Back in the day, most companies just resolved Foreign Corrupt Practices Act enforcement actions and it was “wait and see” for the actual settlement amount. Nowadays, certain companies prep the market by disclosing an approximate settlement amount before the settlement actually occurs.
As highlighted in this prior post, in mid-2015 Alexion Pharmaceuticals disclosed FCPA scrutiny. The company recently disclosed that it reached an agreement in principle with the SEC to resolve an approximate $25 million enforcement action.
Just because Alexion disclosed an approximate settlement amount, does not necessarily mean that settlement is imminent. For instance, Walmart disclosed an FCPA settlement amount but it took an additional 1.5 years to actually resolve the action.
Alexion’s disclosure states:
“In May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the Securities and Exchange Commission (SEC) requesting information related to our grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA) in various countries. In addition, in October 2015, we received a request from the Department of Justice (DOJ) for the voluntary production of documents and other information pertaining to Alexion’s compliance with the FCPA. The SEC and DOJ also seek information related to Alexion’s recalls of specific lots of SOLIRIS and related securities disclosures. Alexion has been cooperating with these investigations.
The investigations have focused on operations in various countries, including Brazil, Colombia, Japan, Russia and Turkey, and Alexion’s compliance with the FCPA and other applicable laws.
DOJ recently informed us that it has closed its inquiry into these matters.
As previously disclosed, we have been engaged in discussions with the SEC to resolve this investigation. Following March 31, 2020, we reached an agreement in principle with the SEC Enforcement Division staff to settle the claims relating to the SEC investigation, pursuant to which we would pay an aggregate amount less than $25 million to resolve the investigation. As a result, we have accrued a liability in such amount in our financial statements for the quarter ended March 31, 2020.
While we have reached an agreement in principle with the SEC, there can be no assurance that a definitive agreement reflecting the terms of the agreement in principle will be agreed to or finalized. If no such definitive agreement is reached, or if the terms of any definitive agreement are different than the agreement in principle, it is possible that a loss related to these matters may be incurred and such amount may be greater than the amounts contemplated by the agreement in principle. In addition, if we fail to reach a definitive agreement and the SEC continues its investigation, the SEC may pursue litigation to determine whether our operations or activities are not or were not in compliance with existing laws or regulations and such action could result in the imposition of fines, civil penalties, equitable remedies, including disgorgement, injunctive relief, and/or other sanctions against us, and remediation of any such findings could have an adverse effect on our business operations.
Alexion is committed to strengthening its compliance program and is currently enhancing and continuing to implement a comprehensive company-wide transformation plan that is designed to enhance our business processes, structures, controls, training, talent, and systems across Alexion’s global operations.”
