The third panel on Day 2 of the PLUS D&O Symposium discussed foreign exposures for U.S. companies. They noted that this encompasses two broad categories: claims brought in the U.S. relating to activities abroad, and claims actually brought abroad against U.S. companies.

The panel started with the first category, which it said was the far more serious. This category consist mostly of claims brought under the Foreign Corrupt Practices Act (FCPA), which makes it illegal to offer anything of value to foreign governments or government officials in an effort to get business. It was observed that record fines have been assessed during the last two years, including a $200 million fine against Siemens and seven other fines topping $100 million. The panelists believed that CAP claims were not a “litigation fad,” but a kind of litigation that is here to stay. This is because the economy continues to grow increasingly globalized. A panelist speculated that new whistleblower laws may also be helping the increase in investigations.

The panel observed that many of these SEC and DOJ investigations into FCPA violations do not trigger D&O insurance coverage — investigation costs are generally not included in entity coverage, and fines and penalties are generally not covered or insurable. And the SEC often reaches a settlement simultaneously with filing a civil action. But increasingly, said the panel, FCPA claims are being litigated without settlement, are being pressed against individuals, and are resulting in related securities claims and derivative suits, which are more commonly included in entity coverage.

One panelist noted that the spike in FCPA claims might be mitigated somewhat by a recent string of defeats after trial, including in the so-called “Shot Show trials” and other acquittals in New York and Texas.

The panel also addressed the new U.K Bribery Act, which took effect last year. They noted that the U.K. law was written to encompass a much broader array of conduct and people than the FCPA. But they said that in practice it has resulted in very few prosecutions — in fact, only one — mostly because of a very small budget available to the U.K. regulators.

The panel also discussed the second category noted above — shareholder suits in foreign jurisdictions against U.S. companies. The Panel observed that these suits were invited by the Supreme Court’s decision in Morrison v. Australian National Bank decision, which prevented suits in U.S. courts by foreign shareholders who bought their shares in foreign exchanges. The Panel noted that although most other countries have rules that are more hostile to litigation — such as the “loser pays” rule — these suits are in the increase. According to one panelist, Taiwan has been leading forum for these lawsuits (41%), followed by Canada.