The FCPA Report

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

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By Topic: Venture Capital

  • From Vol. 5 No.22 (Nov. 9, 2016)

    Och-Ziff’s Settlement Offers Five Compliance Lessons for Hedge Fund Managers and Private Equity Investors 

    Och-Ziff’s recent settlements with both the SEC and DOJ for violations of the FCPA should be a wakeup call for hedge fund managers and private equity investors. “Although the enforcement authorities have historically focused their FCPA attention elsewhere, the DOJ and SEC are increasingly turning their attention to sophisticated financial firms,” Jason Jones, a partner at King & Spalding, explained. “Hedge funds, private equity firms, banks, and other firms often focus the majority of their compliance resources on anti-money laundering and sanctions programs, but anti-corruption must not be neglected,” he said. The details of the case, along with the terms of the company’s settlement, offer five key compliance lessons for firms in this industry. For details on the facts underlying the case and the terms of the settlement see our companion article “Dirty Dealings in Africa Result in SEC and DOJ Settlements for Och-Ziff and Two Executives” (Oct. 26, 2016).

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  • From Vol. 5 No.21 (Oct. 26, 2016)

    Dirty Dealings in Africa Result in SEC and DOJ Settlements for Och-Ziff and Two Executives

    After months of speculation, the SEC and DOJ recently announced a settlement with Och-Ziff Capital Management and two of its employees for more than $400 million. The settlement papers indicate that Och-Ziff’s varied dealings in Africa – both in terms of procuring investors and making private equity investments – were characterized by a nonchalant attitude toward compliance. The company routinely worked with intermediaries with questionable backgrounds and known ties to government officials. Once deals were made, little effort was put into ensuring that funds were spent appropriately. According to a team of attorneys at MoloLamken, the settlement is a “significant development” in both the FCPA and hedge fund worlds. “For a number of years, DOJ and the SEC have indicated that their FCPA enforcement efforts are focused on private equity and hedge funds,” they said, “but the Och-Ziff settlement is the first major move in that direction. And it’s a significant one: the case represents one of the largest FCPA settlements in history against one of the world’s largest hedge funds.” A companion article in our next issue will distill further compliance takeaways from the case. See “Addressing Corruption Risks and Compliance Strategies for Co-Investors (Part One of Two)” (Jun. 24, 2015); Part Two (Jul. 8, 2015). 

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  • From Vol. 5 No.2 (Jan. 27, 2016)

    Former Prosecutor Nat Edmonds Discusses the Implications of the Recent Changes to the U.S. Attorneys’ Manual (Part Two of Two)

    The DOJ recently announced that it had revised its U.S. Attorneys’ Manual (USAM) to reflect the Department’s efforts to hold more individuals accountable for corporate criminal activity. Although the new guidelines may not represent a significant change in policy, even subtle shifts in the USAM language may affect how a company approaches anti-corruption compliance, former prosecutor Nat Edmonds, now a partner at Paul Hastings, told The FCPA Report. We share Edmond’s insights in this two-part series. See “How Will the Yates Memo Change DOJ Enforcement? (Part One of Two)” (Sep. 23, 2015); Part Two (Oct. 7, 2015).

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Minimizing Anti-Corruption Deal Risk While Maximizing Returns on Venture Capital Investments

    More and more, venture capital firms are investing in start-ups seeking to expand internationally or with nascent cross-border operations in place.  Such investments offer opportunities for lucrative returns but also carry significant anti-corruption risk that VC firms are often ill-equipped to manage.  For many businesses, managing anti-corruption risk is a necessary cost center.  But VC firms are uniquely positioned to use that risk to drive a better deal and gain greater control over management and direction of the business.  In a guest article, G. Derek Andreson, Thomas M. Shoesmith, Marc H. Axelbaum, partners, and Ryan R. Sparacino, counsel, at Pillsbury Winthrop Shaw Pittman LLP, offer an assessment of the opportunities and risks that VC firms should consider, and conclude with four strategies for maximizing returns while limiting anti-corruption risks.  See also “Strategies for Mitigating the FCPA Risk of Entering Into Joint Ventures,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).

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