In re Legg Mason, Inc. (2018)

• Case Name
• In re Legg Mason, Inc. (2018)

• Date Filed
• 06/04/2018

• Enforcement Agency
• DOJ

• Countries
• Libya

• Foreign Official
• Unnamed executives of the Central Bank of Libya, the Libyan Arab Foreign Bank, the Economic and Social Development Fund, and the Libyan Investment Authority.

• Date of Conduct
• 2005 to 2012

• Nature of Business
• Legg Mason was a Maryland-based investment firm and its stock traded on the New York Stock Exchange. Permal Group Ltd. is a U.S.-based investment management firm that was a majority- and then wholly-owned subsidiary of Legg Mason.

• Influence to be Obtained
•  According to the DOJ, between 2005 and 2012, Permal entered into a corrupt arrangement to make payments to various Libyan government officials, through a Libyan intermediary, to obtain investments from the Central Bank of Libya, the Libyan Arab Foreign Bank, the Economic and Social Development Fund, and the Libyan Investment Authority, all of which are Libyan state-owned enterprises. The DOJ alleged that Permal worked with Société Générale S.A., a French financial institution, to sell structured notes to the Libyan State Agencies worth approximately $950 million. Société Générale acted as the structuring bank and issued the structured notes. Société Générale then agreed to place some portion of the notes it sold to the Libyan State Agencies into funds managed by Permal, on which it collected commissions and fees.
  
  
  To obtain the business of the Libyan State Agencies, Permal and Société Générale entered into an agreement with an unnamed Libyan Intermediatary, who is a dual citizen of Libya and Italy. Permal and Société Générale paid the Libyan Intermediary through a Panamanian shell company for “purported ‘introduction’ services.” However, Permal and Société Générale were aware that, in fact, the Libyan Intermediary was using these funds to pay bribes to Libyan government officials. In addition to payments, the Libyan Intermediary allegedly used threats and intimidation tactics to “cook” Libyan government officials — that is, to convince them to invest in Société Générale’s and Permal’s products.

• Enforcement
• On June 4, 2018, Legg Mason entered into a non-prosecution agreement with the DOJ, pursuant to which Legg Mason agreed to pay $32,625,000 in monetary penalty and $31,617,891 in disgorgement, for a total sanction of $34,242.891. Legg Mason will receive credit from any disgorgement it pays to other agencies. It did not receive voluntary disclosure credit, but did receive full cooperation and remediation credit, reflected in an aggregate discount of 25% from the sentencing guidelines.
  
  On August 27, 2018, the SEC issued a cease-and-desist order to Legg Mason in which it agreed to pay $34,502,494 in disgorgement and prejudgment interest, which will be credited towards the DOJ’s disgorgement amount.

• Amount of the Value
• Approximately $26.25 million.

• Amount of Business Related to Payment
• Net revenue of approximately $31.6 million.

• Intermediary
• Agent; Shell Company.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 34,242,891

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 67,127,494

• Related Enforcement Actions
• United States v. Société Générale S.A. (E.D.N.Y. 2018)
  United States v. SGA Société Générale Acceptance, N.V. (E.D.N.Y. 2018)
  In the Matter of Legg Mason, Inc. (2018)
  In the Matter of Legg Mason, Inc. (2018)
  United States v. Société Générale S.A. (E.D.N.Y. 2018)
  United States v. SGA Société Générale Acceptance, N.V. (E.D.N.Y. 2018)
  

• Industries
• Finance & Banking, Conglomerate/Diversified Holding Company

• Regions
• Northern Africa

Legg Mason, Inc.

• Citation
• In re Legg Mason (2018).

• Date Filed
• 06/04/2018

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Conspiracy
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• None.

• Disposition
• Non-Prosecution Agreement

• Defendant Jurisdictional Basis
• Agent of Issuer

• Defendant's Citizenship
• United States

• Individual Sanction
• $34,242,891.