Generally speaking, when a major hedge fund that is also a publicly-traded corporation finds itself on the wrong side of regulators for allegedly bribing an entire continent, it is best to nip things in the bud. This is what Och-Ziff Capital Management did when faced with accusations that its top men in Europe and Africa were liberally lubricating African officials in exchange for investment mandates, mining rights and more mining rights. In fact, the hedge fund couldn’t cut a deal fast enough, finally reaching a $400 million accord with the SEC and Justice Department in September of 2016.
That time, however, it was a mistake. For if Och-Ziff had followed its alleged bribers-in-chief’s lead and just waited a few more months, it could have saved itself at least some of that $400 million, as well as potentially avoiding some of the scandal’smoreunpleasantconsequences.
The Securities and Exchange Commission missed the boat with a lawsuit against two former executives of Och-Ziff Capital Management LLC, filing too late to seek damages stemming from a bribery scheme involving payments to high-level officials across Africa, a judge ruled…. The judge in the case against Messrs. Cohen and Baros cited a Supreme Court ruling issued shortly after the SEC filed its lawsuit as part of the reason for the time limit. In early June 2017, the Supreme Court ruled unanimously that the SEC has five years to sue suspected wrongdoers for ill-gotten gains, classifying such clawbacks, or disgorgement, as a penalty under the law.
Of course, the DoJ is not so constrained, and so Michael Cohen’s not getting that $10 million in bail money back anytime soon. Bright side: He doesn't need it to pay off the SEC.