SEC Enters Into A Deferred Prosecution Agreement With Cooperating Witness by staff103


									SEC Enters into a Deferred Prosecution Agreement With Cooperating

Posted on November 3, 2011 by Brenda Hamilton, Attorney

                                     In January of 2010, the Securities and
Exchange Commission (the “SEC”) announced it would strengthen its
enforcement program by encouraging greater cooperation from individuals and
companies in SEC investigations and enforcement actions.

One of those measures included the use of Deferred Prosecution Agreements
(“DPA”). On May 17, 2012, the SEC entered into its first such agreement with
Tenaris S.A., a steel pipe manufacturer. In announcing the settlement, the SEC
provided guidance as to what cooperation was provided by Tenaris.

The SEC alleged that Tenaris violated the Foreign Corrupt Practices Act by
bribing government officials in Uzbekistan to obtain contracts to supply pipelines
for transporting oil and natural gas. Under the DPA, the SEC will not bring a civil
action against Tenaris for these violations if the company complies with certain
undertakings for a two-year period, including paying $5.4 million in
disgorgement and prejudgment interest.

The SEC’s press release described the DPAs as “[f]ormal written agreements in
which the Commission agrees to forego an enforcement action against a
cooperator if the individual or company agrees, among other things, to
cooperate fully and truthfully and to comply with express prohibitions and
undertakings during a period of deferred prosecution.” The Tenaris settlement
provides some insight into what steps a company must take in order to secure a
In its press release, Tenaris stated that it had learned from one of its customers
in Central Asia that certain sales agency payments made by one of its
subsidiaries may have improperly benefited employees of the customer and
other persons, potentially in violation of the FCPA. The audit committee of the
board of directors engaged external legal counsel to undertake a review of the
payments made and related facts. Tenaris then voluntarily notified the SEC and
the DOJ, and cooperated in the investigations conducted by the SEC and the
DOJ. Tenaris also shares the findings of the audit committee with the SEC and

In addition to those actions, Tenaris also:

• reviewed its controls and compliance measures and significantly enhanced its
anti-corruption policies and practices;

• produced all non-privileged documents, information, and other materials to
the SEC as requested;

• used its best efforts to secure the full, truthful, and continued cooperation of
current and former directors, officers, employees and agents, including making
these persons available for interviews and testimony when requested; and

• testified at trial and other judicial proceedings, when requested by the SEC.

For further information about this article, please contact Brenda Hamilton,
Securities Attorney at 101 Plaza Real S, Suite 201 S, Boca Raton Florida, (561)
416-8956, by email at or visit This memorandum is provided as a general
informational service to clients and friends of Hamilton & Associates Law Group
and should not be construed as, and does not constitute, legal and compliance
advice on any specific matter, nor does this message create an attorney-client
relationship. For more information concerning the rules and regulations affecting
the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement
offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting
requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing,
OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks,
reverse mergers, public shells, go public direct transactions and direct public
offerings or please contact Hamilton and Associates at (561) 416-8956 or by
email a Please note that the prior results
discussed herein do not guarantee similar outcomes.

To top