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Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

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Tuesday
Apr092019

Fresenius lands on our top ten disgorgement list

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.

*     *     *

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.

*     *     *

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.

*     *     *

For comparison, here's our current list of the top ten FCPA enforcement actions.

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Richard L. Cassin is editor at large of the FCPA Blog.

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