Qualcomm Incorporated (Qualcomm), a Delaware corporation headquartered in San Diego, California, designed and sold wireless telecommunication products as well as earned royalties from licensing its patented technologies. Qualcomm’s common stock was registered with the SEC and traded on the NASDAQ. Though Qualcomm did business all over the world, in 2012, 42% of the company's revenues came from Chinese handset manufacturers and other Qualcomm customers and licensees in China.
As disclosed in its SEC filings, on September 8, 2010, Qualcomm was notified by the SEC’s Los Angeles Regional office of a formal order of private investigation, the focus of which was compliance with the FCPA. Qualcomm understood that the investigation arose from a “whistleblower’s” allegations made in December 2009 to the audit committee of Qualcomm’s Board of Directors and to the SEC. In 2010, the audit committee completed an internal review of the allegations with the assistance of independent counsel and independent forensic accountants. This internal review into the whistleblower’s allegations and related accounting practices did not identify any errors in the company’s financial statements.
On January 27, 2012, Qualcomm learned that the U.S. Attorney’s Office for the Southern District of California/Department of Justcie (DOJ) had begun an investigation regarding the Qualcomm’s compliance with the FCPA. The audit committee conducted an internal review of the Company’s compliance with the FCPA and its related policies and procedures with the assistance of independent counsel and independent forensic accountants. In part as a result of the audit committee’s review, Qualcom made, and continues to make, enhancements to its FCPA compliance program.
According to its April 23, 2014 10-Q filing, Qualcomm discovered, and, as a part of its cooperation with these investigations, informed the SEC and the DOJ of instances in which special hiring consideration, gifts or other benefits were provided to several individuals associated with Chinese state-owned companies or agencies.
On March 13, 2014, Qualcomm received a Wells Notice from the SEC indicating that the staff had made a preliminary determination to recommend that the SEC file an enforcement action against the company for violations of the anti-bribery, books and records and internal control provisions of the FCPA.
As disclosed in its January 27, 2016 10-Q filing, on April 4, 2014 and May 29, 2014, Qualcomm made Wells submissions to the staff of the SEC explaining why the company believed it had not violated the FCPA.
On November 19, 2015, the DOJ notified Qualcomm that it was terminating its investigation and would not pursue charges in the matter.
As of its April 20, 2016 10-Q filing, on March 1, 2016, Qualcomm entered into an administrative settlement with the SEC pursuant to which the company paid a $7.5 million penalty and entered into a two-year period of self-monitoring and self-reporting with respect to FCPA compliance.
