How Do Bribery Investigations Affect Investors?

April 17, 2011

In the last couple of weeks, Johnson & Johnson, Hercules Offshore Inc, and Comverse Technology Inc. (medical, oil, and tech companies respectively) have settled and/or been investigated by the Securities and Exchange Commission for violations of the Foreign Corrupt Practices Act (“FCPA”).

Federal securities laws prohibit companies from trading on U.S. exchange if they are engaging in conduct that violates the FCPA (i.e., bribing foreign officials).

Question is, do investors benefit from this conduct because the companies are expanding their market while risking small SEC fines?

Maybe, but investors should just be careful for when the SEC decides to make an example of a company engaging in this type of conduct.

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