## Facts

- Senior executives of a Hungarian telecommunications issuer with NYSE-listed ADRs were alleged to have arranged bribes to Macedonian officials to influence telecommunications regulation and legislation.
- The alleged scheme used sham intermediaries and misleading contracts, with improper payments concealed in the issuer’s books and records.
- The alleged conduct supported false or misleading public filings and financial reporting by the SEC-registered issuer.
- Emails furthering and concealing the scheme were alleged to have been routed through or stored on servers located in the United States.
- The SEC brought a civil enforcement action asserting FCPA accounting violations and related securities-law claims, including theories of primary liability, aiding and abetting, and control-person liability.
- Defendants (foreign nationals residing abroad) moved to dismiss for lack of personal jurisdiction, failure to plead the FCPA’s interstate-commerce element, and untimeliness under 28 U.S.C. § 2462.

## Issues

1. Whether exercising specific personal jurisdiction over foreign executives was consistent with due process where the alleged misconduct caused a U.S.-listed issuer to maintain false books and file materially false reports affecting U.S. investors.
2. Whether the FCPA’s requirement of using “the mails or any means or instrumentality of interstate commerce” requires the defendant to know that communications would be routed through the United States.
3. Whether 28 U.S.C. § 2462 bars the SEC’s requested relief, and whether § 2462’s limitations period for civil penalties is tolled while defendants are continuously absent from the United States.

## Decision

- The court denied the motion to dismiss for lack of personal jurisdiction, finding sufficient suit-related contacts with the United States based on the alleged role in causing a U.S.-listed, SEC-reporting issuer to generate false books and records and misleading SEC filings.
- The court held the FCPA interstate-commerce element was adequately pled where emails sent in furtherance of the scheme were routed through or stored on U.S. servers; the statute did not require pleading that defendants knew of the U.S. routing.
- The court held § 2462 applies to civil penalties but does not categorically bar equitable remedies such as injunctions and officer-and-director bars.
- The court held § 2462’s five-year period for penalties was tolled because defendants were continuously outside the United States; their absence prevented the limitations period from running.
- The motion to dismiss was largely denied, allowing the SEC’s claims to proceed.

## Legal Principles

- Specific personal jurisdiction may be exercised over foreign individuals when alleged conduct is purposefully directed at U.S. securities markets, including causing an SEC registrant with U.S.-listed securities to make materially false filings or maintain false books and records affecting U.S. investors.
- For the FCPA’s “instrumentality of interstate commerce” requirement, it is sufficient at the pleading stage that an interstate-commerce facility was used; a separate scienter requirement regarding the geographic routing of electronic communications is not required.
- Under 28 U.S.C. § 2462, civil penalties are subject to a five-year limitations period, while equitable remedies are not automatically treated as time-barred penalties.
- Section 2462’s tolling clause may suspend the running of the limitations period for penalties during a defendant’s continuous physical absence from the United States.

## Conclusion

The court permitted the SEC’s FCPA and related securities claims to proceed against foreign executives, holding that their alleged role in corrupt payments and resulting false reporting supported U.S. personal jurisdiction, that U.S.-server email routing satisfied the FCPA commerce element without requiring knowledge of the routing, and that § 2462 did not bar the action because penalties were tolled during defendants’ absence and equitable remedies were not categorically time-limited.


Securities & Exch. Comm'n v. Straub, 921 F. Supp. 2d 244 (S.D.N.Y. 2013)