Telecommunications Company Settles FCPA Charges With SEC in Apparent "Sons and Daughters" Case

FCPA SEC China

The SEC announced on March 1 that it settled FCPA charges with a San Diego-based mobile chip maker. The company agreed to pay a $7.5 million civil penalty to resolve charges that it violated the FCPA by hiring relatives of Chinese government officials and providing things of value to foreign officials and their family members, in an attempt to influence these officials to take actions that would assist the company in obtaining or retaining business in China.

The company and the SEC settled the case via an Administrative Order Instituting Cease-and-Desist Proceedings, in which the company did not admit or deny the findings set forth in the order. The order found that the company had violated the anti-bribery, internal controls, and books-and-records provisions of the FCPA. In addition to the $7.5 million civil penalty, the company agreed to provide the SEC with self-reports and certifications concerning its FCPA compliance during a two-year period.

According to the order, the company both offered and provided employment and paid internships to family members of Chinese foreign officials in order to try to obtain business. Many of these hires were referred to internally at the company as “must place” or “special” hires and did not satisfy the company’s internal hiring standards. The order also details the company’s provision of meals, gifts, travel, and entertainment to both foreign officials and relatives of foreign officials in an effort to influence these officials to use the company’s technology.

The settlement appears to be an extension of the SEC’s “Sons and Daughters” investigations which, up until now, have been focused on the hiring practices of financial institutions in the Asia Pacific. Prior coverage of other aspects of the “Sons and Daughters” investigations around the world is available here.