Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—D.N.J.: DOJ drops FCPA case against Cognizant executives, (Apr 4, 2025)

By Mark S. Nelson, J.D.

The Trump Administration’s Justice Department moved quickly to dismiss the Cognizant case after Trump signed an executive order pausing FCPA criminal enforcement.

Cognizant Technology Solutions Corporation’s former president, Gordon J. Coburn, and former general counsel, Steven E. Schwartz will not face further criminal prosecution of charges that they violated the Foreign Corrupt Practices Act (FCPA) now that the DOJ has asked a federal court to dismiss the government’s case against them. The government’s rationale is that the prosecution should not continue because President Trump signed an executive order pausing FCPA enforcement by the DOJ and directed the DOJ to re-examine pending FCPA cases for purposes of taking appropriate action (U.S. v. Coburn, No. 19-cr-00120 (D.N.J. Apr. 3, 2025)).

In an April 1, 2025 letter to a federal judge in New Jersey, U.S. Attorney Alina Habba told the court that “[a]fter consultation with the Office of the Attorney General, the Government hereby moves to dismiss this matter pursuant to Federal Rule of Criminal Procedure 48(a).” Rule 48(a) provides that the government may, with leave of court, dismiss an indictment, information, or complaint (dismissal of a prosecution during trail, however, cannot occur without the defendant’s consent to the dismissal).

The government’s letter explained that “[t]he Government's motion is based on the recent assessment of the Executive Order’s application to this matter.”

According to the executive order, the FCPA had allegedly been misapplied by previous administrations and that current FCPA practice may interfere with presidential authorities over foreign policy. With respect to pending FCPA matters at DOJ, the executive order directed DOJ to “review in detail all existing FCPA investigations or enforcement actions and take appropriate action with respect to such matters to restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives.”

The case against Coburn and Schwartz had detailed how the two executives allegedly convinced a contractor to pay a bribe to government officials in the Indian state of Tamil Nadu. The alleged purpose of the bribe was to ease the path for Cognizant to build a corporate campus in Tamil Nadu’s largest city.

The court order dismissing the criminal case notes that the government had asked that the case be dismissed with prejudice and that Coburn and Schwartz had consented to the motion to dismiss.

The SEC brought a related civil FCPA enforcement action in which the agency claimed, among other things, that Coburn and Schwartz violated the Exchange Act’s anti-bribery, and books, records, and internal control provisions and that the two executives also had aided and abetted Cognizant’s FCPA violations. Cognizant separately settled with the SEC, without admitting or denying the agency’s facts, by paying more than $25 million, including a $6 million civil monetary penalty.

The executive order pausing DOJ enforcement of the FCPA did not explicitly mention the civil FCPA actions that may be brought by the SEC. The SEC can bring two kinds of actions under the securities law provisions added by the FCPA—those which focus on bribery (including books, records, and internal controls violations related to bribery), and those which focus on books, records, and internal controls violations unrelated to bribery. As a result, there remains some uncertainty about how the SEC will proceed in these cases under the executive order, although that uncertainty could be resolved once a new SEC chair is confirmed by the Senate.

In the SEC’s civil case against Coburn and Schwartz, the court had previously granted the DOJ’s request to stay discovery pending the outcome of the criminal case, with a status report due one month after resolution of the criminal case. A more recent court order issued on January 5, 2025 administratively terminated the SEC’s civil case without prejudice to the parties, to reopen the case within seven days after adjudication of the criminal case.

The case is No. 19-cr-00120.

Judge: Farbiarz, M.

Attorneys: Alina Habba for the U.S. Hank Bond Walther (Jones Day) for Gordon J. Coburn.

Companies: Cognizant Technology Solutions Corporation

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