Harry Cassin Publisher and Editor

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SEC completes Legg Mason FCPA enforcement action

The Securities and Exchange Commission issued an administrative order Monday that completed the feds' earlier $64 million FCPA enforcement action against investment manager Legg Mason Inc.

On June 4, Maryland-based Legg Mason entered into a non-prosecution agreement with the DOJ to resolve FCPA violations in Libya.

The NPA required Legg Mason to pay $64.2 million, consisting of a criminal penalty of $32.6 million and disgorgement of $31.6 million.

To avoid piling on, the DOJ said the disgorgement would be "credited against disgorgement paid to other law enforcement authorities within the first year of the [non-prosecution] agreement."

Monday's SEC order (pdf) said Legg Mason violated the internal accounting controls provision of the Securities Exchange Act of 1934.

The firm agreed to pay $34 million to settle the civil offenses, with $27.6 million in disgorgement and $6.9 million in prejudgment interest.

After applying the credit for $31.6 million as set out in the June 4 NPA, Legg Mason will pay the SEC $2.4 million for the resolution.

The SEC said it didn't impose any other penalties because the DOJ had already fined Legg Mason $32.6 million in the June 4 criminal action.

Legg Mason's FCPA violations in Libya were caused by its partner there, Paris-based Société Générale S.A.

Between 2004 and 2010, Legg Mason's subsidiary, Permal Group Ltd., teamed with SocGen to win business from Libyan state-owned funds and banks.

SocGen paid $90 million in bribes through a Libyan “broker” in return for 14 investments.

SocGen settled its own FCPA offenses on June 4. It agreed with the DOJ to pay $585 million in criminal penalties, with half the penalties payable to French enforcement agencies.

In seven transactions, the DOJ said, SocGen paid commissions to the Libyan broker to benefit Legg Mason's Permal unit.


Richard L. Cassin is the publisher and editor of the FCPA Blog.