Trump pauses FCPA enforcement and shares of past offenders jump
On February 10 2025 President Trump issued Executive Order 14209 pausing new enforcement under the Foreign Corrupt Practices Act for 180 days, and stocks of US-traded firms with prior FCPA histories rose sharply as markets priced lower enforcement risk.
- Executive Order 14209 directed the Department of Justice to stop initiating new FCPA investigations or enforcement actions for 180 days.
- An event study of 261 US-traded firms with past FCPA actions found abnormal returns of 0.69 percentage points above market on the day of the order.
- The average past FCPA target gained about USD 160 million in market capitalization on the signing day and the portfolio of such firms recorded a net gain of roughly USD 39 billion.
- The study compared those 261 firms to a matched placebo of 236 similar firms and built counterfactuals using non-target S&P 500 firms and LASSO-selected predictors.
- Authors conclude the market reaction reflects investors pricing lower enforcement risk for firms at risk of bribery rather than changes in operational efficiency.
- The paper warns the pause could undermine global anti-corruption coordination and change DOJ practices, with broader implications for the OECD Anti Bribery Convention.