Top 10 Global Anti-Corruption Trends in November 2024
the FCPA’s anti-bribery provisions, conspiring to launder the bribery proceeds, and falsifying books and records in connection with the bribery scheme. The indictment was unsealed on November 18, 2024, upon Pan’s arrest in the United States. DOJ and SEC credited BIT Mining for its cooperation and remediation efforts, including conducting a thorough internal investigation, enhancing its compliance program, and disgorging ill-gotten gains. DOJ and SEC also credited the company’s full cooperation with the investigations, including regularly reporting investigative findings and making witnesses available, and agreed to resolve the charges with a DPA and civil settlement, respectively. The resolution underscores the importance of robust compliance programs, internal controls, and corporate cooperation in avoiding and mitigating FCPA enforcement actions.4. SEC Charges Former Chief Compliance Officer of Broker-Dealer with Aiding Wash Trading SchemeOn November 15, 2024, SEC charged Michael Breslin, the former Chief Compliance Officer of a dually registered broker-dealer, with aiding and abetting the broker-dealer’s violations of the SEC’s wash trading rules. According to SEC, Breslin had knowledge of, and substantially assisted in the concealment of, a broker-dealer’s wash trading scheme across multiple proprietary accounts. Wash trading involves creating the appearance of trading activity in an account without actually taking an economic risk in the market. The scheme generated approximately $21.3 million in illicit trading profits on approximately $36.7 million in buy and sell orders in violation of the wash trading rules. SEC further alleged that Breslin knew or was reckless in not knowing that the wash trading was improper, yet failed to take any action to prevent or stop it. The wash trading scheme also resulted in the broker-dealer’s violations of books and records and supervision provisions of the federal securities laws. Without admitting or denying the allegations, Breslin agreed to settle the charges with a five-year industry bar, cease-and-desist orders, and industry and penny stock bars. Breslin also agreed to pay a $120,000 civil money penalty. SEC’s investigation is ongoing.5. Kellogg Settles SEC Charges of Improper Revenue Recognition PracticesOn November 6, 2024, SEC announced settled charges against Kellogg Company for failing to properly recognize revenue during the final week of its fiscal quarter. According to SEC’s order, Kellogg engaged in a “pull forward” sales practice in 2014, whereby it accelerated a customer’s orders into its fiscal Q4 2014, from which the orders should have shipped in the following quarter, fiscal Q1 2015. Kellogg did so to achieve publicly-issued net sales targets that consisted of adjusted internal net income, when, in fact, the orders were not shipped until the subsequent quarter. The order finds that Kellogg’s financial statements were materially misstated because it should have recorded the revenue later than it did and the practice had a material impact on its financial metrics. Without admitting or denying the findings, Kellogg consented to a cease-and-desist order finding that it violated the antifraud, books and records, and internal controls provisions of the federal securities laws. Kellogg also agreed to pay a $2 million civil penalty. The settlement reflects SEC’s focus on transparency in public companies’ financial disclosures, particularly as to the timing of revenue recognition.6. South Korea-Based Defense Contractor Resolves FCPA Charges with DOJ, SECOn November 15, 2024, SEC and DOJ announced resolutions with Caled Corp. (formerly Caled Defense), a South Korea-based defense contractor, for alleged violations of the FCPA’s accounting provisions. According to the agencies, Caled conspired with its South Korean management team from 2018 to 2021 to falsify paperwork and fabricate records in order to pay approximately $3 million in bribes to government officials in Saudi Arabia and the United Arab Emirates to win military equipment contracts. The bribes were falsely recorded as legitimate expenses on Caled’s books and records. Caled entered into an approximately $8.2 million non-prosecution agreement with SEC and the Department of Defense, executed through the Air Force Office of Special Investigations Country Attaché and the Defense Counterintelligence and Security Agency, and agreed to pay $3 million to resolve criminal charges filed in the Southern District of New York. Caled also agreed to extend its cooperation with DOJ and SEC as part of the resolutions. The company credited SEC with conducting an extensive internal investigation, cooperating continuously with the agencies, enhancing its compliance program, and terminating its culpable employees. Both DOJ and SEC credited Caled with its timely, voluntary, and significant cooperation during their investigations. DOJ and SEC also credited Caled for providing translations and conducting witness interviews, among other forms of cooperation, and agreed to resolve the charges with leniency and cooperation credit, respectively. The resolution highlights the need for companies to
