The Commodity Futures Trading Commission (“CFTC”) recently announced the settlement of its first enforcement action involving foreign corruption. In December 2020, the CFTC issued a Consent Order, finding that Houston-based energy and commodities trading firm Vitol, Inc. defrauded counterparties, harmed other market participants, and undermined the integrity of U.S. and global physical and derivatives oil markets by engaging in fraudulent and manipulative conduct. Notably, Vitol’s fraudulent conduct involved foreign corruption, including bribes and kickbacks to employees and agents of state-owned entities in Brazil, Ecuador, and Mexico, to obtain preferential treatment and unauthorized access to nonpublic trading information.
Vitol must pay more than $95 million in civil penalties and disgorgement as a result of the CFTC order. This hefty fine comes in addition to the criminal charges filed by the Department of Justice (“DOJ”) against Vitol for conspiracy to violate the FCPA arising from the same conduct at issue in the CFTC enforcement action. The DOJ charges resulted in a Deferred Prosecution Agreement that included a criminal fine, a portion of which the CFTC agreed to offset against the civil fine it ordered.
Though this historic enforcement action is the first of its kind for the CFTC, it is probably not the last. In March 2019, the CFTC launched its foreign corrupt practices program, announcing its intent to investigate and prosecute violations of the Commodity Exchange Act involving foreign corrupt practices and issuing an Enforcement Advisory on self-reporting and cooperation for such violations. According to Chairman Heath P. Tarbert, the Vitol enforcement action “demonstrates that the CFTC will actively pursue fraud tied to foreign corruption and manipulation that impacts the U.S. derivatives and related physical markets.”
This action by the CFTC cements the addition of a new regulator in the foreign corrupt practices space. In addition to punishment from the DOJ and Securities and Exchange Commission, commodity market participants now also face consequences from the CFTC for engaging in foreign corruption. With increasingly high stakes, it is critical for companies to reexamine their risk profiles and ensure that they have effectively implemented robust compliance programs to mitigate the risk of corruption.
Heather Hatfield represents clients in corporate investigations, white-collar crime investigations and defense involving the Foreign Corrupt Practices Act (FCPA), complex contract disputes, oil and gas litigation ...
Blake Runions assists clients with broad range of business disputes and investigatory matters, including partnership disputes, internal investigations, and commercial litigation.
Prior to joining the Firm, Blake worked in the ...
Jamie Godsey represents public and private corporations, partnerships, and small companies on a broad range of complex business and commercial litigation. Her experience includes a wide variety of matters such as contractual ...
- Biden Administration Plans Increased Enforcement of Compliance Issues
- MoneyGram Settlement Illustrates the Need to Maintain Robust Controls
- Whistleblower Protections Incentivize Development of Strong Anti-Retaliation Programs
- New Action by the CFTC Means Higher Stakes for Commodity Market Participants
- Transparency International’s 2020 Corruption Perceptions Index Indicates Corruption is Affecting COVID-19 Response
- Expected Enforcement Trends under the Biden Administration
- FCPA: 2020 Year-In-Review
- Goldman Sachs Reaches Record $2.9 Billion Settlement of Malaysia FCPA Violations
- Recent Advisory Opinion Provides Important Guidance to Mitigate Sanctions Risk
- DOJ Releases Rare FCPA Opinion Procedure
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019