Ralph Lauren Corporation will pay $1.6 million in combined penalties to the DOJ and SEC in exchange for unprecedented dual non-prosecution agreements after admitting its Argentina subsidiary paid bribes to government and customs officials.
The is the first time the SEC has resolved an FCPA case using a non-prosecution agreement.
Clothing retail icon Ralph Lauren Corporation, or RLC, agreed to pay the DOJ a criminal fine of $882,000 and the SEC nearly $735,000 in disgorgement and interest.
Pre-trial agreements to avoid prosecution have traditionally been associated with negotiated resolutions by the DOJ but not with the SEC.
This is only the second time the DOJ and SEC have both used pre-trial agreements in parallel actions of any kind.
In a 2011 FCPA case, Luxembourg-based pipe maker Tenaris became the first company to enter into a deferred prosecution agreement with the SEC. Tenaris also entered into a non-prosecution agreement with the DOJ.
In Monday’s Ralph Lauren action, the SEC said it determined not to charge the company with violations of the FCPA due to its ‘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.’
‘Ralph Lauren Corporation’s cooperation saved the agency substantial time and resources ordinarily consumed in investigations of comparable conduct,’ the SEC said.
The SEC announced the adoption of deferred and non-prosecution agreements in 2010 as part of its Cooperation Initiative.
Since then, the agency has entered into three other non-prosecution agreements in non-FCPA actions and the Tenaris deferred prosecution agreement.
In 2012, Robert Khuzami, then head of the SEC’s enforcement division and a former federal prosecutor, said the SEC planned to increase the use of pre-trial agreements to ‘dovetail more nicely’ with DOJ agreements. Khuzami said more uniformity of use of the agreements by both the DOJ and the SEC will result in more ‘consistency and clarity for the regulated community.’
On Monday, the SEC said ‘The NPA in this matter makes clear that we will confer substantial and tangible benefits on companies that respond appropriately to violations and cooperate fully with the SEC.’
Earlier this month, the Senate confirmed Mary Jo White, a former federal prosecutor, as chairman of the SEC. She was the U.S. Attorney for the Southern District of New York from 1993 to 2002.
The SEC said Ralph Lauren’s cooperation included self-reporting within two weeks of discovering the illegal payments and gifts, voluntarily producing documents and English-language translations, summarizing witness interviews from the company’s investigators, and making overseas witnesses available for SEC interviews by bringing them to the U.S.
Ralph Lauren Corporation admitted that its Argentina subsidiary paid $593,000 in bribes to government and customs officials ‘to improperly secure the importation of . . . products in Argentina.’
The bribes were paid during a four-year period through a customs broker to avoid inspection of prohibited products.
The company had no anti-bribery compliance program when the offenses occurred.
The SEC and DOJ said RLC now conducts extensive FCPA training for employees worldwide, implemented an enhanced gift policy, and conducts better due diligence for third-party agents.
The company also fired ‘culpable employees and a third-party agent, [instituted] a whistleblower hotline, and [hired] a designated corporate compliance attorney.’
It also shut down its operations in Argentina, the SEC said.
The DOJ’s April 22, 2013 release is here.