SEC v. Katy Industries, Inc., Wallace E. Carroll, Melvan M. Jacobs (N.D. III. 1978)

• Case Name
• SEC v. Katy Industries, Inc., Wallace E. Carroll, Melvan M. Jacobs (N.D. III. 1978)

• Date Filed
• 11/17/2016

• Enforcement Agency
• SEC

• Countries
• Indonesia

• Foreign Official
• A high-level Indonesian government official.

• Date of Conduct
• pre-1975 to 1978

• Nature of Business
• Katy Industries, Inc. is a Delaware corporation with its headquarters in Illinois, which operated in the oil production industry.  During the relevant time, its common stock and a class of its preferred stock were registered with the SEC pursuant to Section 12(b) of the Exchange Act.  Wallace Carroll was the Chairman of the Board and Chief Executive Officer of Katy.  Melvan Jacobs was a director of Katy’s Executive Committee and acted as counsel to Katy.  

• Influence to be Obtained
• According to the SEC, from 1972 to 1978, the defendants engaged in a scheme to provide improper payments to an Indonesian official to obtain a thirty‑year oil production‑sharing contract with Pertamina, Indonesia’s oil and gas company, giving Katy the exclusive right to explore and develop oil and natural gas in Indonesia.  The SEC alleges that the defendants engaged a consultant, who was a close personal friend of a high-level Indonesian government official (“Official”).  The consultant facilitated the initial contact with the Official, and the parties agreed to an arrangement pursuant to which the defendants would pay the Official’s agents a portion of the profits from the thirty-year contract.  

• Enforcement
• The court entered consent judgments against Katy, Carroll, and Jacobs.  These judgments permanently enjoined the defendants from engaging in future violations of the FCPA.  Katy was also ordered to amend its filings and establish a Special Review Committee of outside directors to report to the board of directors, who were to act on the request.

• Amount of the Value
• $316,250.

• Amount of Business Related to Payment
• $10 million contract.

• Intermediary
• Payments were made through an offshore Cayman Island corporation, owned by a consultant of Katy and a representative of the foreign official.

• Citizenship of Parent Entity
• United States

• Compliance Monitor
• No

• Reporting Requirements
• Yes

• Case is Pending?
• No

Katy Industries, Inc.

• Citation
• SEC v. Katy Indus., Inc., et al., No. 78-cv-03476 (N.D. Ill. 1978).

• Date Filed
• 11/17/2016

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery

• Other Statutory Provision
• (Securities Act Section 17(a); Exchange Act Section 10(b)); False Filing Statements (Exchange Act Section 13(a)); False Proxy Statements (Exchange Act Section 14(a)).

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States

Wallace E. Carroll

• Citation
• SEC v. Katy Indus., Inc., et al., No. 78-cv-03476 (N.D. Ill. 1978).

• Date Filed
• 11/17/2016

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery

• Other Statutory Provision
• Securities Fraud (Securities Act Section 17(a); Exchange Act Section 10(b)); Aiding and Abetting (False Filing Statements; False Proxy Statements); False Proxy Statements (Exchange Act Section 14(a)).

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Agent of Issuer

• Individual Sanction
• None

Melvan M. Jacobs 

• Citation
• SEC v. Katy Indus., Inc., et al., No. 78 cv 03476 (N.D. Ill. 1978).

• Date Filed
• 11/17/2016

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery

• Other Statutory Provision
• Securities Fraud (Securities Act Section 17(a); Exchange Act Section 10(b)); Aiding and Abetting (False Filing Statements; False Proxy Statements); False Proxy Statements (Exchange Act Section 14(a

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Agent of Issuer

• Individual Sanction
• None