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accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.” Id. § 78m(b)(2)(B). That requirement, however, is qualified when an issuer holds less than 50% of the voting power in a firm; in that case, the issuer is required only to “proceed in good faith to use its influence, to the extent reasonable under the issuer's circumstances, to cause such . . . firm to devise and maintain a system of internal accounting controls consistent with” the above statutory requirement. Id. § 78m(b)(6). These “books and record” and “internal controls” provisions are enforced civilly by the SEC, and criminally by the DOJ. One very important fact about FCPA enforcement is that, at least in the case of corporate defendants, very few cases are actually litigated. (In fact, only two companies have ever gone to trial against the Department of Justice in the 37 years of the FCPA.51) As a result, there is very little case law authoritatively interpreting the statute. Virtually all corporate FCPA enforcement actions are settled with the DOJ through plea agreements (negotiated prior to charging), or through devices called “deferred prosecution agreements” (DPAs) or “non-prosecution agreements” (NPAs). In these settlements, negotiated between the DOJ and the company, the company usually admits to some form of wrongdoing and pays fines or penalties, and sometimes agrees to retain a third-party “monitor” to oversee the corporation’s compliance program for some period of years. In return, the government usually agrees either not to file charges (in the case of an NPA) or, in the case of a DPA, to file charges but agree to dismiss them pending fulfillment of the terms of the agreement. In the case of a guilty plea, the government will generally agree to recommend a particular sentence to the courti. Avoiding a formal criminal indictment is valuable to corporate defendants, as even an indictment could be very damaging to the firm, leading to a significant drop in share value. Furthermore, iSEC FCPA enforcement actions, which are often coordinated with DOJ, typically end with either an administrative cease-and-desist order or the filing of a settled civil complaint. Traditionally, the SEC did not require issuers to admit or deny the allegations contained in the cease-and-desist orders or civil complaints.
8 litigating an FCPA case would be lengthy and costly for the firm—and carries with it the risk of astronomical penalties if the firm is unsuccessful. (Of course, on the other side, the government is also eager to settle these cases, as its budget and staff are limited.) When negotiating settlements with firms accused of FCPA violations, the DOJ and SEC have declared they will take a number of factors into account when determining an appropriate resolution to the case. These factors include: The seriousness of the alleged violations;