US And UK Regulators Provide Guidance On Anti-Corruption Controls


Article by Roger M. Witten , Kimberley A. Parker , Jay Holtmeier , Stephen Pollard , Klaus Schubert and Bridget Petherbridge Summary

In recent weeks, each of the DOJ, SEC and UK's FSA have provided detailed guidance on the elements of an effective anti-corruption compliance program. In the case of DOJ and the SEC, the guidance was issued in conjunction with a public announcement that they had declined to prosecute Morgan Stanley for violations of the FCPA due to, among other things, its robust anti-corruption compliance program. These pronouncements provide a benchmark for companies to evaluate their anti-corruption compliance programs.

In recent years, companies around the globe have launched efforts to implement or improve anti-corruption compliance policies and procedures in order to prevent or mitigate violations of the FCPA and, more recently, the UK Bribery Act. For most of this period, these efforts were largely undertaken without the benefit of detailed guidance from the US and UK regulatory authorities as to what, in their view, constitutes an adequate anti-corruption compliance program. In recent weeks, however, each of the DOJ, SEC and UK's FSA has provided such guidance and, in the case of DOJ and the SEC, have for the first time publicly declined to prosecute a company—Morgan Stanley—in light of the effectiveness of its compliance program. In the case of DOJ and the SEC, the guidance came in the form of a guilty plea by a former Morgan Stanley managing director who was accused of making improper payments to a Chinese government official. The FSA's guidance was not issued in the context of a specific case; rather, the FSA published the results of its recent review of the anti-corruption compliance systems at 15 major financial institutions. Taken together, these financial industry developments shed light on what US and UK regulators expect of companies—financial institution or otherwise—regarding the adequacy of their anti-corruption efforts.

Morgan Stanley/Garth Peterson

On April 25, 2012, a former Morgan Stanley managing director, Garth Peterson, pleaded guilty in United States District Court to knowingly violating Morgan Stanley's FCPA internal controls, and simultaneously settled a civil case brought by the SEC alleging knowing circumvention, bribery, and a violation of the Investment Advisers Act of 1940. Contemporaneous with the resolution of the Peterson cases, DOJ and the SEC also publicly announced that they were declining to prosecute Morgan Stanley in connection with Peterson's conduct, citing Morgan Stanley's robust anti-corruption compliance program, as well as its voluntary disclosure and cooperation with the governmental investigations.


Peterson had, prior to...

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