Initial Public Offerings (IPO’s) were back in the news this week. Leading the way was Shanda Games Ltd. By raising $1.04 billion, Shanda’s IPO was the largest since April 2008.

Shanda is a Beijing, China based online computer game company and its listing is the latest example of a foreign issuer (frequently a Chinese company) electing to trade its shares (or a portion of its shares) on a U.S. Exchange.

By becoming an “issuer” Shanda becomes subject to the FCPA.

Presumably, Shanda had experienced securities counsel advising it on its listing and the consequences that flow from such a listing. If not, and if you are listening, welcome to the club Shanda.

Your potential FCPA exposure is not just limited to the books and records and internal control provisions. The FCPA’s anti-bribery provisions also apply to you.

Don’t take my word for it, listen to the Department of Justice.

In 2006, the Department of Justice announced an FCPA enforcement action against Statoil ASA, a Norwegian company, for making improper payments to Iranian foreign officials – the first time DOJ brought criminal FCPA charges against a non-U.S. company. (See here for the deferred prosecution agreement).

The U.S. prosecuting a Norwegian company for making improper payments to Iranian foreign officials … how did that happen?

Statoil had shares traded on a U.S. exchange and was thus an “issuer” subject to the FCPA.

In announcing the settlement, the DOJ had this to say – “Although Statoil is a foreign issuer, the Foreign Corrupt Practices Act applies to foreign and domestic public companies alike, where the company’s stock trades on American exchanges” (see here).

And this – “This prosecution demonstrates the Justice Department’s commitment vigorously to enforce the FCPA against all international businesses whose conduct falls within its scope.”

The Statoil FCPA enforcement action is certainly not the only FCPA enforcement action against a foreign issuer. In fact, the largest FCPA enforcement action ever was settled in December 2008 involving Siemens AG, a German company (see here and here).

Despite these, and other, enforcement actions, there is still a common misperception that the FCPA is “the law that applies to only U.S. companies.”

With the IPO market showing signs of life again, with foreign companies (like Shanda) increasingly turning to U.S. capital markets, and with many of these companies doing business in FCPA high-risk countries, the number of FCPA enforcement actions against foreign issuers is likely to increase.