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Enforcement Action Dataset

 

Docket or Case Number:    3-18964

Court:    N/A

Initiation Date:    12/26/2018  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:    Unknown

Assisting Agencies:    Unknown

Type of Action:    SEC Administrative Proceeding

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Polycom, Inc., headquartered in San Jose, California, sold voice and video communications products and services. From 1996 until 2016, Polycom’s common stock was registered with the SEC and traded on the NASDAQ. On September 27, 2016, a private equity firm acquired Polycom, at which pount the company's shares ceased to trade publicly. On July 2, 2018, Plantronics, Inc. acquired Polycom from the private equity firm, and Polycom became a wholly-owned subsidiary of Plantronics.

Polycom Communications Solutions (Beijing) Co., Ltd. (China) (“ Polycom China”) was a wholly-owned subsidiary of Polycom organized in China that sold Polycom’s products and services in the Chinese market.

According to the documents in this case, from 2006 through 2014, Polycom’s Vice President of China at Polycom China, along with other senior managers, provided significant discounts to Polycom’s distributors with the intention that the distributors would use the discounts to make payments to officials at Chinese government agencies and state-owned enterprises in order to sell Polycom's products. The payments were recorded in a parallel deal-tracking and email system located in China, outside of Polycom’s company-approved systems. From 2012 to 2014, these concealed improper payments ultimately netted Polycom approximately $10.7 million.

In a settled administrative proceeding initiated on December 26, 2018, the SEC ordered Polycom to cease and desist violations of the books and records and internal controls provisions of the FCPA. In addition the SEC ordered Polycom to pay disgorgement of $10,672,926 plus prejudgment interest of $1,833,410 and a civil fine of $3,800,000. In determining to accept the settlement and the amount of fines paid, the SEC noted Polycom's voluntary disclosure of the misconduct as well as the company's cooperation in the investigation and the remedial measures taken.

In a related matter, on December 20, 2108, the DOJ issued a formal declination letter to Polycom pursuant to the agency's Corporate Enforcement Policy. Under the terms of the declination, Polycom would not be prosecuted but was required to disgorge $30,978,000. The company would pay $10,672,926 of the disgorgement to the SEC in the related enforcement action and $10,152,537 each to both the DOJ and the U.S. Postal Inspection Service Consumer Fraud Fund.

Country(ies) involved:    China

Sanction to Bribe Ratio:    Not Applicable

Sanction to Revenue Ratio:    Not Applicable

Sanction to Profit Ratio:    $16,306,336 / $10,700,000 = 152.40 %

Number of Related Enforcement Actions (Including This Enforcement Action):    2

Country(ies) involved:    China

Total $ Bribery Payments:    Unknown

Total $ Revenue Generated from Bribery:    Unknown

Total $ Profit Earned or Expenses Avoided from Bribery:    $30,978,000

Total $ Monetary Sanctions:    $36,611,410

Sanction to Bribe Ratio:    Not Applicable

Sanction to Revenue Ratio:    Not Applicable

Sanction to Profit Ratio:    $36,611,410 / $30,978,000 = (118.18 %)

Name:    Polycom, Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Merged or Acquired 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:    None

Statutory Basis for FCPA Jurisdiction:    Issuer

Name:    Plantronics, Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Public Company


Name:    Polycom Communications Solutions (Beijing) Co., Ltd. (China)

Place of Incorporation:    China

HQ Country(ies):    China

Entity Type:    Subsidiary

Period of Bribery:   2006 - 2014

Total Bribery Payments:    Unknown

Total Revenue Generated from Bribery:    Unknown

Total Profit Earned or Expenses Avoided from Bribery:    $10,700,000

Country(ies) involved:    China

Officials Potentially Influenced (Name; Title; Organization): 

  • Name Unknown, Officials; Chinese government

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    None/Unknown

Third-Party Intermediary:   

  • Local distributors , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Not Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in China

Period of Bribery:   2006 – 2014

Total Bribery Payments:    Unknown

Total Revenue Generated from Bribery:    Unknown

Total Profit Earned or Expenses Avoided from Bribery:    $10,700,000

Country(ies) involved:    China

Officials Potentially Influenced (Name; Title; Organization):  

  • Name Unknown, Officials; Chinese government;

Affiliates, Subsidiaries and Joint Ventures Involved in the Misconduct:    None/Unknown

Third Party Intermediary:    Local distributors - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Not Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes

Parent:    Polycom, Inc. (Corporate HQ: United States; Place of Incorporation: United States; Industry: Technology)

  • Subsidiary:  Polycom Communications Solutions (Beijing) Co., Ltd. (China) (Corporate HQ: China; Place of Incorporation: China; Industry: Technology)

    • Percentage of Ownership:    100.00 %
    • Direct or Indirect Ownership:    Indirect
    • 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?     Yes

Type of Transaction:    Acquisition


Successor:    Plantronics, Inc. (Corporate HQ: United States; Place of Incorporation: United States; Industry: Technology)

Predecessor:  Polycom, Inc. (Corporate HQ: United States; Place of Incorporation: United States; Industry: Technology)

  • Nature of Misconduct   
    • Misconduct Occurred Solely Pre-acquisition:    Yes
    • Misconduct Occurred Pre- and Post-acquisition, with NO Knowledge and/or Involvement of Successor:    No/Unknown
    • Misconduct Occurred Pre and Post-acquisition, with Knowledge and/or Involvement of Successor:    No/Unknown
  • Quality of Due Diligence:    Unknown
  • Voluntary Disclosure by Successor in Connection with the Transaction:    No
  • DOJ Opinion Sought in Connection with Transaction:    No/Unknown
  • Successor Liable for Predecessor Misconduct? :    No

  

Re: Polycom, Inc.

  • Inadequate internal controls or auditing

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Polycom, Inc.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Polycom, Inc.    

Total Monetary Sanctions for the Action:    $16,306,336

Case Status:    Resolved


Disposition:    Cease and Desist Order

Date of Disposition:    12/26/2018

Polycom, Inc.

—  Total Monetary Sanctions for Defendant:    $16,306,336

—  Compliance Obligation:    No

—  Reporting Obligation:    No Applicable

—  Admission of Guilt/Acceptance of Responsibility:    No

No Document Title Date Category