New SEC Chief Criticized Foreign Anti-Bribery Law. Good.

“Trump’s pick for SEC chair criticized U.S. anti-bribery enforcement in 2011 as too zealous,” gasps one tweet reacting to President-elect Donald Trump’s selection of Sullivan & Cromwell attorney Jay Clayton to head the Securities and Exchange Commission. In a subhead, the WSJ says Clayton “criticized SEC and [Department of] Justice handling of Foreign Corrupt Practices Act as overly aggressive.”

Good! Clayton is right to voice such criticisms. As I’ve argued in this space, the 1977 FCPA “is a feel-good piece of overcriminalization that oversteps the proper bounds of federal lawmaking in at least four distinct ways, any of which should have prevented its passage”: it is extraterritorialvicariouspunitive, and vague. It is not clear that a more carefully drafted law would have been a good idea; my Cato colleague Jeffrey Miron writes that while curtailing Americans’ involvement in overseas corruption may be a well-intentioned goal, FCPA “discourages U.S. companies from doing business abroad in the first place,” is readily circumvented in many situations, fails to distinguish between the most corrosive forms of bribery and those in which favors to officials are “an attempt to get around laws that make little sense in the first place”—such as restrictions on entering markets—and leaves some countries to welter in poverty if they cannot fix a local culture of baksheesh.

All of this was made worse by the Obama administration’s decision to step up the pace of FCPA prosecution, which ran into a series of rebukes from federal judges throwing out high-profile cases. Allegations of FCPA violations led to a great furor about Wal-Mart’s operations in Mexico that mostly fizzled later, while other prosecutions have been based on purported corruption oddly reminiscent of practices that go on right here in the U.S. without anyone prosecuting, such as Western banks’ alleged practice overseas of hiring young relatives of influential persons, something that has been known to happen in politics and the media here in Washington, D.C.

Don’t back down, Mr. Clayton.