Archive

September 28, 2018

Stryker Corp has agreed to pay $7.8 million to settle charges of violating the Foreign Corrupt Practices Act (FCPA) in sales of its products in China, India, and Kuwait. This is the company's second alleged violation of the FCPA in recent times; the company had paid $13.2 million to settle similar charges in 2013. According to the SEC, the current charges relate to inadequate internal controls and inaccurately recorded records. In addition to the penalty, the settlement will now require Stryker to retain an independent compliance consultant. SEC

September 27, 2018

Elon Musk, the CEO and Chairman of Tesla Inc, has been charged with violating the antifraud provisions of federal securities laws through misleading tweets made in August that a plan to privatize Tesla was imminent pending a shareholder vote. The statement allegedly caused significant market disruption, along with a 6 percent jump in Tesla's stock value, and has led the SEC to seek a permanent injunction and bar to prevent Musk from taking on a leadership position in a publicly traded company, in addition to the usual civil penalty and disgorgement. SEC

September 27, 2018

Petroleo Brasileiro S.A. has agreed to pay a $853 million penalty and $933 million in disgorgement to settle DOJ and SEC charges that it violated the Foreign Corrupt Practices Act and filed false documents with the SEC that misled U.S. investors. According to the non-prosecution agreement struck with the DOJ, and the related SEC order, the Brazilian oil and gas company allegedly paid billions of dollars in bribes to Brazilian politicians, and then falsely categorized these kickbacks in records as relating to asset acquisition and management. DOJ; SEC.

September 25, 2018

Edward J. DiMaria, the former chief financial officer of Bankrate, Inc., a publicly traded company, plead guilty and was sentenced to ten years in prison for orchestrating an accounting and securities fraud scheme that caused more than $25 million in shareholder losses.  DiMaria admitted that between 2010 and 2014 he took actions to artificially inflate Bankrate’s earnings by leaving millions of dollars in unsupported expense accruals on Bankrate’s books, then selectively reversing those accruals in later quarters to boost earnings, as well as misrepresenting other company expenses.  DiMaria lied to Bankrate's independent auditors to conceal the fraud.  As a result of the accounting fraud, Bankrate’s financial statements filed with the SEC were materially misstated.  S.D. Fla. USAO; DOJ

September 19, 2018

Three men from three states have been indicted for allegedly conspiring to defraud more than 230 investors of more than $364 million in a classic Ponzi scheme, and in one of the largest ever charged in Maryland. Kevin B. Merrill, Jay B. Ledford, and Cameron Jezeierski of Maryland, Nevada, and Texas, respectively, allegedly persuaded investors across the country that they could make a profit by purchasing consumer debt portfolios that would either have their debt collected upon or be sold to other debt buyers. Instead, the defendants used the money to purchase expensive homes, boats, jewelry, and at least 25 cars, as well as lead a generally lavish lifestyle. To conceal the fraud, the defendants allegedly created fake debt selling companies, bank accounts, and brokers, and generated false contracts, records, and reports. They face both criminal charges from the DOJ and civil charges from the SEC, and if convicted, face both financial penalties as well as decades in prison for the combined charges. USAO MD; SEC

September 18, 2018

Clovis Oncology Inc., along with its CEO, Patrick Mahaffy, and former CFO, Erle Mast, have agreed to pay civil penalties totaling over $20 million to resolve allegations that it violated the Securities Act and Securities Exchange Act by misleading investors about the efficacy of a lung cancer drug that it was developing. According to the complaint, in 2015, the company reported to investors that the drug was 60% effective and continued to do so for months after it learned that the drug was really only 28% effective, which allowed it to raise about $298 million at a public stock offering. With the disclosure of its true efficacy, however, Clovis's stock value dropped by approximately 70%, and the drug ceased to be developed in 2016. To compensate investors harmed by the misinformation, the SEC will create a Fair Fund to distribute penalties. SEC

September 18, 2018

SeaWorld and its former CEO, James Atchison, have agreed to pay a combined total of $5 million to settle charges of violating the antifraud provisions of federal securities laws. In a complaint filed by the SEC in New York, the defendants were alleged to have mislead investors about how the 2013 documentary, Blackfish—which condemned the company for allegedly mistreating orcas—had led to a drop in attendance numbers and negatively affected its business. Another employee, former VP of communications, Frederick D. Jacobs, will pay a lower fine of $100,000 for his significant contributions to the investigation. SEC

September 6, 2018

A real estate broker for Colliers International Group, Inc. has agreed to pay $225,000 to settle FCPA charges of attempting to bribe a foreign official over the sale of a commercial building in Vietnam. The broker, Joohyun Bahn, had paid the bribe to a middleman, bypassed internal accounting controls, created fake documents and messages, and lied to executives about the supposedly impending sale, which caused the company to falsely record revenue. Unfortunately for Bahn, the sale never went through because the middleman had kept the bribe for himself. SEC

August 27, 2018

Legg Mason Inc. has agreed to pay $34 million to settle a charge that it bribed Libyan government officials to secure investments from state-owned financial institutions. As a result of the bribes, which violated the Foreign Corrupt Practices Act (FCPA), Legg Mason was allegedly awarded investments worth $1 billion, and earned revenues totaling $31.6 million. The SEC fine comes at the heels of a $33 million fine that Legg Mason had previously agreed to pay to DOJ in a similar settlement. SEC

August 20, 2018

Merrill Lynch, Pierce, Fenner & Smith has agreed to pay $8.9 million to resolve claims that it violated the anti-fraud provisions of the Investment Advisers Act by failing to disclose its conflicts of interests to clients. According to the SEC, the violation occurred when Merrill Lynch failed to go through with a planned vote on whether to stop offering certain products managed by a third party, and then failed to disclose to clients that this decision was due to its own business interests. SEC