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Caught bribing? Now you might pay personally…

Law.com carries a post from August 20 which may be significant:

“SEC Trots Out a New Weapon: Control Person Liability”.

Whilst this sounds like impenetrable legalese, it could matter, quite a lot.

Natural Sunshine Products, a US company, was accused of bribing Brazilian officals to get its products into the country, where law classed some of them as medicines.

The alleged bribe was quite large. Over $1 million in cash.

As usual in these settlement cases, the company admitted nothing but paid the SEC a fine that’s actually less than the bribes paid. Which seems odd to me. But then I am not a lawyer.

Here’s the potentially significant part:

“Under the proposed settlement, none of the defendants admitted liability but the company agreed to pay a civil penalty of $600,000 and each officer to pay $25,000.

The case was the first FCPA action in which the SEC has charged individuals under the Exchange Act’s control liability theory”.

Putting this theory into action, apparently, “broadens the scope of potential liability of corporate officers to FCPA claims”.

It means your corporate executives, if cutting a deal with the SEC in the US on bribery accusations, may have to pay up out of their own money, in some cases.

There’s a good argument to get a bigger budget for your ethics training programmes.

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