In the Matter of Orthofix International N.V. (2017)

• Case Name
• In the Matter of Orthofix International N.V. (2017)

• Date Filed
• 01/18/2017

• Enforcement Agency
• SEC

• Countries
• Brazil

• Foreign Official
• Unnamed doctors at government hospitals.

• Date of Conduct
• 2011 to 2013

• Nature of Business
• Orthofix International is a Curacao company with its principal headquarters in Lewisville, Texas. Orthofix do Brasil LTDA is its Brazilian subsidiary.  Orthofix is a medical device company that develops and sells surgical and non-surgical medical products to medical professionals in various market sectors.  Orthofix do Brasil markets and sells extremity fixations products through direct and indirect sales to public and private sector customers. Orthofix maintains a common stock on the Nadsaq Global Select Market.

• Influence to be Obtained
• According to the SEC, Orthofix do Brasil entered into agreements with third-party commercial representatives to directly sell its products to hospitals and doctors in Brazil.  Orthofix do Brasil paid commissions to those commercial representatives, who then used a portion of their commissions to make agreed upon payments to doctors.  Additionally, the SEC alleges that Orthofix do Brasil used third-party distributors to make improper payments to doctors.  The SEC claims that Orthofix lacked adequate training, policies, processes, and corporate culture that would have allowed employees at its subsidiaries to raise compliance concerns to the parent level.  In addition, the SEC alleges that Orthofix do Brasil improperly recorded payments and discounts, portions of which were used to make improper payments, rendering Orthofix’s books and records inaccurate.  Furthermore, the SEC maintains that Orthofix failed in a timely manner to devise and maintain an adequate system of internal accounting controls in Brazil for the setting, approval, and payment of commissions and discounts.  

• Enforcement
• On January 18, 2017, the SEC announced that it had resolved an FCPA enforcement action against Orthofix for violations of the FCPA’s books-and-records and internal controls provisions.  According to the Commission’s cease-and-desist order, Orthofix was required to pay a civil penalty of approximately $6 million

• Amount of the Value
• Not stated.

• Amount of Business Related to Payment
• Not Stated.

• Intermediary
• Third-party Commercial Representatives and Distributors.

• Citizenship of Parent Entity
• Curacao

• Total Sanction
• $ 6,119,375

• Compliance Monitor
• Yes

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 6,119,375

• Related Enforcement Actions
• United States v. Orthofix International, N.V. (E.D. Tex. 2012)
  SEC v. Orthofix International N.V. (E.D. Tex. 2012)
  

Orthofix International N.V. 

• Citation
• In the Matter of Orthofix International N.V., Admin. Proc. File No. 3-17800 (2017).

• Date Filed
• 01/18/2017

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer