15 U.S.C. § 78dd–1 — Prohibited foreign trade practices by issuers

submitted 92 years ago by Pub. L. 95-213 to r/title-15-COMMERCE-AND-TRADE · 2,114 words · no verdicts yet

in plain englishAI-generated · not legal advice

Issuers of registered securities, and their officers, employees, or agents, may not corruptly use interstate commerce to bribe foreign officials, foreign political parties, or candidates to get or keep business. The law lists exceptions, defenses, and lets the Attorney General issue guidance and opinions on what's allowed.

(a) Prohibition. An issuer that has securities registered under section 78l, or that must file reports under section 78o(d), may not corruptly use the mail or any interstate-commerce channel to offer, pay, promise, or authorize paying money or anything of value to certain people, in order to help the issuer get, keep, or direct business to anyone. Neither may the issuer's officers, directors, employees, agents, or stockholders acting for it. The targets and purposes are: (1) A foreign official, to (A) influence an official act or decision, get the official to break their lawful duty, or secure an improper advantage, or (B) get the official to use influence with their government to affect a decision. (2) A foreign political party, party official, or candidate for foreign office, for the same kinds of purposes described in (1). (3) Any other person, if the payer knows the money or item will be passed along to a foreign official, party, or candidate for those same purposes. (b) Exception for routine governmental action. The ban in subsections (a) and (g) doesn't cover "facilitating" or "expediting" payments made to speed up a routine governmental action by a foreign official, party, or party official. (c) Affirmative defenses. It's a defense to a charge under subsection (a) or (g) that: (1) the payment was legal under the written laws of the foreign official's or party's own country; or (2) the payment was a reasonable, legitimate expense — like travel or lodging — directly tied to (A) promoting or explaining products or services, or (B) carrying out a contract with a foreign government. (d) Guidelines by Attorney General. Within one year of August 23, 1988, the Attorney General — after consulting the SEC, Commerce, the U.S. Trade Representative, State, and Treasury, and after taking public comment — had to decide whether more guidance would help businesses follow this section. If so, the Attorney General could issue: (1) guidelines describing conduct tied to common export deals that the Department of Justice's current enforcement policy would treat as lawful; and (2) voluntary procedures issuers can use to align their conduct with that policy. These guidelines follow the formal rulemaking procedures in title 5 and can be challenged in court under title 5's review rules. (e) Opinions of Attorney General. (1) The Attorney General must set up a process — after consulting relevant agencies and taking public comment — to answer specific questions issuers ask about whether planned conduct would violate DOJ's enforcement policy under this section. The Attorney General must answer within 30 days. If a court case later arises over conduct the Attorney General already approved in an opinion, there's a rebuttable presumption that the conduct was lawful; the government can rebut it only by a preponderance of the evidence, and the court weighs factors like whether the issuer's submission was accurate and complete. This opinion process also follows title 5's formal procedures and review rules. (2) Documents submitted to or created by DOJ or other agencies under this opinion process are exempt from Freedom of Information Act disclosure and won't be made public without the issuer's consent — even if the Attorney General never answers or the issuer withdraws the request. (3) An issuer can withdraw its opinion request any time before the Attorney General answers; a withdrawn request has no legal effect. (4) The Attorney General must, as much as practical, give timely guidance to potential exporters and small businesses that can't afford specialized lawyers — but this guidance is limited to answering formal requests under paragraph (1) and giving general explanations of compliance duties and potential liability. (f) Definitions. (1)(A) "Foreign official" means any officer or employee of a foreign government (or its agency or instrumentality) or of a public international organization, or anyone acting officially for such a government or organization. (B) "Public international organization" means (i) an organization designated under section 288 of title 22, or (ii) any other international organization the President designates by executive order for this section, once that order is published in the Federal Register. (2)(A) A person acts "knowingly" about conduct, a circumstance, or a result if they're aware of it, aware it's happening, aware it's practically certain to happen, or firmly believe it exists or will happen. (B) If a law requires knowledge of a circumstance, that knowledge exists if the person is aware there's a high probability the circumstance exists — unless the person actually believes it doesn't. (3)(A) "Routine governmental action" means only actions a foreign official ordinarily performs, like (i) issuing permits or licenses to let someone do business in the country; (ii) processing paperwork like visas and work orders; (iii) giving police protection, mail service, or scheduling inspections tied to a contract or goods transit; (iv) providing phone, power, or water service, loading and unloading cargo, or protecting perishable goods; or (v) similar actions. (B) "Routine governmental action" does not include a foreign official's decision on whether or on what terms to award or continue business with a particular party, or any action by an official involved in that decision meant to encourage awarding or continuing that business. (g) Alternative jurisdiction. (1) It's also unlawful for a U.S.-organized issuer with registered securities or reporting duties (or a U.S.-person officer, director, employee, agent, or stockholder acting for it) to corruptly do any of the acts described in subsection (a) outside the United States, even without using the mail or interstate commerce. (2) "United States person" means a U.S. national (as defined in section 1101 of title 8), or a corporation, partnership, or similar entity organized under U.S. federal or state law.

