Legg Mason, Inc. was a Maryland-based investment management firm whose shares of stock traded on the New York Stock Exchange.
Permal Group Ltd. ("Permal") was an investment management firm within Legg Mason's International Division and conducted business as an asset manager for and on behalf of Legg Mason. Legg Mason was the majority and later sole owner of Permal, and Permal's financial statements were consolidated into Legg Mason's financial statements and they participated in a net revenue sharing arrangement.
According to the documents in this case, between 2004 and 2010, Permal partnered with the French multinational bank Societe Generale S.A. to solicit business from Libyan state-owned financial institutions, including the Libyan Investment Authority which acted as Libya's sovereign wealth fund. During this time, Societe Generale paid bribes through a Libyan intermediary to several officials in connection with 14 investments made by the various Libyan state-owned financial institutions. The intermediary was paid a commission on each investment. Societe Generale made payments to the intermediary on behalf of Permal in connection with the seven investments managed by Permal. In all, Permal paid approximately $26.25 million in bribes through Societe Generale and the Libyan intermediary and made profits of approximately $31.6 million in connection with its investments with Libya.
On June 4, 2018, the DOJ announced that it had entered into a non-prosecution agreement with Legg Mason. In agreeing not to prosecute the company, the DOJ noted Legg Mason's thorough cooperation and remediation. However, the company did not receive any credit for voluntarily disclosing the misconduct to the authorities. Under the terms of the agreement, Legg Mason agreed to pay a criminal penalty of $32.625 million plus disgorgement of $31,617,891.90 for a total of approximately $64.2 million, to continue to implement its enhanced anti-corruption compliance policies and procedures, and to report on its anti-corruption compliance to the DOJ for a term of three years. No independent monitor was ordered. The DOJ agreed that in light of the company's cooperation and remediation, the penalty imposed would reflect a downward departure of 25% below the sentencing guidelines range.
In a related administrative proceeding on August 27, 2018, the SEC issued a cease and desist order to Legg Mason. Under the terms of the order, the SEC ordered Legg Mason to stop violating the internal controls provisions of the FCPA and to pay disgorgement of $27,594,729 plus prejudgment interest of $6,907,765. In determining to issue the order, the SEC noted Legg Mason's cooperation and remediation, and the agency chose not to impose a civil penalty against the company in light of the $32,625,000 criminal fine the DOJ imposed in its proceeding.
