This Comment argues that, while the Foreign Corrupt Practices Act (“FCPA”) excludes those with U.S. citizenship from being “foreign officials” to protect defendants from an ambiguous criminal statute, businesses should structure compliance programs to treat “foreign officials” as including those with U.S. citizenship. The FCPA prohibits bribing “foreign officials,” but it does not define the word “foreign” or give any guidance to what citizenship the official must have to fall under the FCPA. This Comment answers that question by identifying how a court would use past approaches to interpret the term “foreign” to include actors with U.S. citizenship, but ultimately would adopt a defendant’s narrow definition under the statutory construction rule of lenity. This Comment then argues that businesses should consider this loophole nonexistent for compliance program purposes.
Whether Justice Scalia chopped down the “judicial oak which ha[d] grown from little more than a legislative acorn” or cleared an entire forest of “botanically distinct tree[s]” when he created the transactional test in Morrison v. National Australia Bank, Ltd., he undoubtedly changed the legal landscape for both international and antifraud securities laws. The transactional test—which the Supreme Court designed to act as a bright-line rule to supplant the older “conduct” and “effects” tests developed by the Second Circuit—gauges whether a U.S. court can hear an antifraud securities case containing extraterritorial elements.
AMANDA S. NAOUFAL
In SEC v. Citigroup Global Markets, Inc., Judge Rakoff rejected a $285 million settlement between the Securities and Exchange Commission (“SEC” or “Commission”) and Citigroup. The complaint alleged that Citigroup failed to disclose its role in the selection of assets for a billion dollar collaterized debt obligation. Judge Rakoff rejected the consent judgment, concluding it was neither fair, nor reasonable, nor adequate, nor in the public’s interest. The critical issue in Judge Rakoff’s decision was the validity of the SEC’s “no admit/deny” policy, which is a policy that has long been accepted by courts. He objected to this policy because it required the court to employ its power without the parties providing him a factual basis, which constrained his ability to exercise his independent judgment. This decision has great implications for the SEC’s enforcement program. The SEC relied on courts’ longtime acceptance of a standard that produced an efficient and effective process with regards to consent judgments.