SEC Settles FCPA Action Against Dutch Medical Supplier Philips for $62 Million

Dutch Medical Supplier Philips to Pay More Than $62 Million to Settle FCPA Charges

The Securities and Exchange Commission today announced that Amsterdam-based Koninklijke Philips N.V. will pay more than $62 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) with respect to conduct related to its sales of medical diagnostic equipment in China.

According to the SEC’s order, Philips’ subsidiaries in China, cumulatively referred to in the order as Philips China, used special price discounts with distributors that created a risk that excessive distributor margins could be used to fund improper payments to government employees. The SEC’s order also found that employees, distributors, or sub-dealers of Philips’ subsidiaries in China engaged in improper conduct to influence hospital officials to draft technical specifications in public tenders to favor Philips’ products. For example, the order found that, in one instance, a district sales manager at Philips China provided funds to a hospital director in return for the director’s assistance in the procurement process, and, in another instance, Philips China employees discussed tailoring technical specifications for a public tender with hospital directors so that only Philips China and two other manufacturers would qualify for the bid.

SEC Charges HSBC and Scotia Capital with Widespread Recordkeeping Failures

The Securities and Exchange Commission today charged HSBC Securities (USA) Inc. and Scotia Capital (USA) Inc. for widespread and longstanding failures by both firms and their employees to maintain and preserve electronic communications. To settle the charges, HSBC and Scotia acknowledged that their conduct violated recordkeeping provisions of the federal securities laws and agreed to pay penalties of $15 million and $7.5 million, respectively.

The SEC’s investigation of HSBC Securities and Scotia Capital, both registered broker dealers, uncovered pervasive and longstanding use of off-channel communications at both firms. As described in the SEC’s orders, the firms admitted that their employees often communicated “off-channel” about securities business matters on their personal devices, using messaging platforms, such as WhatsApp. Neither firm maintained or preserved the substantial majority of these communications, in violation of the federal securities laws. The failings involved employees at multiple levels of authority, including supervisors and senior executives. Both HSBC Securities and Scotia Capital cooperated with the SEC’s investigation by, among other things, self-reporting the recordkeeping failures after gathering communications from the personal devices of a sample of the firms’ personnel.

Hot Off The Presses: SEC/Covington and Burling Hearing Transcript

During a roughly hour-long hearing yesterday, U.S. District Judge Amit P. Mehta questioned both the SEC’s contention that it has the authority to force Covington to hand over a list of 298 clients affected by the 2020 cyberattack and Covington’s claim that attorney-client privilege prohibits it from disclosing that list. The SEC has requested client names to investigate whether any information obtained during the attack led to some company not properly disclosing the nature and impact of the attack.

Elon Musk’s bid to end tweet pre-approval faces skeptical court

A federal appeals court on Thursday questioned Elon Musk’s bid to end an agreement that he made to get a Tesla Inc (TSLA.O) lawyer’s preapproval of some of his tweets, with judges pointing out that he agreed to it as part of a 2018 deal with the U.S. Securities and Exchange Commission.

Musk’s attorney Ellyde Thompson told the 2nd U.S. Circuit Court of Appeals in Manhattan that while the Tesla chief executive thought the settlement would “buy peace” with the SEC, the agency’s recent attempts to enforce the tweet vetting provision have discouraged him from exercising his right to free speech.

The settlement resolved a lawsuit accusing Musk of defrauding investors with a Aug. 7, 2018 tweet that he had “funding secured” to take his electric car company private, though a buyout was not close.

Coinbase’s SEC Complaint Draws U.S. Chamber, Paradigm to Depict Regulator as Crypto Bully

The filings – a means by which outside parties can offer support for legal arguments – are piling support on Coinbase’s request more than two weeks ago to force the SEC to respond to an earlier 2022 petition that the agency provide rules clarifying crypto’s place in securities regulation. While SEC Chair Gary Gensler has made it clear that the agency has no intention of tailoring specific rules for crypto, the regulator has to respond by May 13 in the legal dispute.

Meanwhile, even the U.S. Chamber of Commerce – the broadest of organizations that lobby on behalf of U.S. business interests – has offered criticism for the behavior of the SEC.

Crypto Winter 2022 Cost Bitcoin Holders More Than Cash

For George, apologizing to me wasn’t the hardest part. He’d persuaded his Chinese immigrant parents to refinance their mortgage and lend him $50,000 to invest in Bitcoin. He stored the funds on Celsius, a sort of crypto bank where they could accrue interest. The company collapsed into bankruptcy, and now the money was frozen, much of it likely lost. “I said, ‘I’m really sorry, I’m deeply ashamed, and I will commit ritual seppuku if you demand it,’?” he says. They didn’t, but he said he plans to pay them back when he can.

It seemed that George, like a lot of us who got caught up in crypto, was experiencing not just a financial loss but a kind of financial grief—a tangle of guilt, second-guessing and that awful feeling of having fallen for something. Bitcoin’s price has bounced back some since we spoke, but that’s little comfort if you’ve had your money stuck on a janky platform such as Celsius, or lost funds on Sam Bankman-Fried’s allegedly fraudulent FTX exchange, or held one of the now-worthless “altcoins” that popped up like mushrooms in a big rain during the pandemic trading boom. For many, crypto had become an identity, a way to feel smart and subversive and on the cutting edge of a new technology. What happens to that self-image when its foundation erodes? When instead of being someone’s savvy son or daughter, you are the sheepish adult child who has to explain where the family savings went?…

House Republicans Eye SEC Regulatory, Enforcement Budget

Lastly, McHenry requested a freeze on the SEC’s enforcement budget and said it does not need the more than 50 additional personnel that have been requested. The SEC’s budget request provides for 53 net hires for its Enforcement Division alone.

McHenry added that the SEC’s aggressive enforcement actions against cryptocurrency have brought “further uncertainty to this nascent industry.”

Rep. Patrick McHenry to U.S. SEC: Which Crypto Exchanges Have Tried to Register?

Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee that oversees the SEC, sent a letter this week to SEC Chair Gary Gensler complaining that an earlier April 26 request had been rebuffed. The letters, also signed by Rep. Bill Huizenga (R-Mich.), coincided with recent hearings – including one on May 10 – in which Republican lawmakers criticized the agency for trying to hold the crypto industry to existing securities regulations.

“While you have stated that digital asset intermediaries such as exchanges should ‘come in and register,’ you have refused to establish rules with which digital asset trading platforms and other intermediaries can comply,” the lawmakers wrote in the April letter, which asked for a list of companies that have met with SEC officials to discuss registration.

Autonomy founder Mike Lynch extradited to the US to face fraud charges

British tech entrepreneur Mike Lynch has been extradited to the U.S. to face fraud charges in relation to the sale of his software company Autonomy to Hewlett Packard.

Lynch arrived in the U.S. on Thursday afternoon and is currently detained in San Francisco until bail conditions are met, his spokesperson confirmed to CNBC. He face charges of securities and wire fraud in relation to the sale of his company Autonomy to HP for $11 billion.

The entrepreneur attended an arraignment hearing on Thursday and was ordered to pay a $100 million bail to be released on house arrest, the spokesperson said.