To say regulators in the US and UK have traditionally used different tools to ferret out and punish fraud and corruption is a considerable understatement. As compared with the Serious Fraud Office (SFO) and the Ministry of Justice (MOJ), the United States Securities and Exchange Commission (SEC) and their counterparts at the Department of Justice (DOJ) take a more active approach to identifying and prosecuting – and in appropriate cases, settling – fraud and corruption cases.
In order to identify, as soon as possible, activity that might run afoul of anti-fraud and corruption laws, US regulators actively encourage voluntary disclosures and whistleblower tips from the business community. Neither the US culture of voluntarily reporting possible incidents of fraud or corruption to appropriate regulatory or criminal authorities, however, nor its welcoming whistleblower environment, have taken root in the UK. Indeed, only in recent years has the UK begun to earnestly promote self-reporting, and it is openly opposed to putting in place a system that would actively encourage (and monetarily incentivize) whistleblowers to report fraud or corruption.
When it comes to resolving known cases of fraud or corruption, the UK, again, adopts a strikingly different model to that employed in the US. Deferred prosecution agreements and binding plea agreements – popular in the US – are virtually non-existent in the UK. And the enforceability of plea agreements in the UK courts is a truly dubious prospect. Also, little, if anything, has been said in the UK about the possibility of employing non-prosecution agreements in seemingly appropriate cases.
Many of the differences in tack reflect patterns of practice that over time became entwined in the UK’s patchwork regulatory framework. In the Bribery Act era, however, the SFO – and, indeed, the MOJ – appear increasingly likely to explore some of the successful investigative and dispute resolution techniques that have knit themselves into the US regulatory and enforcement fabric.
In a series of five blogs, we will look in the coming weeks at several successful SEC and DOJ techniques for identifying and resolving fraud and corruption cases, with a specific eye toward tools the SFO and MOJ have expressed some interest in implementing. In PART II, we will begin with an analysis of the self reporting (or voluntary disclosure) culture and requirements in the US and UK. In PART III, we will look at the use of whistleblower incentives in the US to encourage would-be tipsters to come forward to regulatory agencies with information about possible instances of fraud or corruption. PART IV focuses on the use of Deferred and Non-Prosecution Agreements in the US as a means of resolving fraud and corruption cases, and their potential application in the UK. We round out the series, in PART V, with a look at the use of binding settlement or plea agreements in a civil and criminal context.
The McGuireWoods Guest Bloggers are Robert Plotkin, a partner based in McGuireWoods LLP’s Washington and New York offices and head of the firm’s SEC Enforcement Defense group, and Kurt E. Wolfe, an associate based in McGuireWoods LLP’s Washington office and a member of the firm’s Government, Regulatory and Criminal Investigations department.