business with the World Bank: Understanding and Avoiding Debarment,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013).  The FCPA Report is publishing a series of articles addressing best practices for disclosing anti-corruption investigations in SEC filings.  The series provides insight on when a company should disclose and strategies for mitigating the negative impact of a disclosure, including guidance on timing and language to include in the disclosure.  In addition to analysis and insight from practitioners, this series will include a compendium of actual FCPA-related disclosures from recent SEC filings compiled with help from Intelligize’s database and search tools.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings relating to an FCPA issue.  This article, the third in the series, provides insight on the most effective language to use in disclosures, and analyzes Wal-Mart’s disclosures at critical decision points in its recent investigation.  The first article in the series discussed factors that companies should consider when determining whether a public disclosure is appropriate; what experts a company should retain to help it make appropriate disclosure decisions; and the risks and benefits of disclosing at different stages of the anti-corruption investigation.  The second installment in the series detailed the risks inherent in disclosure and non-disclosure; addressed ways to diminish those risks, including handling media coverage; and discussed best practices when disclosing foreign investigations to the SEC.  Finally, in the last article in the series, The FCPA Report will publish the referenced compendium of SEC disclosures, categorized by their attributes.

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  • From Vol. 2 No.10 (May 15, 2013)

    A Guide to Disclosing Corruption Investigations in SEC Filings (Part Two of Four)

    Public companies that discover evidence of potential anti-corruption violations are faced with a series of difficult decisions.  One of the most critical decisions is whether and when the company should disclose the potential violation and investigation in its public SEC filings.  Public companies are required to disclose material information, but determining when an FCPA investigation becomes material is more of an art than a science.  Further complicating matters, making such a disclosure to the SEC can carry serious consequences, including civil lawsuits, stock price instability, reputational damage, waning employee morale and productivity, loss of current government contracts and debarment from future contracts.  The FCPA Report is publishing a series of articles addressing the crucial issues public companies face when anti-corruption allegations surface.  In addition to analysis and insight from practitioners, this series will include a compendium of actual FCPA-related disclosures from recent SEC filings compiled with help from Intelligize’s database and search tools.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings relating to an FCPA issue.  This article, the second in the series, details the risks inherent in disclosure and non-disclosure; addresses ways to diminish those risks, including handling media coverage; and discusses best practices when disclosing foreign investigations to the SEC.  The first article in the series discussed factors that companies should consider when determining whether a public disclosure is appropriate; what experts a company should retain to help it make appropriate disclosure decisions; and the risks and benefits of disclosing at different stages of the anti-corruption investigation.  The third installment will provide insight on the most beneficial language to use in disclosures and analyze Wal-Mart’s disclosures during different periods of its recent investigation.  Finally, in the last installment in the series, The FCPA Report will publish the referenced compendium of SEC disclosures, categorized by their attributes.

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  • From Vol. 2 No.9 (May 1, 2013)

    A Guide to Disclosing Corruption Investigations in SEC Filings (Part One of Four)

    When a company becomes aware of a bribery allegation, various difficult decisions materialize.  For public companies, chief among those decisions is whether, when and how to disclose the matter in an SEC filing.  Public companies are required to disclose material information or events affecting the company, but the definition of material can be amorphous, and the stakes are high.  Public disclosure of a corruption problem exposes companies to civil lawsuits, stock price instability, reputational damage, waning employee morale and productivity, loss of current government contracts and debarment from future contracts.  The potential consequences add urgency to the questions: “When does a company have to disclose?” and “How can a company minimize the negative impact of the disclosure?”  The FCPA Report is addressing these questions and others in a four-part series that will serve as a reference guide for disclosing corruption matters in SEC filings.  Specifically, this series will provide guidance on whether and at what stage of an internal investigation to make the disclosure and how to craft language to mitigate the fallout from such disclosure.  In addition to analysis and insight from sources, this series will include a compendium of actual FCPA-related disclosures from recent SEC filings.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings relating to an FCPA issue.  This article, the first in the series, discusses: factors that companies should consider when determining whether a public disclosure is appropriate; what experts a company should retain to help it make appropriate disclosure decisions; and the risks and benefits of disclosing at different stages of the anti-corruption investigation.  The second article in this series will: detail the risks inherent in disclosure and non-disclosure; address ways to diminish those risks, including how to handle the media; and discuss best practices when disclosing foreign investigations to the SEC.  The third article will provide insight on the most beneficial language to use in disclosures, and will analyze Wal-Mart's disclosures at different times in its FCPA investigation.  The fourth installment will be the referenced compendium of SEC disclosures, categorized by their attributes.

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  • From Vol. 2 No.3 (Feb. 6, 2013)

    Analysis of Public Filings Identifies the FCPA as a Top Risk to Operating Companies

    Despite the idiosyncratic risks that grabbed headlines during the fourth quarter of 2012 – Hurricane Sandy, the fiscal cliff and deepening uncertainty on the Euro zone periphery – a more constant risk continued to loom large in board rooms and corner offices.  According to an analysis of late 2012 public filings, the FCPA was one of the most commonly mentioned risk factors in public company disclosures.

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