In two rulings earlier this year, judges Richard J. Sullivan and Shira A. Scheindlin of the U.S. District Court for the Southern District of New York analyzed whether foreign defendants whose conduct occurred outside the United States were subject to U.S. jurisdiction under the Foreign Corrupt Practices Act (FCPA).1 Sullivan’s ruling has been interpreted by some as supporting a broad and expansive application of the FCPA, while Scheindlin in her decision expressly sought to limit the application of the statute. In a more recent decision issued this August, Sullivan analyzed and distinguished Scheindlin’s decision and affirmed his prior ruling. Read together, all three opinions should serve as reminders to foreign companies and individuals that the FCPA’s reach is broad, and that even if their conduct occurs outside the United States, and is not principally aimed here, they could be held accountable for FCPA violations in U.S. courts.
‘SEC v. Straub’
The defendants in the case before Sullivan, SEC v. Straub, No. 11 Civ. 9645 (S.D.N.Y.), are Hungarian citizens believed to be residing in Hungary. At the time of their alleged misconduct, the defendants were executives of a Hungarian telecommunications company called Magyar Telekom, which was controlled by a German concern called Deutsche Telekom. In a complaint filed on Dec. 29, 2011, the U.S. Securities and Exchange Commission (SEC) alleged that the defendants schemed to bribe officials in Macedonia in an effort to stave off the regulatory effects of a new electronic communications law on Magyar’s Macedonian subsidiary, MakTel.
