Among recent enforcement actions taken by the SEC were a nonprosecution agreement with Ralph Lauren Corporation in a bribery case; a court action to secure the return of investor funds in the wake of an immigration scheme; charges against a former executive for insider trading; and charges against Capital One Financial Corp. and two executives for understating losses.
Ralph Lauren Corp. Gets Nonprosecution Agreement in Bribery Case
The SEC announced that Ralph Lauren Corp. has consented to a nonprosecution agreement (NPA) in connection with bribes paid by a company subsidiary to government officials in Argentina from 2005 to 2009. The agreement was reached, rather than charges being brought in connection with violations of the Foreign Corrupt Practices Act (FCPA), because the company swiftly reported the misconduct itself after discovering it in an internal review.
According to the SEC, the promptness of the company’s action in reporting the bribes, as well as the completeness of the information it provided and its extensive cooperation, resulted in the NPA rather than charges. The NPA is the first for the SEC that involves FCPA misconduct.
The NPA provides additional details on the occurrence, which it says took place before the company had meaningful anticorruption compliance and control mechanisms over its Argentine subsidiary, which paid bribes to government and customs officials to win importation of the company’s products into Argentina. The bribes were intended to avoid paperwork, inspection of prohibited products, and inspection by customs officials, and totaled $593,000 during a four-year period.
The company terminated employment and business arrangements with the parties involved in the bribery; it has since ceased operations in Argentina. It has also put in place compliance training and stronger internal controls and procedures for third-party due diligence, as well as conducting a worldwide risk assessment to uncover any other potential compliance issues.
The agreement specifies that the company will disgorge more than $700,000 in illicit profits and interest it received as a result of the bribes. A separate NPA with the Justice Department in parallel criminal proceedings will result in the company paying an additional penalty of $882,000.
Investors to Receive Return of Principal after Immigration Scheme Stopped
The SEC announced that a federal district court judge has ordered that all investors in a fraudulent investment scheme that offered foreign investors a way to become citizens will receive their money back.
Two months ago the SEC charged Anshoo Sethi, and two companies he created, with misleading Chinese investors on a scheme he devised to sell securities in a nonexistent hotel and conference center near O’Hare Airport in Chicago. Sethi sold more than $145 million to the investors, who had been told that with their investment they would be participating in the EB-5 Immigrant Investor Pilot Program, which offers a path to citizenship for foreign investors.
At the time, the SEC also got an emergency court order to freeze investor assets. Sethi consented to return the funds, which were being held in escrow, and on April 19 U.S. District Court Judge Amy St. Eve modified the asset freeze order to direct that the money be returned.
The SEC is not finished yet with Sethi; litigation is ongoing and additional penalties are being sought.
Former Exec Charged in Insider Trading on Info from Professional Group