This week’s headlines suggest regulators seeking to pinpoint and charge individuals involved in alleged criminal activity are making headway in their push.
In one such action, prosecutors from the U.S. attorney’s office for the Southern District of New York said this week that French citizen Frederic Cilins had pleaded guilty to one count of obstruction for attempting to block an an FBI investigation into possible violations of the Foreign Corrupt Practices Act and laws proscribing money laundering.
As Washington, D.C.–based Dorsey and Whitney partner Thomas Gorman pointed out in a March 10 post on his “ SEC Actions” blog, Cilins’ plea dovetails with the strategy recently announced by the Justice Department’s top FCPA enforcement official. “Last week new FCPA Chief Patrick Stokes announced that the prosecution of individuals would be a priority,” Gorman wrote. “This point has become a recurring theme not just in FCPA cases where the international nature of the actions can pose difficulties, but in other actions.”
Meanwhile, that theme was reinforced Tuesday when the Securities and Exchange Commission charged eight individual officers and directors of Agfeed Industries Inc., including the CEO, CFO, and controller, with accounting fraud involving allegedly falsified sales from operations in China.
As Gorman noted in a separate blog post, “Since the market crisis enforcement officials have heard repeated calls to prosecute not just companies but high ranking corporate officials,” Gorman wrote about the AgFeed case. “While the Commission brought a series of market crisis actions against firms and individuals, as part of the new ‘get tough’ policy individuals will be a focus.”
(As Law.com reported Monday, Benjamin Lawsky, New York state’s top banking regulator, recently told the Financial Times that his agency, too, plans to maintain its focus on bringing people, not organizations, to justice.)
The SEC demonstrated the shift in its enforcement emphasis anew Wednesday, by responding to the news that Fabrice Tourre, the “Fabulous Fab” of Goldman Sachs fame caught with damning e-mails revealing his questionable marketing of shoddy investments, was ordered to pay $825,000 in fines. The sum was just shy of the $1 million the SEC requested, The New York Times’ Dealbook blog pointed out.
“We’re pleased that the judge’s decision imposes the disgorgement amount we recommended as well as other significant penalties for providing false marketing materials to investors,” SEC enforcement director Andrew Ceresney said in a statement posted on the SEC website. “The ruling reflects the SEC’s intent of pursuing meaningful sanctions to punish individuals responsible for misconduct and deter others from violating the federal securities laws.”