Company Settles after SEC Finds FCPA Violations

The SEC charged a Chinese subsidiary of a U.S. company with making improper payments to health care professionals at government-owned hospitals. These health care workers were recommending the company's infant formula to patients who were new or expectant mothers. The company agreed to pay a $12 million penalty for violating the Foreign Corrupt Practices Act ("FCPA").

The SEC investigation found that employees funded the improper payments through "distributor allowance" funds paid to third-party distributors who marketed, sold and distributed the company's products in China. The SEC also discovered that even though the funds belonged to the distributors contractually, employees exercised some degree of control over how the money was spent and provided specific guidance to distributors on how to use the funds.

See: SEC Press Release.