The SEC Uses a Shiny New Tool

Earlier this year the Securities and Exchange Commission announced a new initiative encouraging cooperation. They wanted to start using Cooperation Agreements, Deferred Prosecution Agreements, and Non-prosecution Agreements.

They finally got use one of their shiny new tools. The SEC announced that Tenaris S.A. entered into a Deferred Prosecution Agreement.

The SEC alleged that Tenaris, a global manufacturer of steel pipe products, violated the Foreign Corrupt Practices Act by bribing Uzbekistan government officials during a bidding process to supply pipelines for transporting oil and natural gas. Tenaris made almost $5 million in profits from those contracts. As part of the DPA, the SEC is requiring Tenaris to cough up $5.4 million.

In addition to paying cast, Tenaris needs to do the following under the DPA:

• Cooperate with SEC in the investigation
• Not break the law
• Not claim a tax break or seek an insurance claim for $5.4 million penalty
• Update its code of conduct annually
• Require each director, officer and management-level employee to certify compliance with the code of conduct
• Train employees on the FCPA

Sources:

• Tenaris to Pay $5.4 Million in SEC's First-Ever Deferred Prosecution Agreement - SEC Press release
• Deferred Prosecution Agreement with Tenaris (.pdf)
• SEC's Cooperation Initiative
• SEC's New Enforcement Cooperation Initiative - prior post in Compliance Building

For additional commentary on developments in compliance and ethics, visit Compliance Building, a blog hosted by Doug Cornelius.

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