On January 18, a Texas-based medical device company admitted wrongdoing and agreed to pay approximately $6 million to the SEC to settle FCPA books and records and internal controls charges in connection with improper payments made by its Brazilian subsidiary to doctors through third parties. In related non-FCPA proceedings, the company also agreed to pay a $8.25 million penalty to resolve various accounting violations. Each of the four former executives consented to accounting-related SEC orders without admitting or denying the findings. Filing of each can be found here, here, here, and here.
According to the Administrative Order Instituting Cease-and-Desist Proceedings, the company’s Brazilian subsidiary employed third-party commercial representatives and distributors to make improper payments to doctors employed at government-owned hospitals to induce them to use the company’s products, thereby increasing sales. The company also improperly recorded revenue, leading to the related accounting charges.
In settling with the SEC, The company has now resolved two separate FCPA cases in the span of five years. In 2012, the company resolved FCPA actions with both the SEC and DOJ in connection with bribes paid to Mexican officials by its Mexican subsidiary. Given the prior corruption and internal controls issues, the SEC found that the company failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances to detect and prevent such payments. The company agreed to hire a compliance consultant for one year.