White-collar crime refers to nonviolent crimes committed for monetary gain. These crimes are often motivated by gaining money, property, or services or avoiding losing them. According to the FBI, they are characterized by deceit, concealment, or violation of trust. However, they may also be driven by a desire to gain a competitive advantage.
Historically, white-collar employees have been designated by office jobs and management, while blue-collar employees wore blue shirts despite working physically demanding jobs.
Due to technological advancements and financial developments, white-collar crimes have increased exponentially. As a result, the internet facilitates a variety of white-collar crimes, such as fraudulent emails requesting money in exchange for help.
Some definitions of white-collar crime only include offenses committed by individuals for their own benefit. On the other hand, a corporate crime includes “large-scale fraud perpetrated by many within a corporation or government entity.” The FBI identifies corporate crime as one of its highest enforcement priorities since it results in substantial financial losses for investors.
According to the FBI, these crimes may also negatively impact investor morale and the U.S. economy.
What Is the Foreign Corrupt Practices Act?
The Foreign Corrupt Practices Act (FCPA) governs foreign business activities in the United States. Bribery is punished under the act in order to deter corrupt foreign practices. The act also specifies how companies with securities must maintain accurate and transparent records in accordance with the Securities Exchange Act of 1934.
Congress created the FCPA during the 1970s to stop U.S. companies from offering bribes to foreign officials. The act was amended in 1977 and again in 1998 to enlarge the scope of its anti-bribery provisions.
The FCPA concerns primarily multinational companies. These companies are prone to violating FCPA’s anti-bribery provisions due to their interactions with foreign officials. The FCPA also applies to multinational firms that issue stock abroad.
How Is Securities Fraud Prosecuted?
The Securities and Exchange Commission (SEC) prosecutes securities fraud through civil and administrative actions. The United States Department of Justice brings criminal proceedings. It is also possible to be convicted of securities fraud by both the federal and state governments due to blue sky laws that are similar to federal laws.
How Can an Investor Make a Claim?
For an investor to have a claim for securities fraud, they must rely on the information given and suffer some type of harm. Federal securities fraud laws also require that the fraud affect interstate commerce, but this can be as simple as giving information over the phone or the internet. Furthermore, individual states may have their own securities fraud laws.
What Else Should I Know About White Collar Crimes?
Government prosecutors prosecute the majority of white-collar crimes. To determine what charges to file, prosecutors examine the nature of the crime and the police reports of the arresting officers.
Grand juries sometimes make the charging determination for felony white-collar crimes. 15-23 randomly selected individuals view the evidence and decide if charges should be filed.
Prosecutions and defenses collect evidence and prepare for hearings and trials simultaneously.
White-collar crimes may be punished in a variety of ways, including:
- Compensation payment to victim;
- Community service;
- Criminal fines;
- Incarceration in either jail or prison, depending on whether the crime is a misdemeanor or a felony; or
- Probation.
What Is Securities Fraud Law?
Securities fraud is any fraud used in connection with the sale of a security. It is similar to spoofing. This regulation prohibits anyone from defrauding investors or making untrue statements. Taking securities from accounts and manipulating the market can also be considered theft.
How Can an Investor Make a Claim?
An investor must rely on the information given and suffer some harm in order to file a claim for securities fraud. The fraud must also affect interstate commerce to fall under federal securities fraud laws, but this can be as simple as giving information over the phone. Additionally, individual states may have their own securities fraud laws.
What Does the FCPA Prohibit?
The Foreign Corrupt Practices Act prohibits US-based individuals and organizations from paying foreign officials to further their business interests. Amendments to the act also prohibit bribery of foreign issuers.
The FCPA Mandates Accurate Books and Internal Controls
In addition to the anti-bribery provision, the FCPA requires companies with securities listed in the U.S. to abide by specific accounting provisions.
Such companies must:
- Make and keep books (and other records) reflecting fair and accurate corporate transactions.
- Develop and maintain an internal accounting system.
In adherence to these provisions, companies must develop adequate accounting and oversight systems and comply with their disclosure and due diligence obligations.
Can a Small Business Violate the FCPA?
A small or mid-sized business that engages in business with a foreign official is also subject to the FCPA’s provisions, even though it generally applies to large companies. Individuals may also violate the FCPA through their activities.
How Can My Business Comply with the FCPA?
You or your business should not facilitate bribes or corrupt payments to comply with the FCPA’s anti-bribery provisions. Business activities cannot be furthered by paying a foreign official.
Due to the fact that many of their business activities may take place under the radar, small businesses are more likely to become targets of corrupt solicitations unwittingly. A small business may lack a sophisticated management team, making it a perfect target for unscrupulous local officials.
Who Enforces the Foreign Corrupt Practices Act (FCPA)?
While the U.S. Department of Justice (DOJ) is the immediate enforcer of the Foreign Corrupt Practices Act (FCPA), the SEC also has the power to coordinate the act’s enforcement.
Criminal sanctions, such as criminal fees and imprisonment, may be used by the Department of Justice to implement the act. The Securities and Exchange Commission may impose miscellaneous civil penalties.
What Are the Penalties for Violating the FCPA?
A violation of the FCPA can result in fines or imprisonment. Companies and individuals are both subject to penalties.
FCPA violations may result in the following penalties:
- Individual liability resulting in a prison sentence of up to 5 years
- Suspensions from various government contracting programs
- Criminal fines (up to $2 million for a company and up to $100,000 for an individual)
- Up to $100,000 of civil fines (both for a company and an individual)
- Disgorgement of the violator’s pecuniary gain
- Additional civil fines of up to $500,000 for companies and $100,000 for individuals
FCPA violations cannot be indemnified by the company.
Are There Any Defenses to FCPA Liability?
Several defenses may be presented against an FCPA violation.
For instance, you can claim that:
- The payment only facilitated a non-discretionary action by the foreign official (“grease payment”).
- The payment was lawful under the country’s laws where it was made (very rare nowadays).
- The payment was reasonable and for a minimal purpose.
- You lacked the necessary criminal intent.
Do I Need to Seek Legal Advice?
You should notify the DOJ if you suspect a foreign official, agent, or business entity is soliciting a corrupt payment. It is also a good idea to seek legal assistance when conducting business in foreign countries. Furthermore, if you suspect that you have been involved in making a corrupt payment, a criminal defense attorney should evaluate your situation.
