eTrade 2012 Annual Report Download - page 225

Tied Products and Services
“Tying” arrangements, in which clients are required to purchase one product or service as a condition to another product or service
being made available to them, are unlawful in certain instances. Consult the Legal Department for advice about tying restrictions.
Avoiding Improper and Corrupt Payments, Including the Foreign Corrupt Practices Act
Various laws in the U.S. and other countries prohibit providing money or anything else of value to government officials (including
employees and agents of government-owned entities), political parties or candidates for public office for the purpose of improperly
influencing their actions in order to obtain or retain business. One such law is the U.S. Foreign Corrupt Practices Act (“FCPA”),
which you should assume applies, regardless of where you are located.
The Foreign Corrupt Practices Act (“FCPA”) contains two principal parts. First, the FCPA makes it a criminal offense to pay, offer,
or give anything of value to a foreign official, a foreign political party (or official thereof) or candidate for foreign office, for the
purpose of influencing the decisions of those officials, parties or candidates to secure any business advantage, such as inducing the
entity or individual to act favorably upon, or influence others to act favorably upon, business proposals or regulatory decisions. This
is true regardless of the fact that giving anything of value may be widely accepted or even seem necessary in the country in question.
The scope of the laws concerning corruption of public officials is very broad. The laws prohibit not only payments to public officials,
but also any offer, promise (even if never fulfilled) or merely an authorization to pay a public official. Such payment, offer, promise
or authorization may be direct or indirect. Thus, a company and its agents also will be liable under the laws if they attempt to “funnel”
a payment indirectly to a public official by using an unrelated third party as a conduit. In addition, “payment” under the laws is not
limited to money. Payment includes “anything of value” including non-monetary gifts, free trips and other forms of non-cash favors.
Even payments to foreign charities could be improper under the FCPA.
Second, the FCPA sets forth record keeping and accounting requirements that require E*TRADE to maintain books, records and
accounts in detail such that they accurately and fairly reflect all transactions and dispositions of assets. Thus the FCPA prohibits the
mischaracterization or omission of any transaction on a company’s books as well as any failure to maintain proper accounting
controls that result in such mischaracterization or omission. Accordingly, covering up a transaction which violates the FCPA by
mischaracterizing it on the Company’s books and records (such as an expense account) is itself a separate violation of the FCPA.
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• divulge the identity of E*TRADE’s actual or potential customers or any of the terms upon which E*TRADE may work with
those customers;
• enter into any agreement obligating any customer either to work exclusively with E*TRADE or not to purchase securities or
services from a com
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etitor;
• enter into an
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uire market or com
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etitive information with res
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