Legg Mason Charged With Violating the FCPA
Legg Mason Inc. paid over $34 million to the SEC to settle FCPA charges that its subsidiary Permal Group bribed Libyan officials between 2004 and 2010 via a middleman who called it "cooking," securing $1 billion in investments and $31.6 million in net revenues, after already paying $33 million to the DOJ.
Legg Mason Inc. agreed to disgorge $27.6 million in ill-gotten gains and pay $6.9 million in prejudgment interest to the SEC for violating the FCPA’s internal accounting controls provision, stemming from its subsidiary Permal Group’s bribery of Libyan government officials between 2004 and 2010. The scheme involved payments to a Libyan middleman who used the term "cooking" to describe securing investments through corruption, resulting in $1 billion in client investments and $31.6 million in net revenues for Legg Mason. The company had previously paid $33 million to the U.S. Department of Justice in criminal sanctions, bringing its total resolution to over $67 million.
Between 2004 and 2010, Legg Mason Inc.’s subsidiary, Permal Group Inc., engaged in a bribery scheme to secure investment business from Libyan state-owned financial institutions by paying bribes through a Libyan middleman who referred to his corrupt tactics as "cooking." The scheme successfully generated $1 billion in investments for the Libyan institutions and approximately $31.6 million in net revenues for Legg Mason. The SEC found that Legg Mason violated the internal accounting controls provision of the Securities Exchange Act of 1934 by failing to detect or prevent the bribes, despite clear red flags in its use of intermediaries. To resolve the SEC’s charges, Legg Mason agreed to disgorge $27.6 million in ill-gotten gains and pay $6.9 million in prejudgment interest, totaling over $34 million in SEC penalties. Prior to this, the company had already paid $33 million in criminal sanctions to the U.S. Department of Justice, bringing its total financial resolution to over $67 million. The SEC’s investigation was conducted in coordination with the DOJ’s Fraud Section, the FBI, and the U.S. Attorney’s Office for the Eastern District of New York. The case underscores the regulatory emphasis on corporate accountability for bribery risks when using third-party agents in high-corruption jurisdictions.
Exhibits & Attached Documents (1)
Extracted insights
- $1.00B $1 billion ≥$1B
- $34.00M $34 million $10M–$100M
- $33.00M $33 million $10M–$100M
- $31.60M $31.6 million $10M–$100M
- $27.60M $27.6 million $10M–$100M
- $6.90M $6.9 million $1M–$10M
- agency $33 million to u.s. department of justice
- person bribery scheme
- person Eric Heining
- company french financial services company
- company legg mason inc.
- person Martin F. Healey
- agency over $34 million to resolve sec charge
- person paul g. block
- company permal group inc.
- person rory alex
- agency sec investigation
- Legg Mason Inc. will pay over $34 million to resolve SEC charge
- Legg Mason Inc. violated Foreign Corrupt Practices Act (FCPA)
- Permal Group Inc. engaged in scheme to pay bribes to Libyan government officials
- Legg Mason Inc. was awarded business tied to $1 billion of investments for Libyan financial institutions
- Legg Mason Inc. earned net revenues of approximately $31.6 million
- Legg Mason Inc. violated internal accounting controls provision of Securities Exchange Act of 1934
- Legg Mason Inc. agreed to disgorge approximately $27.6 million of ill-gotten gains plus $6.9 million in prejudgment interest
- Legg Mason Inc. agreed to pay $33 million to U.S. Department of Justice
- Permal Group Inc. partnered with French financial services company
- Bribery scheme occurred between 2004 and 2010
- Eric Heining conducted SEC investigation
- Paul G. Block conducted SEC investigation
- Rory Alex conducted SEC investigation
- Martin F. Healey conducted SEC investigation
The Securities and Exchange Commission today announced that Legg Mason Inc. will pay over $34 million to resolve an SEC charge that the company violated the Foreign Corrupt Practices Act (FCPA) in a scheme to bribe Libyan government officials. According to the SEC’s order, between 2004 and 2010, a former Legg Mason asset management subsidiary, Permal Group Inc., partnered with a French financial services company to solicit investment business from Libyan state-owned financial institutions. These entities engaged in a scheme to pay bribes to Libyan government officials through a Libyan middleman in order to secure investments. As a result of the corrupt scheme, Legg Mason, through its Permal subsidiary, was awarded business tied to $1 billion of investments for the Libyan financial institutions, earning net revenues of approximately $31.6 million. According to the SEC’s order, the middleman used the term “cooking” to describe his ability to cause Libyan government officials to invest by any means necessary, including bribes. “Companies must take adequate steps to identify and mitigate the risks of bribery and corruption present in their global business. Those risks are particularly acute when, as here, agents and middlemen are used as part of a company’s efforts to obtain business with government clients,” said Charles Cain, Chief of the Enforcement Division’s FCPA Unit. The SEC’s order finds that Legg Mason violated the internal accounting controls provision of the Securities Exchange Act of 1934. Legg Mason agreed to disgorge approximately $27.6 million of ill-gotten gains plus $6.9 million in prejudgment interest to settle the SEC’s case. Legg Mason had also previously agreed to pay $33 million to the U.S. Department of Justice in sanctions resulting from the firm’s involvement in the Libyan bribery scheme. The SEC’s investigation was conducted by Eric Heining and Paul G. Block of the FCPA Unit and Rory Alex and Martin F. Healey of the Boston Regional Office. The SEC appreciates the assistance of the Fraud Section of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of New York, and the Federal Bureau of Investigation.
The Securities and Exchange Commission today announced that Legg Mason Inc. will pay over $34 million to resolve an SEC charge that the company violated the Foreign Corrupt Practices Act (FCPA) in a scheme to bribe Libyan government officials. According to the SEC’s order, between 2004 and 2010, a former Legg Mason asset management subsidiary, Permal Group Inc., partnered with a French financial services company to solicit investment business from Libyan state-owned financial institutions. These entities engaged in a scheme to pay bribes to Libyan government officials through a Libyan middleman in order to secure investments. As a result of the corrupt scheme, Legg Mason, through its Permal subsidiary, was awarded business tied to $1 billion of investments for the Libyan financial institutions, earning net revenues of approximately $31.6 million. According to the SEC’s order, the middleman used the term “cooking” to describe his ability to cause Libyan government officials to invest by any means necessary, including bribes. “Companies must take adequate steps to identify and mitigate the risks of bribery and corruption present in their global business. Those risks are particularly acute when, as here, agents and middlemen are used as part of a company’s efforts to obtain business with government clients,” said Charles Cain, Chief of the Enforcement Division’s FCPA Unit. The SEC’s order finds that Legg Mason violated the internal accounting controls provision of the Securities Exchange Act of 1934. Legg Mason agreed to disgorge approximately $27.6 million of ill-gotten gains plus $6.9 million in prejudgment interest to settle the SEC’s case. Legg Mason had also previously agreed to pay $33 million to the U.S. Department of Justice in sanctions resulting from the firm’s involvement in the Libyan bribery scheme. The SEC’s investigation was conducted by Eric Heining and Paul G. Block of the FCPA Unit and Rory Alex and Martin F. Healey of the Boston Regional Office. The SEC appreciates the assistance of the Fraud Section of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of New York, and the Federal Bureau of Investigation.