Orthopedic device maker Zimmer Biomet Holdings Inc. said in a securities filing Friday the DOJ and SEC are still investigating possible FCPA violations in Brazil and Mexico.
“These matters remain under investigation by the DOJ and the SEC,” Zimmer Biomet said Friday.
A three-year deferred prosecution agreement Biomet entered into with the DOJ in March 2012 and already extended for a year won’t end on March 26 as scheduled, the company said Friday.
“[T]he matter is ongoing and will not conclude in its entirety on March 26, 2016,” the company said.
Zimmer bought Indiana-based Biomet last year for about $14 billion.
In March 2012, Biomet agreed to pay $22.7 million to settle FCPA-related offenses. It paid a criminal fine of $17.3 million to the DOJ and entered into the three-year DPA. It also disgorged $5.5 million to the SEC to resolve civil FCPA allegations.
In July 2014, the SEC subpoenaed Biomet for documents relating to “certain alleged improprieties” in the company’s Brazilian and Mexican operations. Biomet had disclosed the allegations to the DOJ and the SEC three months earlier.
In March 2015, the DOJ extended the DPA and the independent compliance monitor’s appointment for an additional year.
Zimmer Biomet said Friday:
The DOJ, the SEC and Biomet have agreed to continue to evaluate and discuss these matters during the second quarter of 2016 and, therefore, the matter is ongoing and will not conclude in its entirety on March 26, 2016.
Zimmer Biomet is one of the biggest makers of orthopedic implants such as artificial knees and hips.
* * *
Zimmer Biomet Holdings Inc.’s Form 8-K filed with the SEC on March 25, 2016 said,
As previously reported, on March 26, 2012, Biomet, Inc. (“Biomet”) announced that it had settled an ongoing federal investigation into its international sales practices with the U.S. Department of Justice (“DOJ”) and the U.S. Securities and Exchange Commission (“SEC”).
As part of the settlement, Biomet entered into: (i) a consent to final judgment (the “SEC Consent”) with the SEC and (ii) a deferred prosecution agreement (the “DPA”) with the DOJ. Pursuant to the SEC Consent, Biomet consented to the entry of a Final Judgment which, among other things, permanently enjoined Biomet from violating the provisions of the Foreign Corrupt Practices Act.
As further disclosed, in October 2013, Biomet became aware of certain alleged improprieties regarding its operations in Brazil and Mexico, including alleged improprieties that predated the entry of the DPA. Additionally, pursuant to the terms of the DPA, in April 2014 and thereafter, Biomet disclosed these matters to and discussed these matters with the independent compliance monitor and the DOJ and the SEC. On July 2, 2014, the SEC issued a subpoena to Biomet requiring that Biomet produce certain documents relating to such matters. These matters remain under investigation by the DOJ and the SEC.
On March 13, 2015, the DOJ informed Biomet that the DPA and the independent compliance monitor’s appointment had been extended for an additional year. On April 2, 2015, at the request of the staff of the SEC, Biomet consented to an amendment to the Final Judgment to extend the term of the compliance monitor’s appointment for one year from the date of entry of the Amended Final Judgment.
The shares of Biomet are wholly-owned by LVB Acquisition, Inc. (“LVB”). As previously disclosed, on June 24, 2015, Zimmer Biomet Holdings, Inc. (formerly known as Zimmer Holdings, Inc.) acquired LVB, and LVB is now owned by various other subsidiaries of Zimmer Biomet Holdings, Inc.
The DPA, as extended, is set to expire on March 26, 2016.
However, the DOJ and the SEC continue to evaluate the alleged misconduct in Brazil and Mexico, as well as any issues relating to Biomet’s compliance program. The DOJ, the SEC and Biomet have agreed to continue to evaluate and discuss these matters during the second quarter of 2016 and, therefore, the matter is ongoing and will not conclude in its entirety on March 26, 2016.
Pursuant to the DPA, the DOJ has sole discretion to determine whether conduct by Biomet constitutes a violation or breach of the DPA.
The DOJ has informed Biomet that it retains its rights under the DPA to bring further action against Biomet relating to the conduct in Brazil and Mexico disclosed in 2014 or the violations set forth in the DPA.
The DOJ could, among other things, revoke the DPA or prosecute Biomet and/or the involved employees and executives. Biomet continues to cooperate with the SEC and the DOJ, and expects that discussions with the SEC and the DOJ will continue.
There is no assurance that Biomet will enter into a consensual resolution of this matter with the SEC or the DOJ, and the terms and conditions of any such potential resolution are uncertain.
______
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.
Comments are closed for this article!