United States: Two Recent New York Decisions Provide Guidance On FCPA’s Reach Over Foreign Nationals

Keywords: guidance, FCPA, foreign nationals, Straub

Two recent decisions from the Southern District of New York provide some guidance on limits to the US government's ability to prosecute foreign nationals under the Foreign Corrupt Practices Act. The first decision, SEC v. Straub, et al.,1 supports the government's long-held view that the FCPA applies broadly to foreign nationals involved in foreign bribery schemes - regardless of the defendant's direct contacts with the United States - and significantly limits a foreign defendant's ability to assert a statute-of-limitations defense. The second decision, SEC v. Sharef et al.,2 on the other hand, makes clear that the FCPA's reach does have limits under principles of personal jurisdiction.

The Straub Case

In Straub, the defendants were executives at Magyar Telekom, a telecommunications company. The defendants allegedly bribed public officials in Macedonia to mitigate the effects of a new law, which subjected Magyar to increased competition in the Macedonian telecommunications market. At the time of the alleged bribes, Magyar and its parent, Deutsche Telekom, were publicly traded on the New York Stock Exchange and registered with the SEC. The government alleged that the bribes were recorded in the corporations' books and records "in a manner that did not reflect the true purpose of the contracts." Further, defendants allegedly provided false management representation letters to Magyar's auditors. According to the SEC's complaint, had Magyar auditors known these facts, "they would not have ... provided an unqualified audit opinion to accompany Magyar['s] annual report [to the SEC]."

Defendants first moved to dismiss on personal jurisdiction grounds. During the proceedings, the SEC told the court that the jurisdictional theory the SEC was advocating "may be breaking new ground." But Judge Richard Sullivan disagreed, holding that the court had jurisdiction over the defendants because "their concealment of [the] bribes, in conjunction with Magyar's SEC filings, was allegedly directed toward the United States." The court characterized as "overblown" the defendants' argument that the court's ruling would mean that "any individual director, officer, or employee of an issuer in any FCPA case" would be subject to personal jurisdiction. The court stated that it was not "creat[ing] a per se rule regarding employees of an issuer but rather bas[ing] its decision on a fact-based inquiry." The court's opinion, however, alluded to few, if any, limiting principles on the SEC's broad view of personal jurisdiction.

The defendants also moved to dismiss on statute of limitations grounds. The court acknowledged that "[i]t [wa]s undisputed that more than five years ha[d] elapsed since the SEC's claims first accrued." Nevertheless, the court held that, under the plain language of the catch-all limitations period set forth in 28 U.S.C. § 2462, "an offender must be physically present in the United States for the statute of limitations to run."

The Sharef Case

In Sharef, the defendant was an executive working for an Argentine subsidiary of Siemens, a German corporation. According to the SEC's complaint, between 1996 and 2007, Siemens paid more than $100 million in bribes to government officials in Argentina. The SEC did not allege that the defendant had been directly involved in authorizing or paying the bribes. Instead, the complaint alleged that a Siemens managing board member recruited defendant to facilitate the bribes because of his longstanding ties to government officials in Argentina. The bribes were allegedly authorized by top executives at Siemens and members of its managing board. According to the complaint, approximately $31.3 million of the bribes occurred after March 12, 2001 - when Siemens became subject to US securities laws - and, in the course of paying these bribes, Siemens made false certifications to the SEC.

Defendant moved to dismiss on personal jurisdiction grounds and Judge Shira Scheindlin granted the motion. Citing Straub, the court noted "[i]t is by now well-established that signing or directly manipulating financial statements to cover up illegal foreign action, with knowledge that those statements will be relied upon by United States investors satisfies th[e] [personal jurisdiction minimum contacts] test." The court concluded, however, that the "exercise of jurisdiction over foreign defendants based on the effect of their conduct on SEC filings is in need of a limiting principle." The court distinguished Straub, noting that the defendant "neither authorized the bribe, nor directed the cover up, much less played any role in the falsified [SEC] filings."

The court also pointed out that the SEC had not "alleged that [defendant's] position as Group President of [the] Siemens [subsidiary] would have made him aware of, let alone involved in falsification of these filings." Finally, the court acknowledged that the complaint alleged that defendant had calls with a Siemens official in New York regarding the bribery scheme and that a portion of the bribery payments were deposited in a New York bank. But these facts did not alter the court's analysis since the defendant "did not place the calls" to New York, nor did the defendant "direct that the funds be routed through a New York bank."

Bolstering its conclusion, the court noted that exercising personal jurisdiction over the defendant would be unreasonable. The court noted defendant's "lack of geographic ties to the United States, his age, his poor proficiency in English, and the forum's diminished interest in adjudicating the matter ... [since the United States government] ha[d] already obtained comprehensive remedies against Siemens' and Germany ha[d] resolved an action against [defendant] individually."


The Second Circuit will likely weigh in on these issues and provide additional guidance in this complex area of law. As Judge Scheindlin wrote in Sharef, "under the SEC's theory [of personal jurisdiction], every participant in illegal action taken by a foreign company subject to U.S. securities laws would be subject to the jurisdiction of U.S. courts no matter how attenuated their connection with the falsified financial statements." The Straub decision provides some support for the SEC's expansive view. And both Straub and Sharef make clear that the SEC is aggressively enforcing the FCPA without regard to a foreign defendant's direct contacts with the United States. Further, the Straub decision all but eliminates a statute of limitations defense for a foreign national as long as the individual remains outside the United States. Thus, in light of Straub, companies operating in foreign places should address all allegations that raise potential FCPA concerns, no matter how long ago the alleged misconduct occurred.

To learn more about our FCPA capabilities, please visit the following:
White Collar Defense & Compliance
Securities Litigation & Enforcement
International Trade


1. No. 1:11-cv-09645-RJS (S.D.N.Y. Feb. 8, 2013).
2. No. 1:11-cv-09073-SAS (S.D.N.Y. Feb. 19, 2013).

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2013. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions