ComEd Settlement Proves the Foreign Corrupt Practices Act Is Not Limited to Foreign Corruption

On September 28, 2023, the Securities and Exchange Commission (“SEC”) announced that it reached a settlement with Exelon Corporation and its subsidiary, Commonwealth Edison Company (“ComEd”), relating to charges that ComEd engaged in a multi-year bribery scheme. Exelon and ComEd agreed to pay a $46.2 million civil penalty to resolve the charges.

According to the SEC’s Order, from 2011 through 2019, ComEd engaged in a scheme to corruptly influence and reward a government official for his assistance in passing favorable legislation. ComEd allegedly arranged for the government official’s associates to obtain jobs, vendor subcontracts, and monetary payments. The SEC’s Order finds that the monetary payments were arranged through third-party vendors to conceal their size and to assist ComEd in denying any oversight of the associates. The SEC charged Exelon and ComEd with violations of the books and records and internal controls provisions of Section 13(b)(2) of the Exchange Act.

Although this fact pattern sounds like the Foreign Corrupt Practices Act (“FCPA”) cases we often address on this Blog, there is a key difference: the government official here was not a foreign official. It was the former Speaker of the Illinois House of Representatives, Michael Madigan. Nevertheless, the SEC used the FCPA’s accounting provisions in this domestic bribery context. The Department of Justice (“DOJ”) similarly used the FCPA’s books and records provision to criminally prosecute ComEd for the alleged bribery scheme in 2020 despite the lack of a foreign bribery allegation.

The DOJ’s and the SEC’s use of the FCPA outside the foreign bribery context may signal an expansion of anti-corruption enforcement for domestic corruption. Regardless, the recent announcement should serve as a reminder that the FCPA has a very broad application and companies should implement robust compliance programs that mitigate both foreign and domestic bribery risks.

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