The recent FCPA enforcement actions brought against Veraz Networks, Inc. shows that it does not take huge piles of money to get in trouble. Veraz admitted to making improper payments of only $40,000.
Not that $40,000 is an insignificant amount. It just pales in comparison to the huge dollars we have seen on other FCPA enforcement actions.
That $40,000 in improper payments led to a $300,000 fine and $3,000,000 of investigation expenses.
Back in 2008 Veraz was involved in an SEC investigation that resulted in the company not being able to timely file its 10Q for March 31, 2008. The FCPA violation was uncovered by the company during this investigation. It’s not clear what the original SEC investigation was focused on, but I would guess it was not FCPA violations. They were merely a byproduct of another investigation.
What lessons can we learn from the Veraz?
It does not take a lot of zeros to have an FCPA violation. It’s clear from the statute that even a nominal amount can be a violation.
FCPA violations are on the SEC’s checklist when they start poking around. The SEC is getting easy wins from the FCPA.
Sources:
- SEC Complaint Against Veraz Networks
- SEC press Release – SEC Charges California Telecommunications Company With FCPA Violations
- SEC Litigation Release – SEC Charges California Telecommunications Company With FCPA Violations
- Veraz Networks April 30, 2010 10Q
- Veraz Networks June 30, 2010 8K
- Disconnected … Another Telecommunications Company Settles An FCPA Enforcement Action by Mike Koehler in FCPA Professor
- When a Rose is not a Rose but an FCPA Violation by Thomas Fox in Corporate Compliance Insights
- Former SEC FCPA Enforcement Attorney Critical of SEC’s Recent Veraz Networks Inc. Enforcement Action by Mike Koehler in Corporate Compliance Insights