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Monday
Dec242012

Judge Leon rejects SEC, IBM settlement

A federal judge Thursday angrily rejected a proposed 2011 settlement between the SEC and IBM, saying the  company should be required to report all accounting violations and not just FCPA anti-bribery problems.

IBM agreed last year to pay $10 million to resolve a civil complaint filed by the SEC and to inform the agency of certain compliance issues.

The settlement needed final court approval.

U.S. District Judge Richard Leon had met with the SEC and IBM behind closed doors to talk about the terms of the settlement but Thursday was the first public hearing.

Judge Leon also oversaw the Africa sting case, which ended earlier this year with dismissals for all 22 defendants.

The SEC's civil complaint charged IBM with violating the books and records and internal control provisions of the FCPA. The complaint said IBM made improper cash payments to government officials in South Korea and China. The SEC also described illegal gifts and the improper payment of travel and entertainment expenses.

IBM agreed to a settlement without admitting or denying the allegations.

Bloomberg said Judge Leon, citing IBM's history of books and records violations, asked for 'annual reports regarding the company’s FCPA compliance, specifically telling him about all possible accounting violations. He said that IBM balked at supplying such information beyond specific bribe allegations, a position supported by the SEC.'

The report described Judge Leon as speaking 'loudly and angrily' to the SEC's lawyer and threatening to hold IBM's lawyer in contempt 'for talking over him.'

The next hearing in the case is scheduled for February 4.

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