In the Matter of Rockwell Automation, Inc. (2011)

• Case Name
• In the Matter of Rockwell Automation, Inc. (2011)

• Date Filed
• 03/03/2011

• Enforcement Agency
• SEC

• Countries
• China

• Foreign Official
• Employees of state-owned Chinese design institutes and employees of other unspecified Chinese state-owned companies.

• Date of Conduct
• 2003 to 2006

• Nature of Business
• Rockwell Automation, Inc. (“Rockwell”) is a global company that designs and manufactures industrial automation products and services.  Rockwell is incorporated in Delaware and has its principal offices in Milwaukee, Wisconsin.  Rockwell Automation Power Systems (Shanghai) Ltd. (“RAPS-China”) was a wholly-owned subsidiary of Rockwell headquartered in Shanghai, China.  In 2007, Rockwell sold RAPS-China to Baldor Electric Company.  RAPS-China supplied industrial mechanical power transmission products and industrial motors and drives.

• Influence to be Obtained
• The SEC alleged that, from 2003 through 2006, employees of RAPS‑China, relying on third‑party intermediaries, made over $1,065,000 in payments and funded approximately $450,000 in leisure travel for employees of Chinese state‑owned design institutes (which were typically state‑owned design engineering and technical integration enterprises) and other Chinese government‑owned companies to influence sales contracts and obtain business from end‑user state‑owned customers.  RAPS‑China allegedly recorded these payments as legitimate business expenses in its books and records and failed to implement or maintain a system of internal accounting controls sufficient to prevent and detect the payments.  Rockwell self‑reported the payments after discovering them in 2006 through its normal financial review process.

• Enforcement
• On May 3, 2011, without admitting or denying the allegations, Rockwell consented to the entry of an order requiring it to cease and desist from violating the books and records and internal controls provisions of the FCPA and ordering Rockwell to pay disgorgement of $1,771,000, prejudgment interest of $590,091, and a civil money penalty of $400,000.  The cease-and-desist order notes that Rockwell voluntarily self‑reported the improper payments to the SEC and cooperated with the SEC’s subsequent investigation.  Rockwell also undertook numerous remedial measures with respect to its internal controls and compliance program. 

• Amount of the Value
• Travel and cash payments of over $1,500,000.

• Amount of Business Related to Payment
• Approximately $1,771,000 in net profits.

• Intermediary
• Third‑party intermediaries.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 2,761,091

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 2,761,091

Rockwell Automation, Inc. 

• Citation
• In the Matter of Rockwell Automation, Inc., Admin. Proc. File No. 3-14364 (May 3, 2011).

• Date Filed
• 05/03/2011

• 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

• Defendant's Citizenship
• United States