In the Matter of Qualcomm Inc. (2016)

• Case Name
• In the Matter of Qualcomm Inc. (2016)

• Date Filed
• 03/01/2016

• Enforcement Agency
• SEC

• Countries
• China

• Foreign Official
• Unnamed Chinese government officials and employees and executives of Chinese stated-owned instrumentalities.

• Date of Conduct
• 2002 to 2012

• Nature of Business
• Qualcomm Incorporated is a Delaware corporation headquartered in San Diego, California.  The company designs and sells wireless telecommunication products and earns royalties from licensing its patented technologies.  The company’s common stock trades on the NASDAQ Global Select Market and is registered with the Commission pursuant to Section 12(b) of the Exchange Act.

• Influence to be Obtained
• According to the SEC, Qualcomm maintained a high interest in promoting the use of its wireless telecommunications technologies within the Chinese telecommunications market.  The SEC claims that Qualcomm’s success hinged on the decisions of Chinese state-owned telecommunications companies and, specifically, whether those companies would adopt and promote Qualcomm technologies on an expedited basis.  As described below, to curry favor with those companies and those officials with decision-making authority, the SEC Claims that between 2002 and 2012, Qualcomm (i) hired relatives or other individuals at the request of Chinese officials and (ii) offered or provided others meals, gifts, and entertainment.
  
  First, Qualcomm allegedly offered to employ multiple individuals, often family members of Chinese telecommunications officials, with the purpose of influencing those officials’ decisions.  In total, the SEC described three occasions where Qualcomm offered to hire the children or other individuals at the request of Chinese officials.  In each case the SEC made clear that the decision to offer those individuals employment was based on the company’s interest in promoting Qualcomm technologies among the Chinese state-owned telecommunications companies. In at least two of those three instances, the SEC points out that the children of those officials were not qualified for the position they were offered. 
  
  Second, the SEC also described instances where Qualcomm officials provided foreign officials with extravagant meals, gifts, and entertainment.  This included lavish hospitality packages to events such as the 2008 Beijing Olympics, sightseeing tours, and golf outings.  According to the SEC, none of these benefits had a valid business purpose.

• Enforcement
• On March 1, 2016, the SEC announced that it settled its enforcement action against Qualcomm through an administrative proceeding whereby Qualcomm agreed to pay a civil penalty of $7.5 million.  For its part, Qualcomm acknowledged that its conduct caused the company to violate the FCPA’s anti-bribery, books-and-records, and internal controls provisions.  The DOJ had launched a separate investigation in 2012 and notified the company in 2015 that it would not pursue any charges.

• Amount of the Value
• Not Stated

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• None

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 7,500,000

• Compliance Monitor
• No

• Reporting Requirements
• Yes (2 Years)

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 7,500,000

Qualcomm Inc. 

• Citation
• In the Matter of Qualcomm Inc.,Admin. Proc. No. 3-17145 (Mar. 1, 2016).

• Date Filed
• 03/01/2016

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States