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$2 Million Anti-Bribery Fine Against Firearms Manufacturer

Thursday, July 31, 2014
Sandler, Travis & Rosenberg Trade Report

The Securities and Exchange Commission announced July 28 that a U.S. firearms manufacturer has agreed to pay $2.03 million to settle charges that it violated the anti-bribery, internal controls, and books and records provisions of the Foreign Corrupt Practices Act. This amount includes a $1.906 million civil penalty, $107,852 in disgorgement and $21,040 in prejudgment interest. The company must also report to the SEC on its FCPA compliance efforts for two years. Press reports indicate that the charges stem from a Department of Justice investigation that has since been dropped.

According to an SEC order, the company sought to break into new markets overseas starting in 2007 and continuing into early 2010. During that period the company’s international sales staff engaged in a “pervasive effort” to win contracts to supply firearm products to military and law enforcement agencies by offering, authorizing or making illegal payments or providing gifts meant for government officials in Pakistan, Indonesia, Turkey, Nepal and Bangladesh.

The SEC notes that it considered the company’s cooperation with the investigation as well as the remedial acts taken after the conduct came to light. Specifically, the company halted the impending international sales transactions before they went through, implemented a series of significant measures to improve its internal controls and compliance process, and terminated its entire international sales staff.

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