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Judicial Decision

This post highlights updates to Foreign Corrupt Practices Act related civil actions involving OSI Systems and Misonix.

OSI Systems

As highlighted in this prior post, in late 2017 investment firm Muddy Waters Research accused OSI Systems (a California based company that develops and markets security and inspection systems such as airport security X-ray machines and metal detectors) of corruption in Albania. As often happens when a company becomes the subject of FCPA scrutiny, plaintiff’s lawyers representing shareholder filed securities fraud class action lawsuits.

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Yet Another FCPA-Related Securities Fraud Lawsuit Dismissed

Dismissed

It is as predictable as the sun rising in the east and dogs barking.

In the aftermath of a Foreign Corrupt Practices Act enforcement action (or mere instances of FCPA scrutiny), plaintiffs’ lawyers representing shareholders on a contingent fee basis file securities fraud claims against the company and/or certain officers or directors. Such FCPA-related claims are frequently dismissed, but the claims nevertheless continue to be filed.

In the latest example, U.S. District Court Judge William Bertelsman (E.D. KY) recently granted a motion to dismiss filed by General Cable (and various individual defendants) disposing of Section 10(b) and Rule 10-b5  claims. As highlighted in prior posts here and here, in late 2016 General Cable agreed to pay approximately $76 million to resolve an FCPA enforcement action concerning conduct in Angola, Bangladesh, Indonesia, Thailand, China, and Egypt.

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Civil Complaint Sheds Light On Hollywood Industry Sweep

fenton

Previous posts herehere, here, and here highlighted the so-called industry sweep of Hollywood film studies for its business practices in China. These prior posts were generally from 2012 and 2013 and given the passage of time it appears that this sweep did not yield any Foreign Corrupt Practices Act enforcement actions.

Nevertheless, this recent civil complaint filed in California state court by Christopher Fenton (pictured – a former General Manager and Motion Picture Group President of DMG Entertainment) sheds light on the matter specifically as it relates to DMG Entertainment. In the complaint, Fenton alleges that after a “long, successful tenure with DMG, [and his] prominent role within the organization” DMG Entertainment, related entities and individuals failed to comply with certain contractual obligations and oral promises to compensate him in connection with the company’s eventual initial public offering.

Among the job tasks Fenton alleges in the complaint was his successful handling of the SEC’s FCPA investigation of the company. If nothing else, the allegations make for an interesting read on the alleged impact the FCPA inquiry had on Fenton’s life and career.

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Friday Roundup

Roundup

About time, scrutiny updates, ripple, for the record, just saying, and for the reading and listening stack. It’s all here in the Friday roundup.

About Time

After dinging companies for nearly 40 years for internal controls and risk management failures, the SEC names its first chief risk officer.

As highlighted in this prior post, if the SEC were an issuer there would be many books and records and internal controls issues within the organization.

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