SEC Investigating SWF Bribes

Ashby Monk

Dionne Searcey and Randall Smith broke a story yesterday about the launch of a new investigation by the US Securities and Exchange Commission into whether US banks and asset managers violated bribery laws in their dealings with SWFs. Apparently, the investigation singles out 10 firms and appears to be linked to the “Foreign Corrupt Practices Act”. In short, the SEC seems to be treating all employees and agents of SWFs as foreign government officials, which means lavish gifts to these individuals could be considered a bribe under FCPA.

For more details beyond the WSJ article, check out coverage from BloombergReutersthe FT, and the NYT. Watch this space…


4 Responses to “SEC Investigating SWF Bribes”


  1. 1 Rien Huizer January 14, 2011 at 7:30 pm

    Predictable of course, given many SWFs’ home business cultures and also a good way to show that those agents are not necessarily irrational (like, “patriotic”, unselfish, etc). Maybe a little ill-advised? Central banks were already off limits for this type of marketing as far as I know but now the law is catching up with this seemingly safe harbor as well. What can an investment manager or securities salesman do to get business?

  2. 2 Ashby Monk January 14, 2011 at 8:28 pm

    Do Yankee tickets or a steak dinner count as a bribe? If so, I see problems for the bankers / PE crew…

  3. 3 MMcC January 17, 2011 at 6:49 am

    What will really be interesting to see is whether or not the SEC considers the swingeing fee reductions that large SWFs typically negotiate to be a corrupt inducement, especially if discovery of those fees is made public.

  4. 4 Ashby Monk January 17, 2011 at 9:33 am

    That’s an interesting point, Mike. I guess the fee reductions go to the benefit of the organization (EG CIC), while the Yankee tickets are a sort of perk for the CIC employee who is tasked with making the mandate decision. Still, I’ll be interested to learn more about this inducement process…


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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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