SEC Enters into a Deferred Prosecution Agreement With Cooperating Witness 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 DPA. 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 DOJ. 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 firstname.lastname@example.org or visit www.gopublic101.com. 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 email@example.com. Please note that the prior results discussed herein do not guarantee similar outcomes.
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