SEC Reaches First FCPA Non-Prosecution Agreement with Ralph Lauren Corporation | Practical Law

SEC Reaches First FCPA Non-Prosecution Agreement with Ralph Lauren Corporation | Practical Law

As part of the Securities and Exchange Commission's first Foreign Corrupt Practices Act (FCPA) non-prosecution agreement and a separate non-prosecution agreement with the Department of Justice, Ralph Lauren Corporation has agreed to pay more than $1.6 million to the US government to settle charges that it violated the FCPA by bribing government officials in Argentina.

SEC Reaches First FCPA Non-Prosecution Agreement with Ralph Lauren Corporation

Practical Law Legal Update 1-526-1826 (Approx. 4 pages)

SEC Reaches First FCPA Non-Prosecution Agreement with Ralph Lauren Corporation

by PLC Commercial
Published on 24 Apr 2013 • USA (National/Federal)
As part of the Securities and Exchange Commission's first Foreign Corrupt Practices Act (FCPA) non-prosecution agreement and a separate non-prosecution agreement with the Department of Justice, Ralph Lauren Corporation has agreed to pay more than $1.6 million to the US government to settle charges that it violated the FCPA by bribing government officials in Argentina.
On April 22, 2013, the SEC and the DOJ announced that Ralph Lauren Corporation (Ralph Lauren) has reached two separate non-prosecution agreements with the US government to pay a total of more than $1.6 million in penalties, disgorged profits and interest for violating the Foreign Corrupt Practices Act (FCPA). The DOJ announced its settlement with Ralph Lauren in an April 22, 2013 press release. The SEC announced a parallel non-prosecution agreement with Ralph Lauren in a separate April 22, 2013 press release.
While the DOJ commonly enters into non-prosecution agreements, this is the SEC's first non-prosecution agreement involving FCPA violations. The SEC specifically noted that it will confer substantial and tangible benefits on companies that respond appropriately to FCPA violations and cooperate fully with the government. Both the DOJ and SEC decided not to prosecute Ralph Lauren for its FCPA violations because the company:
  • Voluntarily disclosed its misconduct promptly after discovering it during an internal review.
  • Cooperated extensively with the government's investigation by:
    • voluntarily making employees available for interviews;
    • making voluntary document disclosures; and
    • keeping the government apprised of the status and findings of its internal investigation.
  • Conducted a worldwide risk assessment.
  • Terminated the employment and business relationships with all individuals involved in the wrongdoing.
  • Strengthened its internal controls and procedures for third party due diligence.
Ralph Lauren violated the FCPA when, over a period of five years, a manager of its subsidiary in Argentina bribed government and customs officials to improperly secure the importation of Ralph Lauren products into Argentina. During this five-year period, Ralph Lauren did not have an anti-corruption program and did not provide any anti-corruption training or oversight regarding its subsidiary in Argentina. Ralph Lauren discovered this misconduct during an internal review and promptly reported it to the DOJ and SEC.
For a sample company policy on the use of third-party agents abroad, see Standard Document, Policy for the Use of Third-party Agents Outside of the United States. For more information on the FCPA generally, see Practice Note, The Foreign Corrupt Practices Act: Overview.