Enforcement Action

 

Docket or Case Number:    3-17800

Court:    N/A

Initiation Date:    01/18/2017  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:    N/A

Assisting Agencies:    Brazil's Securities Commission (Comissão de Valores Mobiliários)

Type of Action:    SEC Administrative Proceeding

Origin of the Proceeding:    Previous FCPA Action Obligation

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Orthofix International N.V., incorporated in Curacao and headquartered in Texas, was a diversified medical device company that developed and sold a variety of medical products to in several markets, both domestically and internationally. Orthofix’s stock was registered with the SEC and traded on the NASDAQ.

Orthofix do Brasil LTDA (“Orthofix Brazil”) was a wholly-owned Brazilian subsidiary of Orthofix which marketed and sold extremity fixation products to public and private sector customers. Orthofix Brazil’s financial statements were incorporated into Orthofix's books and records.

From about 2011 to 2013, Orthofix Brazil made improper payments through third-party intermediaries to doctors employed at government-owned hospitals in Brazil in order to induce the doctors to use Orthofix’s products. In all, the improper payments generated profits of approximately $2,928,000 for Orthofix.

On January 18, 2017, the SEC initiated a settled administrative proceeding against Orthofix. Under the terms of the proceeding, the SEC ordered Orthofix to cease and desist violations of the books & records and internal controls provisions of the FCPA, to pay a civil fine of $2,928,000 and disgorgement of $2,928,000 plus prejudgment interest of $263,375, and to hire an independent compliance monitor for a term of one year.

In a statement released on January 18, 2017, Orthofix stated that the DOJ had declined to prosecute the company in this matter.

Country(ies) involved:    Brazil

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $6,119,375 / $2,928,000 = 209.00 %

Number of Related Enforcement Actions (Including This Enforcement Action):    1

Country(ies) involved:    Brazil

Total $ Bribery Payments:    N/A

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $2,928,000

Total $ Monetary Sanctions:    $6,119,375

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $6,119,375 / $2,928,000 = (209.00 %)

Name:    Orthofix International NV

Place of Incorporation:    Netherlands Antilles

HQ Country(ies):    United States

Entity Type:    Public Company

FCPA Claims:    Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer

Period of Bribery:   2011 - 2013

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $2,928,000

Country(ies) involved:    Brazil

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Doctors; Brazilian government-owned hospitals

Defendant-Related Entities Involved in the Misconduct:    Orthofix do Brasil LTDA - Subsidiary

Third-Party Intermediary:   

  • Third-party commercial representatives , Agent/Consultant/Broker
  • Third-party distributors , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Brazil

Period of Bribery:   2011 – 2013

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $2,928,000

Country(ies) involved:    Brazil

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Doctors; Brazilian government-owned hospitals;

Defendant-Related Entities Involved in the Misconduct:    Orthofix do Brasil LTDA - Subsidiary

Third Party Intermediary:    Third-party commercial representatives - Agent/Consultant/Broker
Third-party distributors - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Orthofix International NV

Subsidiary:  Orthofix do Brasil

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

N/A

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Orthofix International NV      

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Orthofix International NV  

Total Monetary Sanctions for the Action:    $6,119,375

Case Status:    Resolved


Disposition:    Cease and Desist Order

Date of Disposition:    01/18/2017

Orthofix International NV

—  Total Monetary Sanctions for Defendant:    $6,119,375

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Independent monitor

—  Admission of Guilt/Acceptance of Responsibility:    Yes

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