Fines and Settlements and Disgorgements…Oh My! - Mitratech

Fines and Settlements and Disgorgements…Oh My!

Let’s set the stage…

If I were to pitch you on a $1 million investment that had a guaranteed return of $20 million, you would be a fool not to take it. Right? It doesn’t take a C-level executive of a Fortune 500 company to take you up on that offer. Unless that $1 million was to bribe a foreign official in order to be awarded a $20 million contract.

Legal Governance, Risk, and Compliance solutions have long provided organizations with effective methods to mitigate risk in their operations. In terms of regulatory compliance, identifying sources of risk can help an organization avoid potential penalties by proactively avoiding some event.

Although it has been around for quite some time, the Foreign Corrupt Practices Act has surfaced in the enterprise legal environment to a much greater degree over the past several years due to increased DOJ and SEC enforcement. Some of the settlements are absolutely mind boggling with Siemens AG topping the list at a whopping $800 million to settle. You can see the top ten settlements here.

Just recently, however, some news on the FCPA front has surfaced that will make your technology investment that much more valuable. A few weeks ago, the SEC announced a Non-Prosecution Agreement with Ralph Lauren. Specifically the SEC “has determined not to charge Ralph Lauren Corporation with violations of the Foreign Corrupt Practices Act (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.” You can read the full SEC release here.

The result? Ralph Lauren will disgorge roughly $700k in illicit profits and interest obtained in connection with the bribes, in addition to an $882,000 penalty due to parallel criminal proceedings. That sure beats the potential for millions in fines. All done through the implementation of a new compliance program and the strengthening of internal controls.

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