Enforcement Action

A federal court in Florida has ordered Woodbridge Group of Companies and its former owner to pay $1 billion in penalties and disgorgement for operating a Ponzi scheme that targeted retail investors.

Car rental company Hertz Global Holdings will pay a $16 million civil penalty to settle a case concerning inaccurate financial reporting, the Securities and Exchange Commission announced in an order filed Dec. 31.

The Hain Celestial Group recently settled charges with the Securities and Exchange Commission resulting from weaknesses in its internal controls. Why the food company was not assessed a monetary penalty is where the compliance lessons lie.

Farm supplies company CHS disclosed in a Dec. 3 securities filing that it has self-reported to the Department of Justice and Securities and Exchange Commission potential violations of the Foreign Corrupt Practices Act.

The SEC on Tuesday announced that Paris-based pharmaceutical company Sanofi has agreed to pay more than $25 million to resolve charges that its Kazakhstan and Middle East subsidiaries made corrupt payments to win business.

The SEC today awarded a whistleblower more than $500,000 for reporting information that prompted an investigation into misconduct that resulted in an enforcement action. It is the second whistleblower award announced by the SEC in the past week. 

U.K. pharmaceutical giant GlaxoSmithKline will pay a civil money penalty in the amount of $20 million to the Securities and Exchange Commission to resolve charges concerning bribery payments made to government officials in China. Jaclyn Jaeger reports.

The SEC reached a consent agreement with yet another company over allegations it violated securities laws for using severance agreements that required outgoing employees to waive their ability to obtain monetary awards from the Commission’s whistleblower program. Jaclyn Jaeger reports.

Digital telecommunications maker Qualcomm this week reached a $7.5 million settlement with the Securities and Exchange Commission to resolve charges that it violated the Foreign Corrupt Practices Act by hiring relatives of Chinese government officials. These officials were in positions to decide whether to select Qualcomm’s mobile technology products amid increasing competition in the international telecommunications market.

London-based HSBC said in an earnings release last week that it is one of several banks being investigated by the U.S. Securities and Exchange Commission for its hiring practices in Asia. Hiring a family member or friend of a government official violates the Foreign Corrupt Practices Act if the intent of the hiring is to obtain or retain business.

Two China subsidiaries of computer software company PTC this week reached a combined $28 million settlement—a $14.5 million criminal penalty to the Department of Justice, and $13.6 million in disgorgement and prejudgment interest to the Securities and Exchange Commission—to resolve an investigation of potential violations of the Foreign Corrupt Practices Act in China. The SEC also announced its first deferred prosecution agreement with an individual in an FCPA case.

SciClone Pharmaceuticals announced that it has entered into a $12.8 million settlement with the Securities and Exchange Commission to resolve an investigation of potential violations of the Foreign Corrupt Practices Act with respect to its China operations. SciClone further said that the Department of Justice has also completed its related investigation and has declined to pursue any action.

State Street Bank and Trust Company last week reached a $12 million settlement with the Securities and Exchange Commission to settle charges that it conducted a pay-to-play scheme through its then-senior vice president and a hired lobbyist to win contracts to service Ohio pension funds.

Computer software company PTC disclosed in an annual report last week that it is discussing a tentative $28.2 million settlement with the Department of Justice and the Securities and Exchange Commission to resolve an investigation of potential violations of the Foreign Corrupt Practices Act. The potential violations concern expenditures by its business partners in China. Details inside.

During remarks at a recent conference in New York, Assistant Attorney General Leslie Caldwell offered some insight about the Justice Department’s newly established compliance counsel position and how this individual will help the Criminal Division assess compliance programs. “Unfortunately, a surprising number of companies still lack rigorous compliance programs,” she said. More of her comments are inside.

In the same month that the Securities and Exchange Commission approved Regulation Crowdfunding, permitting startups and small businesses to raise capital by offering and selling securities through crowdfunding, the agency also filed its first complaint for crowdfunding fraud. The case highlights the emerging risk posed by online fundraising for the investor community. More inside.