In the Matter of World Acceptance Corporation (2020)

• Case Name
• In the Matter of World Acceptance Corporation (2020)

• Date Filed
• 08/06/2020

• Enforcement Agency
• SEC

• Countries
• Mexico

• Foreign Official
• Unnamed government officials in Mexico

• Date of Conduct
• 2010 to 2017

• Nature of Business
• World Acceptance Corporation (WAC) is a consumer loan company headquartered in Greenville, South Carolina.  It offers small loans directly to customers and to state and federal government employees.  The company issued and maintains a class of publicly-traded securities on the Nasdaq Stock Market, which means it is an Issuer pursuant to Section 12(b) of the Exchange Act.
  
  WAC had a wholly-owned subsidiary based in Mexico, WAC de Mexico, S.A. de C.V. (WAC Mexico), which it sold in 2018.  At the time of the alleged misconduct, the company consolidated the books and records of its Mexican subsidiary into its own financial statements. 
   

• Influence to be Obtained
• According to the SEC, WAC violated the FCPA’s anti-bribery, recordkeeping, and internal controls provisions because of its subsidiary’s actions in Mexico.  One of the company’s main lines of business in Mexico was a program called Viva that offered small loans to state and federal government employees. The SEC alleged that employees of WAC Mexico paid monetary bribes to Mexican government officials to secure the ability to make loans to the government employees under the Viva program.  Employees at WAC Mexico allegedly paid $4.1 million in cash or with bank deposit to obtain the loans and hired several third-party intermediaries to assist with making ongoing bribe payments to those government officials.
  
  According to the SEC, as a result of the alleged conduct described above, WAC maintained inaccurate financial records with respect to third party payments and lacked the internal accounting controls to detect or prevent such payments. 

• Enforcement
• On August 6, 2020, the SEC settled its enforcement action against WAC, noting both the company’s positive remedial efforts and cooperation with the SEC.  The SEC issued a cease-and-desist and ordered WAC to pay $17.83 million in disgorgement, $1.9 million in prejudgment interest, and a civil money penalty of $2 million for a total fine of $21.73 million.  
   
  Separately, the DOJ issued a declination letter noting that the agency had decided to decline prosecution based on the disgorgement amount paid by the company to the SEC and the company’s prompt voluntary self-disclosure.

• Amount of the Value
• $4.1 million

• Amount of Business Related to Payment
• Not stated

• Intermediary
• Third-party intermediary

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 21,726,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 21,726,000

• Industries
• Finance & Banking

• Regions
• Latin Amer. & Carib

World Acceptance Corporation

• Citation
•  In the Matter of World Acceptance Corporation, Admin. Proc. File No. 3-19905 (August 6, 2020).

• Date Filed
• 08/06/2020

• Filed Under Seal
• No

• Date Case Was Unsealed
• 08/06/2020
  

• FCPA Statutory Provision
• • Anti-Bribery
  • Books-and-Records
  • Internal Controls

• Disposition
• Public Declination with Disgorgement, Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States

• Individual Sanction
• $17.83 million in disgorgement, $1.9 million in prejudgment interest, and a civil money penalty of $2 million for a total fine of $21.73 million.