June 3, 2013

SEC and DOJ Enter Into Non-Prosecution Agreements

Holland & Knight Bulletin
Eric S. Almon

On April 22, 2013 the SEC and the DOJ announced separate non-prosecution agreements (NPAs) with an international apparel company. Pursuant to the NPAs, the company agreed to pay a criminal fine of $882,000 and disgorgement of $734,846 in profits and interest. In addition, the company agreed to submit periodic self-monitoring reports concerning its compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect Foreign Corrupt Practices Act (FCPA) violations.

The parties entered into the NPAs to resolve allegations that the company violated the FCPA. According to the NPAs, beginning in 2005, the manager of the company’s subsidiary in Argentina allegedly bribed customs officials in Argentina over the period of five years to improperly secure the importation of the company's products in Argentina without necessary paperwork and, in some cases, to avoid inspection by customs officials. The transgressions were discovered by the company when it began implementation of an FCPA compliance training program in Argentina, which it did not previously have in place.

According to SEC's release, the agency determined not to charge the company with violations of the FCPA due to "the company's prompt reporting of the violations on its own initiative, the completeness of the information it provided, and its extensive, thorough, and real-time cooperation with the SEC's investigation." The company's cooperation included self reporting of its internal investigation within two weeks of discovering the transgressions, voluntarily producing documents, providing English translations of documents, summarizing witness interviews conducted overseas and making overseas witnesses available for SEC interviews. 

The NPA is the first that the SEC has entered involving FCPA misconduct. NPAs are part of the SEC Enforcement Division's Cooperation Initiative, which is designed to reward cooperation in SEC investigations. Both the SEC and the DOJ also noted that they took into account the company's remediation efforts, including the implementation of a new FCPA compliance program throughout its worldwide operations.

SEC Non-Prosecution Agreement: http://www.sec.gov/news/press/2013/2013-65-npa.pdf

DOJ Release:


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