A company listed on a United States exchange may also have overseas operations. Such companies are subject to the Foreign Corrupt Practices Act of 1977 (“FCPA”), which prohibits them from making, offering, or promising illicit payments to foreign officials to influence their official acts or decisions. Examples of such violations include funneling money to a foreign government or a representative of a foreign government in exchange for assistance developing a project in that country, acquiring a lucrative contract, settling legal disputes, or influencing the outcome of regulatory matters.
A violation of the FCPA may give rise to securities law claims. For example, consider a pharmaceutical company that obtains approval of its drug by bribing a foreign country’s health authority. If the company’s stock price declines when the truth is revealed and the drug’s continued approval is called into question, then the concealment of the illegal bribery might be considered “misleading,” which allows investors to seek a recovery from the company for their injury. Further, violations of the FCPA may subject the company to civil penalty, criminal action, injunctions, or disgorgement of profits. These too might damage the company’s stock price when the market learns of them, and investors may seek recovery of these additional losses.
However, foreign FCPA frauds are often difficult to prove given that they commonly involve foreign laws, foreign regulatory bodies, and foreign financial statements. Experienced securities class action lawyers are key to the successful prosecution of such cases.
If you believe that a company has engaged in bribery, please contact class action attorneys at Glancy Prongay & Murray LLP.