SEC Chair Jay Clayton criticized his foreign counterparts for their lack of anti-corruption enforcement, arguing that only through a collaborative global strategy on fighting offshore bribery will such efforts be successful.

In a statement to the Economic Club of New York, Mr. Clayton emphasized the importance of enforcing the Foreign Corrupt Practices Act ("FCPA") on a global scale. Mr. Clayton noted that while U.S. enforcement by the SEC has continued unabated for two decades, similar anti-corruption laws in many other countries are either not enforced or nonexistent. Mr. Clayton pointed out that the potential for a lack of enforcement is increased because (i) U.S. jurisdiction is effectively limited to regions where U.S. and U.S.-listed companies conduct business and (ii) government corruption remains prevalent in countries where there are attractive business opportunities. Mr. Clayton said it is "essential" that U.S. regulators work with international counterparts to implement effective enforcement strategies.

Mr. Clayton said that the SEC is also monitoring several other market issues, including:

  • the size of corporate debt in the aggregate, as well as by industry, location and type of holders, and credit quality;
  • the expected ceasing of publication of LIBOR at the end of 2021; and
  • the potential effects of Brexit on markets.


Joseph V. Moreno

Chair Clayton's comments were refreshingly blunt. He warned that despite great efforts by the United States to fight corruption worldwide, improvements are not coming to the places that need them most. Last year, Transparency International reported that only 11 major exporting countries - accounting for about a third of world exports - have active or moderate law enforcement against companies bribing abroad in order to gain mining rights, contracts for major construction projects, purchases of planes and other deals. Among the worst offenders are China and Russia which have little to no anti-foreign bribery enforcement. More surprising was the finding of declining levels of enforcement in countries typically considered more aligned with U.S. policy, including Austria, Canada, Finland, and South Korea. Foreign bribery and corruption is a serious issue, but as many often point out it does little good when only a handful of countries take it seriously. Good for Mr. Clayton to call out this conundrum rather than sugarcoat it.


Steven Lofchie

While the United States can justifiably feel some degree of pride in its efforts to fight commercial corruption outside the country, query whether the SEC should not also consider questions of practicality in bringing such cases. For example, the U.S. government brought an FCPA case against a firm that hired as interns the children of well-connected government officials in China. Though there is justification for that action, it was also, arguably, an impractical overreach. The SEC is not going to clean up the close ties between the government and industry in China, no matter how hard it goes after U.S. companies doing business there.

In the real world, not all sins are equal. There is a fairly large gap between running an intern program that looks favorably on the children of the well-connected and paying off a senior government minister to buy water purification systems that don't function properly. The SEC should really concentrate on the latter and not the former.

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