Tag Archives: Jay Clayton

Guest Post: How Will Nationalist Election Outcomes in the US and UK Affect Foreign Anticorruption Enforcement?

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Professor Rachel Brewster of Duke Law School and Mat Tromme, Project Lead & Senior Research Fellow at the Bingham Centre for the Rule of Law, contribute today’s guest post, which is based on discussions at a recent Bingham Center-Duke Law School FCPA Roundtable:

In the past year, we have twice seen voters make a significant turn toward nationalism. In June 2016, in a move that was largely motivated by protectionist views, the UK voted to leave the EU, and in November, the United States elected Donald Trump, who campaigned on an “America First” promise. What do these developments mean for US and UK enforcement of their respective laws against overseas bribery (the Foreign Corrupt Practices Act (FCPA) and UK Bribery Act (UKBA), respectively)? Many worry that, insofar as government leaders view anticorruption laws as harming their country’s international competitiveness (a dubious assumption), then nationalistic fervor can lead to weaker enforcement. This is a reasonable concern in both countries—but a more careful analysis of the situation suggests uncertainty is greater in the UK than it is in the US.

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Why Does the SEC Enforce the FCPA?

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Donald Trump’s nomination of Jay Clayton to chair the Securities and Exchange Commission (SEC) has attracted some attention and concern from the anticorruption community. That concern is due mainly to a report issued by a New York Bar Foundation committee, chaired by Mr. Clayton, which criticized the Foreign Corrupt Practices Act (FCPA) for its alleged adverse and asymmetric impact on U.S. corporations. Though it remains to be seen how strongly committed Mr. Clayton is to the views expressed in the report, the concern is understandable given that the SEC is one of the two agencies—along with the Department of Justice (DOJ)—that is responsible for enforcing the FCPA. This controversy also highlights another, broader question that some FCPA critics have raised: Why is the SEC even involved in FCPA enforcement in the first place?

Congress created the SEC in 1934 through the aptly named Securities Exchange Act to enforce federal regulations regarding the trade of securities after they have been issued. The main impetus for the SEC’s creation was the belief that an under-regulated securities market helped drive the 1929 stock market crash. However, over the past 80 years, the SEC has expanded into other areas of enforcement—such as FCPA enforcement—that seem tentatively tied to the SEC’s original mandate. Some have argued that due to resource limitations, it does not make sense for the SEC to pursue vigorous FCPA enforcement at the expense of diverting resources from protecting investors. In pushing this point, some critics also point out that the SEC’s major regulatory fumbles of the past decade coincide with the escalation of FCPA enforcement activity—which perhaps suggests that expanding the SEC’s responsibilities beyond its original mandate has indeed weakened the agency.

The reasons for the SEC’s involvement in FCPA enforcement are partly historical, as explained further below. But beyond that, despite the critics’ complaints, in fact FCPA enforcement remains a valuable use of the SEC’s resources in the 21st century.

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Guest Post: Living in a Kleptocracy–What to Expect Under President Trump

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Bonnie J. Palifka, Assistant Professor of Economics at Mexico’s Tecnológico de Monterrey (ITESM) contributes today’s guest post:

The news regarding President Donald Trump appointments and nominations, and the increase in foreign governments’ business at Trump properties, has caused considerable concern regarding possible conflicts of interest, nepotism, insider trading, and other types of grand corruption. Many are worried about what this means—if President Trump’s tendencies toward crony capitalism, or quasi-kleptocracy, are as serious as his critics fear, what can we expect will happen over the next four or eight years?

While grand corruption among the political elite may be new for US citizens, this challenge is all too familiar in many other parts of the world. As a long-time resident of Mexico and corruption scholar, I have some insight regarding life in a relatively corrupt environment, which might be relevant to what the US is about to face: Continue reading →

How Much Should FCPA Hawks Worry About Trump’s Pick for SEC Chair?

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Every time I write about the impact that the Trump Administration will have on FCPA enforcement, I’m reminded of the old joke about the actor hired to play the gravedigger in a production of Hamlet: When his wife asks what the play is about, he replies, “Well, it’s about this gravedigger, who meets a prince….” Even if we limit our focus to corruption-related issues, FCPA enforcement might not crack the top-5 in terms of high-priority concerns in the Trump Administration. Nonetheless, since the FCPA is one of the things I follow, and one of the things that a big chunk of the US anticorruption community spends a lot of time thinking about, I suppose it’s worth continuing to comment on this issue from time to time.

As regular GAB readers likely know, I’m both something of an “FCPA Hawk” (see here and here), and something of a pessimist when it comes to the likely consequences of a Trump presidency for FCPA enforcement (see here and here). Now that we know President-Elect Trump’s picks to head the two agencies responsible for FCPA enforcement—the Department of Justice and the Securities & Exchange Commission—how much should FCPA Hawks like me worry that these appointees will significantly scale back and/or politicize FCPA enforcement efforts?

The confirmation hearings for Jeff Sessions, Trump’s nominee for Attorney General, are going on today, and for now I don’t have much to say about how his appointment might impact FCPA enforcement. (With respect to the DOJ, I’m actually much more interested in, and concerned about, who’s appointed to head the DOJ’s Criminal Division and the Fraud Section.) Let me instead say a few words about Trump’s pick for SEC Chair, Jay Clayton, currently a partner at Sullivan & Cromwell, a prestigious US law firm.

There’s already been quite a bit of commentary about the Clayton pick, both generally and with respect to the FCPA specifically. I’ll confess right up front that I know very little about Mr. Clayton; I’d never heard of him before Trump picked him for SEC Chair, and I haven’t yet had time to do any detailed research. Based solely on preliminary media reports and some of the discussion that’s already happened, I’d say there’s (1) at least one good reason that FCPA Hawks should be concerned about the choice; (2) at least one not-good reason that some FCPA Hawks (and others) are concerned about the choice; and (3) at least one reason to be maybe cautiously optimistic, or at least relieved. Let me touch on each in turn: Continue reading →