In December 1977 Congress passed the Foreign Corrupt Practices Act (FCPA),¹ making the U.S. the first country to prohibit payments to foreign government officials to secure a business advantage. For most of the FCPA’s existence, enforcement actions were rare. In recent years, however, the Department of Justice (DOJ) and the Securities Exchange Commission (SEC) (collectively, “the Agencies”) have markedly increased their enforcement of the FCPA. To date, the debate over the FCPA’s cost to firms has proceeded without much systematic evidence. To fill this void, the Searle Civil Justice Institute (SCJI) gathered data on FCPA enforcement actions involving foreign bribery. In August 2012, the SCJI released its first report (the “2012 Report”), which provided a descriptive analysis of FCPA enforcement actions over time.² This 2014 Report covers all bribery-related FCPA actions through April 2013, and expands on the 2012 Report by exploring the economic impact of FCPA enforcement on targeted firms. 

Key Findings 

• Targeted firms tend to have a high equity value. 
• Targeted firms concentrate most in the heavy manufacturing, pharmaceutical and healthcare, and oil and gas industries. 
• The announcement of an FCPA investigation decreases the value of a firm. 
• The specific FCPA charge, however, has a large impact on firm losses. 
• Reputational losses can overwhelm direct costs when a firm is charged with both 
  bribery and financial fraud.