Late last week, the SEC announced an FCPA enforcement action involving the California-based entity SciClone Pharmaceuticals, Inc. (SCI). SciClone was assessed a penalty of $2.5M, profit disgorgement of $9.42M and prejudgment interest of $900K for a total penalty of $12.8M, all to settle SEC charges that a Chinese subsidiary of SciClone, SciClone Pharmaceuticals International Ltd., it violated the Foreign Corrupt Practices Act. At issue were charges that SciClone employees in China pumped up sales for five years by making improper payments to professionals employed at state health institutions.
The company had been a poster child for (allegedly) greedy plaintiffs’ lawyers in the securities field who would file lawsuits immediately after a company announced a FCPA investigation was ongoing. Yet SCI demonstrated the usefulness of this private remedy when the company settled the a 2011 shareholder-driven class action against it, as the settlement significantly enhanced the SCI’s compliance program.
