SEC v. UTStarcom, Inc. (N.D. Cal. 2009)

• Case Name
• SEC v. UTStarcom, Inc. (N.D. Cal. 2009)

• Date Filed
• 04/14/2010

• Enforcement Agency
• SEC

• Countries
• China, Mongolia, Thailand

• Foreign Official
• Employees of Chinese government-controlled telecommunications companies; employees of government customers in Thailand.

• Date of Conduct
• 2002 to 2007

• Nature of Business
• Provision of global telecommunications services, including the design, manufacture, and sales of network equipment and handsets by UTStarcom, Inc. (“UTStarcom”), a Delaware corporation and its wholly-owned subsidiary UTStarcom China Co. Ltd.

• Influence to be Obtained
• According to a complaint filed by the SEC on December 31, 2009, UTStarcom made improper payments to sham consultants in China and Mongolia while knowing they would pay bribes to foreign government officials and provided employment benefits and salaries to employees of government customers or their family members when the individuals did no work for UTStarcom.  Further, between 2002 and 2007, UTStarcom allegedly paid for more than 225 overseas “training” trips for employees of Chinese government‑owned telecommunications companies.  In actuality, the trips were primarily for sightseeing.  In addition, UTStarcom arranged for expensive gifts and all‑expense paid executive training programs in the U.S. for existing and potential government customers in China and Thailand.
  
  In 2006, UTStarcom’s audit committee began an internal investigation into the improper payments which eventually uncovered and disclosed the infractions.

• Enforcement
• The SEC’s complaint charges UTStarcom with violations of the anti‑bribery, books and records, and internal controls provisions of the FCPA.  On April 13, 2010, without admitting or denying the allegations in the complaint, UTStarcom consented to entry of final judgment and agreed to a pay a $1.5 million penalty, a permanent injunction against violations of the FCPA, and to provide the SEC with annual FCPA compliance reports and certifications.  In a separate proceeding, UTStarcom entered into a non-prosecution agreement with the DOJ and agreed to pay a $1.5 million penalty to settle the charges against it. 

• Amount of the Value
• Approximately $7,000,000.

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Consultants

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 1,500,000

• Compliance Monitor
• No

• Reporting Requirements
• Yes (4 Years)

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 3,000,000

• Related Enforcement Actions
• In re UTStarcom, Inc. (2009)
  

UTStarcom, Inc.

• Citation
• SEC v. UTStarcom,Inc., No. 09-cv-6094 (N.D. Cal. 2009).

• Date Filed
• 04/14/2010

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States