Prosecuting Agency:
U.S. Securities and Exchange Commission
Type of Action:
SEC Administrative Proceeding
Docket or Case Number:
3-17177
Name of Prosecuting Attorneys:
Unknown
US Assisting Agencies: Unknown
Foreign Enforcement Action/Investigation: Unknown
Foreign Assisting Agencies: Unknown
Origin of the Proceeding:
Unknown
Whistleblower:
Unknown
Case Status:
Resolved
Summary
Novartis AG was a major pharmaceutical and over-the-counter health products company incorporated and headquartered in Switzerland, whose products were available in 180 countries. Novartis shares were registered with the SEC and traded on the New York Stock Exchange. Shanghai Novartis Trading Ltd and Beijing Novartis Pharma Co, Ltd., both indirect subsidiaries of Novartis, were among the subsidiaries solely through which Novartis conducted its business in China.
From about 2009 to 2013, employees and agents of Novartis' Chinese subsidiaries made payments provided things of value, including gifts, travel, entertainment and favors, to numerous Chinese officials, primarily healthcare professionals ("HCPs") employed by Chinese state-owned healthcare facilities. These payments and gifts were intended to increase sales of Novartis pharmaceutical products, and were also improperly recorded in the books and records of the respective subsidiaries, which were consolidated in Novartis' financial reports.
In an administrative proceeding instituted on March 23, 2016, the SEC issued a cease and desist order against Novartis alleging violations of the books & records and internal controls provisions of the FCPA. Without admitting or denying the allegations, Novartis agreed to the imposition of the cease and desist order. Under the terms of the order, the SEC required Novartis to cease and desist violations of the books & records and internal controls provisions of the FCPA, pay disgorgement of $21,579,217, plus prejudgment interest of $1,470,887 and a civil fine of $2 million, and to report to the SEC on the status of the implementation of the the company's enhanced anti-corruption compliance policies and procedures for a term of two years.
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