the actual law source: uscode.house.gov ↗public domain

(a) Prohibition

It shall be unlawful for any issuer which has a class of securities registered pursuant to section 78l of this title or which is required to file reports under section 78o(d) of this title, or for any officer, director, employee, or agent of such issuer or any stockholder thereof acting on behalf of such issuer, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to—

(1)

any foreign official for purposes of—

(A)

(i)

influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or

(B)

inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person;

(2)

any foreign political party or official thereof or any candidate for foreign political office for purposes of—

(A)

(i)

influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or candidate to do or omit to do an act in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; or

(B)

inducing such party, official, or candidate to use its or his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person; or

(3)

any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office, for purposes of—

(A)

(i)

influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official capacity, (ii) inducing such foreign official, political party, party official, or candidate to do or omit to do any act in violation of the lawful duty of such foreign official, political party, party official, or candidate, or (iii) securing any improper advantage; or

(B)

inducing such foreign official, political party, party official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person.

(b) Exception for routine governmental action

Subsections (a) and (g) shall not apply to any facilitating or expediting payment to a foreign official, political party, or party official the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political party, or party official.

It shall be an affirmative defense to actions under subsection (a) or (g) that—

(1)

the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s, political party’s, party official’s, or candidate’s country; or

(2)

the payment, gift, offer, or promise of anything of value that was made, was a reasonable and bona fide expenditure, such as travel and lodging expenses, incurred by or on behalf of a foreign official, party, party official, or candidate and was directly related to—

(A)

the promotion, demonstration, or explanation of products or services; or

(B)

the execution or performance of a contract with a foreign government or agency thereof.

(d) Guidelines by Attorney General

Not later than one year after August 23, 1988, the Attorney General, after consultation with the Commission, the Secretary of Commerce, the United States Trade Representative, the Secretary of State, and the Secretary of the Treasury, and after obtaining the views of all interested persons through public notice and comment procedures, shall determine to what extent compliance with this section would be enhanced and the business community would be assisted by further clarification of the preceding provisions of this section and may, based on such determination and to the extent necessary and appropriate, issue—

(1)

guidelines describing specific types of conduct, associated with common types of export sales arrangements and business contracts, which for purposes of the Department of Justice’s present enforcement policy, the Attorney General determines would be in conformance with the preceding provisions of this section; and

(2)

general precautionary procedures which issuers may use on a voluntary basis to conform their conduct to the Department of Justice’s present enforcement policy regarding the preceding provisions of this section.

The Attorney General shall issue the guidelines and procedures referred to in the preceding sentence in accordance with the provisions of subchapter II of chapter 5 of title 5 and those guidelines and procedures shall be subject to the provisions of chapter 7 of that title.

(e) Opinions of Attorney General

(1)

The Attorney General, after consultation with appropriate departments and agencies of the United States and after obtaining the views of all interested persons through public notice and comment procedures, shall establish a procedure to provide responses to specific inquiries by issuers concerning conformance of their conduct with the Department of Justice’s present enforcement policy regarding the preceding provisions of this section. The Attorney General shall, within 30 days after receiving such a request, issue an opinion in response to that request. The opinion shall state whether or not certain specified prospective conduct would, for purposes of the Department of Justice’s present enforcement policy, violate the preceding provisions of this section. Additional requests for opinions may be filed with the Attorney General regarding other specified prospective conduct that is beyond the scope of conduct specified in previous requests. In any action brought under the applicable provisions of this section, there shall be a rebuttable presumption that conduct, which is specified in a request by an issuer and for which the Attorney General has issued an opinion that such conduct is in conformity with the Department of Justice’s present enforcement policy, is in compliance with the preceding provisions of this section. Such a presumption may be rebutted by a preponderance of the evidence. In considering the presumption for purposes of this paragraph, a court shall weigh all relevant factors, including but not limited to whether the information submitted to the Attorney General was accurate and complete and whether it was within the scope of the conduct specified in any request received by the Attorney General. The Attorney General shall establish the procedure required by this paragraph in accordance with the provisions of subchapter II of chapter 5 of title 5 and that procedure shall be subject to the provisions of chapter 7 of that title.

