In a settlement that involves a company with significant Chinese operations -- and that also may represent something of a template for the settlement of FCPA enforcement follow-on civil lawsuits -- SciClone Pharmaceuticals and the individual defendant directors and officers have agreed to settle the consolidated derivative lawsuits that were filed following the company's announcement that it was the target of SEC and DoJ investigations for possible FCPA violations.
According to the company's October 12, 2011 press release (here), the parties have agreed, subject to court approval, to settle the consolidated cases based on the company's agreement to adopt certain specified corporate governance reforms and the company's agreement to pay $2.5 million in plaintiffs' attorneys' fees. The press release states that the payment of the plaintiffs' attorneys' fees is "to be paid by SciClone's insurers under its director and officer insurance policy." A copy of the parties' stipulation of settlement can be found here.
The FCPA does not provide for a private right of action. However, as I have previously noted on this site, the advent of an FCPA investigation often triggers a follow-on civil lawsuit. In this case, multiple lawsuits were filed against the company, as nominal defendant, and certain of the company's directors and officers, shortly after the company announced the existence of the investigation. The lawsuits, which were filed in San Mateo County (Calif.) Superior Court in September 2010, and which were later consolidated, alleged that "the Individual Defendants, by reason of their failure to implement and maintain internal controls and systems at the Company to assure compliance with the FCPA, breached their fiduciary duties and may be held liable for damages."
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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.
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