In the Matter of Smith & Wesson Holding Corporation (2014)

• Case Name
• In the Matter of Smith & Wesson Holding Corporation (2014)

• Date Filed
• 07/28/2014

• Enforcement Agency
• SEC

• Countries
• Bangladesh, Indonesia, Nepal, Pakistan, Turkey

• Foreign Official
• Pakistani police officials; Indonesian police officials; Turkish police and military officials; Undisclosed “foreign officials” in Nepal and Bangladesh.

• Date of Conduct
• 2007 to 2010

• Nature of Business
• Smith & Wesson Holding Corporation is a Nevada corporation with its principal place of business in Massachusetts.  Smith & Wesson manufactures and markets firearms products in the United States and abroad, and it maintains a class of publicly traded securities on the NASDAQ Stock Exchange, registered pursuant to Section 12(b) of the Exchange Act.

• Influence to be Obtained
• From 2007 to 2010, in an effort to increase Smith & Wesson’s international sales, the SEC alleged that the company authorized employees and other third-party agents to bribe foreign government officials in exchange for contracts to sell firearms. 
  
  According to the SEC, in 2008 Smith & Wesson retained a third-party agent in Pakistan to obtain a deal to sell firearms to a Pakistani police department.  When the third-party agent informed the company that it would provide $11,000 in firearms to the Pakistani officials as gifts and would make additional cash payments to those officials, the company authorized the transaction.  As a result of the alleged bribes, Smith & Wesson earned $107,852 in illicit profits.
  
  In 2009, Smith & Wesson hired a similar third-party agent in Indonesia who explained that payments would be made to Indonesian police officials under the guise of firearm lab testing costs.  Also in 2009, the SEC claims that Smith & Wesson, through a third-party agent, paid bribes to Turkish police and military officials for contracts to sell handcuffs and firearms, respectively.  No shipments were made for these contracts as the company’s bidding efforts for one contract were unsuccessful and the other contract was ultimately canceled.  Smith & Wesson also allegedly attempted to bribe officials in Nepal and Bangladesh, but were unsuccessful.

• Enforcement
• On July 28, 2014, the SEC announced that it settled its claims against Smith & Wesson for violations of the anti-bribery, book-and-records, and internal controls provisions of the FCPA through an administrative proceeding.  According to SEC documents, the company agreed to pay a total of $2,034,892 in disgorgement, prejudgment interest, and civil penalties.

• Amount of the Value
• $11,000.

• Amount of Business Related to Payment
• $107,852.

• Intermediary
• Third-party Agents/Consultants.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 2,034,892

• Compliance Monitor
• No

• Reporting Requirements
• Yes (2 Years)

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 2,034,892

Smith & Wesson Holding Corporation 

• Citation
• In the Matter of Smith & Wesson Holding Corp., Admin. Proc. File No. 3-15986 (Jul. 28, 2014).

• Date Filed
• 07/28/2014

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Non-Prosecution Agreement

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States