(2)

Any document or other material which is provided to, received by, or prepared in the Department of Justice or any other department or agency of the United States in connection with a request by an issuer under the procedure established under paragraph (1), shall be exempt from disclosure under section 552 of title 5 and shall not, except with the consent of the issuer, be made publicly available, regardless of whether the Attorney General responds to such a request or the issuer withdraws such request before receiving a response.

(3)

Any issuer who has made a request to the Attorney General under paragraph (1) may withdraw such request prior to the time the Attorney General issues an opinion in response to such request. Any request so withdrawn shall have no force or effect.

(4)

The Attorney General shall, to the maximum extent practicable, provide timely guidance concerning the Department of Justice’s present enforcement policy with respect to the preceding provisions of this section to potential exporters and small businesses that are unable to obtain specialized counsel on issues pertaining to such provisions. Such guidance shall be limited to responses to requests under paragraph (1) concerning conformity of specified prospective conduct with the Department of Justice’s present enforcement policy regarding the preceding provisions of this section and general explanations of compliance responsibilities and of potential liabilities under the preceding provisions of this section.

(f) Definitions

For purposes of this section:

(1)

(A)

The term “foreign official” means any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.

(B)

For purposes of subparagraph (A), the term “public international organization” means—

(i)

an organization that is designated by Executive order pursuant to section 288 of title 22; or

(ii)

any other international organization that is designated by the President by Executive order for the purposes of this section, effective as of the date of publication of such order in the Federal Register.

(2)

(A)

A person’s state of mind is “knowing” with respect to conduct, a circumstance, or a result if—

(i)

such person is aware that such person is engaging in such conduct, that such circumstance exists, or that such result is substantially certain to occur; or

(ii)

such person has a firm belief that such circumstance exists or that such result is substantially certain to occur.

(B)

When knowledge of the existence of a particular circumstance is required for an offense, such knowledge is established if a person is aware of a high probability of the existence of such circumstance, unless the person actually believes that such circumstance does not exist.

(3)

(A)

The term “routine governmental action” means only an action which is ordinarily and commonly performed by a foreign official in—

(i)

obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign country;

(ii)

processing governmental papers, such as visas and work orders;

(iii)

providing police protection, mail pick-up and delivery, or scheduling inspections associated with contract performance or inspections related to transit of goods across country;

(iv)

providing phone service, power and water supply, loading and unloading cargo, or protecting perishable products or commodities from deterioration; or

(v)

actions of a similar nature.

(B)

The term “routine governmental action” does not include any decision by a foreign official whether, or on what terms, to award new business to or to continue business with a particular party, or any action taken by a foreign official involved in the decisionmaking process to encourage a decision to award new business to or continue business with a particular party.

(g) Alternative jurisdiction

(1)

It shall also be unlawful for any issuer organized under the laws of the United States, or a State, territory, possession, or commonwealth of the United States or a political subdivision thereof and which has a class of securities registered pursuant to section 78l of this title or which is required to file reports under section 78o(d) of this title, or for any United States person that is an officer, director, employee, or agent of such issuer or a stockholder thereof acting on behalf of such issuer, to corruptly do any act outside the United States in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any of the persons or entities set forth in paragraphs (1), (2), and (3) of subsection (a) of this section for the purposes set forth therein, irrespective of whether such issuer or such officer, director, employee, agent, or stockholder makes use of the mails or any means or instrumentality of interstate commerce in furtherance of such offer, gift, payment, promise, or authorization.

(2)

As used in this subsection, the term “United States person” means a national of the United States (as defined in section 1101 of title 8) or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship organized under the laws of the United States or any State, territory, possession, or commonwealth of the United States, or any political subdivision thereof.

Source credit: (June 6, 1934, ch. 404, title I, § 30A, as added Pub. L. 95–213, title I, § 103(a), Dec. 19, 1977, 91 Stat. 1495; amended Pub. L. 100–418, title V, § 5003(a), Aug. 23, 1988, 102 Stat. 1415; Pub. L. 105–366, § 2(a)–(c), Nov. 10, 1998, 112 Stat. 3302, 3303.)

history & why it existsrecord from the source credit

1934Enacted · Pub. L. 95-213 · 91 Stat. 1495
1988Amended · Pub. L. 100-418 · 102 Stat. 1415
1998Amended · Pub. L. 105-366 · 112 Stat. 3302, 3303

A history note hasn’t been published yet. The record shows enactment by Pub. L. 95-213 on 1934-06-06.

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