FCPA Liability Does Not Reach Successor When Target’s Misconduct Was Beyond FCPA’s Jurisdiction, DOJ Affirms, Outlining M&A Best Practices

The SEC/DOJ FCPA Guidance says that an acquisition does not create liability where none existed before.  In its second Opinion Procedure Release of 2014, the DOJ reaffirms the limits of FCPA liability, announcing that it would not take enforcement action against a U.S. acquiring company based on its foreign target’s pre-acquisition conduct, which was not subject to the FCPA’s jurisdiction before the acquisition.  The company explained its pre-acquisition diligence and its post-acquisition plan to bring the target in compliance.  The release comes at a time when the DOJ and SEC are facing judicial scrutiny of their interpretation of the jurisdiction of the FCPA.  See “Hoskins Provides an Opportunity for Judicial Determination of the FCPA’s Jurisdiction” (Oct. 8, 2014); “How Broad Is the FCPA’s Reach Over the Acts of Foreign Nationals?” (Mar. 20, 2013).

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