Securities and Exchange Commission v. Straub

In 2005, the Macedonian Parliament enacted a law that liberalized Macedonia’s telecommunications market in ways that were unfavorable to Hungarian telecommunications company Magyar Telekom, Plc. (Magyar). Three of Magyar’s executives, Elek Straub, Andras Balogh, and Tamas Morvai (the executives) (defendants) launched a bribery scheme, storing their plan in a secret document maintained on a Magyar computer. The executives arranged to pay 95 million euros to Macedonian officials, and in return, the Macedonian officials would reduce some of the new law’s negative impact on Magyar. At the time of the executives’ bribery scheme, Magyar’s securities were publicly traded on the New York Stock Exchange and Magyar was registered with the Securities and Exchange Commission (SEC) (plaintiff). Balogh used emails to further the bribery scheme and conceal the true nature of the bribes. Although these emails were sent outside of the United States, the emails were routed through or stored on network servers in the United States. The SEC charged the executives with violations of the Foreign Corrupt Practices Act (FCPA) in federal district court. The executives filed a motion to dismiss the SEC’s complaint, arguing in relevant part that under the FCPA’s interstate-commerce requirement, defendants must knowingly engage in interstate commerce and that the executives did not personally know that their emails were routed through or stored on United States servers.