FUND MANAGERS – DEALING WITH FCPA RISKS
RC: To what extent are fund managers finding themselves in the FCPA spotlight? What enforcement trends have you seen in the past 12-18 months associated with fund level compliance with the FCPA?
Nelms: Investigations by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) into alleged violations of the FCPA have targeted companies operating in a wide range of industries and markets, and both the DOJ and SEC have made clear in recent years that the banking and finance industries remain the focus of substantial enforcement efforts. Indeed, in the 2012 ‘Resource Guide to the U.S. Foreign Corrupt Practices Act’, the DOJ and SEC specifically identified banking and finance as priorities for FCPA enforcement. Beginning in early 2011, the SEC initiated an investigation to gather information from certain banks, private equity firms, and hedge funds, about their relationships with foreign sovereign wealth funds (SWFs), as well as about the compliance controls put in place to monitor those relationships. In light of the increasing attention being given by US authorities to FCPA compliance by hedge funds and other financial institutions, fund managers must understand the risks both of investing in portfolio companies operating in high risk countries and markets, as well as soliciting investments from the SWFs that have grown significantly in the last decade into a substantial and tempting source of investment capital.
Oct-Dec 2014 Issue
Baker & McKenzie LLP
Ernst & Young LLP
New Mountain Capital, LLC
Ropes & Gray LLP