SEC Charges Individual Executives with Control Person Liability Based on Corporation's Failure to Maintain Proper Books and Records and Internal Controls
11 Aug 2009
Philip Urofsky,
Richard Kreindler,
John Savage,
Danforth Newcomb,
Markus S. Rieder,
Stephen Fishbein,
Jo Rickard,
Patrick D. Robbins,
Robert C. Treuhold
On July 31, 2009, the U.S. Securities & Exchange Commission (SEC) charged a parent corporation, Nature's Sunshine Products, Inc. (NSP), with violating the FCPA’s anti-bribery, books and records, and internal controls provisions as well as other securities law violations based on payments allegedly paid by its Brazilian subsidiary to customs brokers to facilitate the importation of unregistered products. Significantly, the SEC also charged two of the company’s executives with violating the FCPA’s books and records and internal controls provisions based on their position as “control persons,” even though the SEC did not allege that the executives had personal knowledge of the payments. Thus, the case may presage a broader enforcement effort against executives based upon a claim that they had failed to supervise adequately employees responsible for maintaining the company’s books and records and system of internal controls.
Click here to view full memo, SEC Charges Individual Executives with Control Person Liability Based on Corporation's Failure to Maintain Proper Books and Records and Internal Controls
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