California Shows Path to States Stepping Up for FCPA Enforcement

California Attorney General Rob Bonta has laid the groundwork to build a state-level network of enforcers as the Department of Justice steps back from cracking down on Foreign Corrupt Practices Act violations.

Corporate misconduct involving bribery, securities violations, or deceptive practices has traditionally been the primary province of federal agencies such as the DOJ, the Securities and Exchange Commission, and the Federal Trade Commission, especially in cases involving national or multinational conduct.

But US Attorney General Pam Bondi has instructed the DOJ’s FCPA Unit to “prioritize investigations related to foreign bribery that facilitates the criminal operations of Cartels and TCOs.” President Donald Trump followed Bondi’s memo with an executive order directing a 180-day “pause” on FCPA enforcement.

The effects of these federal actions was swift. Within days, DOJ sought to delay several scheduled FCPA trials and ultimately dropped some—moves that some said portended a major retrenchment in DOJ enforcement of the FCPA.

Unlikely Enforcer

The FCPA’s expected decline was perhaps a prediction made in haste. In response to the pause and potential federal pull-back, Bonta issued a legal alert as a sign that state law enforcement agencies may soon occupy the field left by its federal counterparts.

Bonta’s office plans to treat violations of the FCPA as predicate violations under the state’s Unfair Competition Law, which prohibits unlawful, unfair, and fraudulent business acts and practices. If carried out, state-law enforcement of the federal FCPA would shift regulatory dynamics markedly, but it could also signal a new front in corporate anticorruption enforcement in the US.

California’s decision to step into FCPA enforcement may signal more than gap-filling action and may position the state a national leader in corporate anti-corruption efforts at a time when federal oversight may be receding. By using its Unfair Competition Law to enforce FCPA violations, the state is reframing foreign bribery as a consumer protection issue.

That shift gives California broader jurisdiction, a lower burden of proof, and the power to impose steep civil penalties. It also signals to companies that state-level scrutiny can be just as rigorous—and potentially more far-reaching—than federal actions. As the world’s fourth-largest economy, California’s move could set a powerful precedent, encouraging other states to follow suit and reshaping the landscape of FCPA compliance and enforcement across the country.

Enforcement Under UCL

California’s Unfair Competition Law allows for private and government civil actions against any business practice that is unlawful, unfair, or fraudulent. The statute is intentionally broad, enabling the attorney general, county district attorney, or a private litigant to bring suit for violations of virtually any law, including federal statutes, regulations, or administrative code.

A UCL violation provides equitable relief in the form of injunctions and restitution in private lawsuits. For government actions, the UCL also provides a broad platform for civil penalties of up to $2,500 per violation.

Courts have wide discretion in determining the “unit” of violation, considering factors such as the nature and seriousness of the misconduct; the number of violations; the persistence of the misconduct; the length of time over which the misconduct occurred; the willfulness of the defendant’s misconduct; and the defendant’s assets, liabilities, and net worth. For example, violations can be considered to be each instance of deceptive statements or omissions likely to deceive, or every written online marketing communication.

FCPA’s Enforcement Future

California’s insertion into the FCPA enforcement conversation raises several new issues.

A lower burden of proof and increased financial exposure. Deceptive trade practices statutes are creatures of civil law. As a result, they have lower burdens of proof, which could create an easier pathway to allege an FCPA violation under state law than as a federal criminal action.

The financial exposure tied to these actions can be severe, with UCL penalties accruing per violation. One act of misconduct that touches millions of consumers or transactions could trigger exponential liability.

Multiple jurisdictions. Other jurisdictions with robust deceptive trade practices laws, such as Illinois, Massachusetts, New Jersey, New York, Texas, and Washington, may follow California’s lead, potentially resulting in coordinated multistate actions.

The threat of inconsistency. Even in the absence of coordinated multistate state AG actions, the threat of individual state AG actions creates potential inconsistency among multiple state jurisdictions when it comes to companies’ FCPA compliance (as well as with the anti-bribery legal frameworks of foreign jurisdictions around the globe).

California’s new legal alert represents a potentially significant shift in the enforcement landscape, with state AGs stepping into roles traditionally occupied by federal enforcers. Companies must remain vigilant in their compliance efforts, recognizing that state-level enforcement can be just as impactful as federal actions.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Jeffrey Tsai is managing partner of DLA Piper’s San Francisco office and co-chair of the firm’s state attorneys general practice.

John Hillebrecht is partner at DLA Piper and co-chair for the firms US white collar crime, investigations, and government enforcement group.

Aurélie Ercoli is partner at DLA Piper and advises global companies on US enforcement risks and related enforcement actions.

Joshua Cho contributed to this article.

Write for Us: Author Guidelines