FCPA Enforcement Pause: A New Dawn for U.S. Tech Stocks?

The U.S. Department of Justice's (DOJ) recent dismissal of bribery charges against former Cognizant executives marks a pivotal moment in corporate compliance and regulatory policy. On April 2, 2025, the DOJ abandoned the case under President Trump's February 10 Executive Order, which paused Foreign Corrupt Practices Act (FCPA) enforcement for 180 days. This decision, the first of its kind under the new policy, signals a dramatic shift in how the U.S. government balances anti-corruption efforts with corporate interests. For investors, this regulatory pivot could unlock opportunities in the tech sector, where companies with global operations have long faced the threat of costly FCPA investigations.

The Cognizant Case: A Microcosm of Regulatory Change

The charges against Cognizant's former executives—Gordon Coburn and Steven Schwartz—stemmed from allegations of a $2 million bribe paid to an Indian government official between 2014 and 2016. While the company settled a related SEC civil case in February 2025 by paying $25.2 million, the DOJ's abrupt dismissal of criminal charges on April 2 represented a clear victory for corporate defendants under the new administration's FCPA review.

The dismissal was justified under the Executive Order, which directs the DOJ to prioritize economic competitiveness over aggressive anti-bribery enforcement. This policy shift has immediate implications for U.S. tech firms operating abroad. By halting new FCPA investigations and mandating reviews of existing cases, the order reduces legal risks for companies that previously faced prolonged scrutiny—and potentially opens the door for similar dismissals in ongoing cases.

Why This Matters for Tech Investors

The tech sector, with its global supply chains and cross-border partnerships, has long been a focal point for FCPA investigations. Companies like Cognizant, Microsoft, and Amazon routinely navigate complex international compliance landscapes. The pause in FCPA enforcement could:
1. Reduce Legal Costs: Companies may see fewer costly investigations, freeing capital for growth initiatives.
2. Boost Expansion Confidence: With reduced fear of prosecution, firms might accelerate investments in emerging markets.
3. Revalue Stocks: Companies previously burdened by FCPA-related liabilities could see stock rebounds as risks diminish.

Consider Cognizant itself. The company's stock, which had been weighed down by the lingering legal cloud, surged 12% the week after the DOJ's dismissal. This reaction hints at broader market dynamics:

Caveats and Risks: Compliance Isn't Dead

While the FCPA pause creates opportunities, investors must temper optimism with caution. Key risks remain:
- SEC Authority Persists: The SEC retains civil enforcement powers, and companies must still comply with anti-bribery laws to avoid fines or settlements.
- International Scrutiny: Foreign governments (e.g., the EU, India) continue to enforce their own anti-corruption laws.
- Policy Uncertainty: The 180-day pause is temporary, and the review could lead to permanent changes—or a return to stricter enforcement.

Additionally, not all tech stocks will benefit equally. Firms with strong compliance programs and transparent operations may outperform peers still grappling with legacy issues.

Investment Strategy: Targeting the Regulatory Tailwind

Investors should focus on three categories of tech stocks:
1. FCPA-Exposed Companies: Firms like Cognizant, which faced deferred cases, could see valuation uplifts as risks fade.
2. Global Growth Plays: Tech companies with significant emerging-market exposure (e.g., cloud infrastructure providers, SaaS firms) may now expand more aggressively.
3. Compliance Leaders: Companies with robust ethics programs (e.g., IBM, SAP) could gain market share as competitors face regulatory hurdles.

A diversified portfolio combining these categories—alongside monitoring of FCPA-related news—could capitalize on the policy shift.

Conclusion: Navigating the New Regulatory Landscape

The DOJ's dismissal of the Cognizant case underscores a broader pivot toward corporate-friendly policies. For tech investors, this creates a strategic window to reevaluate stocks previously penalized by FCPA risks. However, the pause is not a free pass—companies must still navigate international laws and domestic civil enforcement.

As the 180-day review period unfolds, investors should prioritize firms with clean compliance histories and global expansion potential. The FCPA pause may not last forever, but it offers a timely opportunity to position portfolios for tech's next phase of growth.

Stay informed on regulatory updates and stock performance to make the most of this evolving landscape.