U.S. Foreign Corrupt Practices Act's Applicability to Non-U.S. Entities Sponsoring American Depository Receipts

Reprinted with permission from the January 2007 issue of Business Law Journal.

This article discusses the U.S. Foreign Corrupt Practices Act's (FCPA) bribery and accounting provisions, their jurisdictional requirements and applicability to foreign entities sponsoring American depository receipts (ADRs) on U.S. securities markets. These issues continue to gain importance as the global economy becomes increasingly integrated and companies based outside the United States seek to participate in the U.S. securities markets through the sponsorship of ADRs. Many times these foreign entities are completely unaware that the simple sponsorship of ADRs on U.S. markets — without any other jurisdictional act, conduct or nexus — may alone be enough to subject the foreign entity to the expansive power of the FCPA and the American federal judicial system. As such, this article is written with a mind to the international practitioner that may be attempting to evaluate potential liability and jurisdictional predicates or to pro-actively counsel an ADR sponsoring client with regard to the FCPA.