As asset managers continue to invest in emerging markets, expand their investor base or form joint ventures, they must be well-versed in global anti-bribery/anti-corruption legislation. Failure to comply with these regulations can result in severe consequences, including fines, penalties, prosecution, imprisonment, profit disgorgement, government debarment and rescission of licenses. And while many of these laws have been in place for years, additional global legislation adds to the complexity of compliance.
Asset managers have had attention from regulators for some time and should be prepared and vigilant to minimize their anti-bribery/anti-corruption risk. For example, federal authorities have pursued a multi-year investigation into one of the largest publicly traded hedge-fund firms and filed charges that the firm directly or indirectly paid bribes to government officials in several African nations to secure natural resource deals and obtain foreign investments in its managed funds. On Sept.29, the SEC announced that the firm agreed to pay over $400 million in penalties to settle civil and criminal charges. In addition, several individuals were charged, including the company CEO, who agreed to pay nearly $2.2 million to settle a record-keeping violation with the SEC.
Asset managers who accept foreign investments, particularly from government-owned funds like sovereign wealth funds and foreign pension funds, and who hold investments in foreign companies, may have the highest risk, but regulators may also impose fines and sanctions on companies for the actions taken by retained consultants and agents representing them internationally. Further, in certain cases, officers of asset managers may be prosecuted individually based on their involvement in the alleged violations.
The regulatory environment around anti-bribery/anti-corruption risk will remain active. In addition to the standards set by U.S. regulations such as the Foreign Corrupt Practices Act, the International Organization of Standardization has indicated that it will release a new set of standards
for small, medium and large organizations in the public, private and nonprofit sectors later this year.
To avoid penalties and safeguard your company’s hard-earned reputation, a robust anti-bribery/anti-corruption program tailored to your organization’s specific risks is critical. Consultation from an independent third party, like an accounting firm, can help you understand and navigate regulatory requirements, develop and implement an effective anti-bribery/anti-corruption compliance program that is tailored to the needs and risk profile of your company, perform investigations of specific activity, and develop and implement remediation programs while you pursue growth.
William P. Olsen
Corporate Compliance Practice Leader, Forensic Advisory Services
T +1 703 847 7519