Last month’s $231 million FCPA resolution by German dialysis giant Fresenius Medical Care included disgorgement to the SEC of $147 million. By our count, that’s the tenth biggest disgorgement ever ordered in an FCPA enforcement action.
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Disgorgement, according to Contributing Editor Marc Alain Bohn, is a remedy authorized by the Securities Exchange Act of 1934 that’s “used to deprive wrong-doers of their ill-gotten gains and deter violations of federal securities law.”
Disgorgement first appeared in an FCPA enforcement action in 2004 when ABB Ltd disgorged $5.9 million to resolve books and records and internal controls offenses.
Since then the SEC has used disgorgement in most of its FCPA-related enforcement actions.
Disgorgement doesn’t appear in all big FCPA cases. When Russian telecom MTS paid $850 million in March to resolve FCPA violations in Uzbekistan, it paid the SEC a civil penalty of $100 million but no disgorgement. The DOJ imposed a separate fine and $40 million in criminal forfeiture but also no disgorgement.
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Here are the current top ten FCPA-related corporate disgorgements. Amounts also include pre-judgment interest:
1. Petrobras $933.5 million in 2018*
2. Telia $457 million in 2017
3. VimpelCom $375 million in 2016
4. Siemens $350 million in 2008
5. Teva $236 million in 2016
6. Och-Ziff $199 million in 2016
7. KBR $177 million in 2009
8. Alcoa $161 million in 2014
9. Total S.A. $153 million in 2013
10. Fresenius Medical Care AG & Co. KGaA $147 million in 2019
Close behind Fresenius is Panasonic Corporation and its aviation unit. They disgorged $143 million to the SEC in 2018. In 2017, JPMorgan Chase disgorged $130.5 million to resolve FCPA offenses, and in 2010 Snamprogetti disgorged $125 million.**
* The SEC allowed Petrobras to credit against the disgorgement the money it had already paid into a settlement fund for U.S. shareholder litigation. If for some reason Petrobras hadn’t disgorged that amount within a year through payments to the U.S. class action fund or otherwise, then it was obligated to pay the money directly to the SEC.
** An individual, Jeffrey Tesler of the UK, agreed to an FCPA-related forfeiture of $149 million in 2011 in connection with the TSKJ Nigeria enforcement actions. Forfeiture resembles disgorgement but is a different remedy, so we don’t include Tesler on our disgorgement top ten list.
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For comparison, here’s our current list of the top ten FCPA enforcement actions.
Richard L. Cassin is editor at large of the FCPA Blog.