Company SEC filings are drafted, reviewed, and finalized by many sets of professional eyes.
Words matter in SEC filings and are assumed to be taken literally.
Thus, if a company discloses that it has identified certain transactions that “may raise compliance questions” under a certain law, it is assumed that the company is not yet in a position to determine whether those transaction do in fact violate the law, just that those transactions “may raise compliance questions” under the FCPA.
Why a company would voluntarily contact the U.S. government about this is an interesting question. (See this prior post from 2009).
Stanley Black & Decker, Inc. (a manufacturer of industrial tools and household hardware and provider of security products) recently disclosed:
“As previously disclosed, the Company has identified that certain expenses it incurred in previous years constituted undisclosed perquisites. The Company has voluntarily disclosed this information to the U.S. Securities and Exchange Commission (“SEC”) and is cooperating with the SEC’s investigation of this matter.
Also, the Company has identified certain transactions relating to its international operations that may raise compliance questions under the U.S. Foreign Corrupt Practices Act (“FCPA”) and has voluntarily disclosed this information to the U.S. Department of Justice (“DOJ”) and the SEC. The Company is cooperating with both agencies in their investigations.
The Company is committed to upholding the highest standards of corporate governance and is continuously focused on ensuring the effectiveness of its policies, procedures, and controls. The Company is in the process, with the assistance of professional advisors, of reviewing and further enhancing relevant policies, procedures, and controls.
Currently, the Company does not believe that these matters will have a material impact on its financial condition or results of operations, although it is possible that a loss related to these matters may be incurred. Given the ongoing nature of these matters, management cannot predict the duration, scope, or outcome of the SEC’s and DOJ’s investigations or estimate the potential magnitude of any such loss or range of loss, or the cost of the ongoing investigations. Any determination that the Company’s expense and perquisite reporting practices were not in compliance with existing laws or regulations or that certain transactions relating to the Company’s international operations were not in compliance with the FCPA could result in the imposition of fines, civil or criminal penalties, equitable remedies, including disgorgement, injunctive relief, or other sanctions against the Company. The Company also may become a party to litigation or other legal proceedings over these matters.”
