In re Orthofix International N.V.

 
 
 
 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 79828 / January 18, 2017  
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 3851 / January 18, 2017 
ADMINISTRATIVE PROCEEDING 
File No. 3-17800 
 
In the Matter of 
Orthofix International N.V. 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING REMEDIAL 
SANCTIONS AND A CEASE-AND-DESIST 
ORDER 
 
I. 
The Securities and Exchange Commission (“Commission”) deems it appropriate that 
cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 
Securities Exchange Act of 1934 (“Exchange Act”) against Orthofix International N.V. 
(“Orthofix” or “Respondent”). 
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Paragraphs 1 through 20 below, acknowledges that its conduct violated the 
federal securities laws, admits the Commission’s jurisdiction over it and the subject matter of 
these proceedings, and consents to the entry of this Order Instituting Cease-and-Desist 
Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, 
and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.    
  

 
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III. 
On the basis of this Order and Respondent’s Offer, the Commission finds
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that: 
SUMMARY 
 This matter concerns violations of the books and records and internal controls provisions 
of the Foreign Corrupt Practices Act of 1977 (“FCPA”) by Orthofix International N.V., a 
medical device company organized under the laws of Curacao and headquartered in Lewisville, 
Texas, and its Brazilian subsidiary, Orthofix do Brasil LTDA.  From at least 2011 to 2013 
(hereinafter “the relevant period”), senior personnel at Orthofix Brazil employed at least four 
schemes, with third-party commercial representatives and distributors, to make improper 
payments to doctors employed at government-owned hospitals to induce them to use Orthofix’s 
products, thereby increasing sales.  The improper payments to doctors employed at government 
hospitals were improperly recorded as legitimate expenses and generated illicit profits to 
Orthofix of approximately $2,928,000.   
 Orthofix also failed to devise and maintain a system of internal accounting controls 
sufficient to provide reasonable assurances to detect and prevent such payments by Orthofix 
Brazil, despite the fact that Orthofix had been charged by the Commission in 2012 with violating 
the books and records and internal controls provisions of the FCPA in connection with bribes 
paid to Mexican officials by its Mexican subsidiary.   
 By engaging in the foregoing conduct, Orthofix violated the books and records and 
internal controls provisions of the federal securities laws set forth in Sections 13(b)(2)(A) and 
13(b)(2)(B) of the Exchange Act. 
RESPONDENT 
Orthofix International N.V. (“Orthofix,” “Respondent,” or “Company”) is a limited 
liability company formed under the laws of Curacao and headquartered in Lewisville, Texas.  It 
is a diversified medical device company that develops and sells surgical and non-surgical 
medical products to medical professionals in various market sectors, including orthopedics.  It 
distributes its products both domestically in the United States and internationally in multiple 
countries.  Orthofix’s common stock is registered with the Commission pursuant to Section 12(b) 
of the Exchange Act and currently trades on the Nasdaq Global Select Market under the symbol 
“OFIX.”   
                                                 
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 The findings herein are made pursuant to Respondent’s Offer and are not binding on any other person or 
entity in this or any other proceeding.
 

 
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RELEVANT ENTITY 
  Orthofix do Brasil LTDA (“Orthofix Brazil”) is a wholly-owned subsidiary of 
Orthofix headquartered in Sao Paulo, Brazil.  Orthofix Brazil markets and sells extremity 
fixation products through direct and indirect sales to public and private sector customers.  From 
2011 to 2013, approximately 12.5 % of Orthofix Brazil’s sales were made to public sector 
customers, such as government-owned hospitals and associated doctors, and the remaining 
87.5% to private customers, including non-government-owned hospitals and associated doctors.  
Orthofix consolidated Orthofix Brazil’s financial statements into its financials. 
FACTS 
A. Prior Commission Enforcement Action Against Orthofix 
1. In 2012, the Commission filed a settled civil injunctive action in United States 
District Court for the Eastern District of Texas alleging that Orthofix had violated the books and 
records and internal controls provisions of the FCPA through its Mexican subsidiary, Promeca 
S.A. de C.V. (“Promeca”).  From at least 2003 to 2010, Promeca made improper payments 
totaling approximately $317,000 to employees of a government agency in Mexico.  These 
improper payments, recorded as training and promotional expenses, generated illicit net profits to 
Orthofix of approximately $4.9 million. 
2. Orthofix settled the matter by consenting to the entry of a final judgment that (i) 
enjoined the company from violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, 
(ii) ordered Orthofix to pay disgorgement and prejudgment interest of approximately $5.2 
million, and (iii) ordered Orthofix to undertake certain remedial measures concerning its FCPA 
compliance program, including self-reporting to the staff for a two-year term regarding its 
remediation efforts.  In a parallel criminal investigation, Orthofix entered into a deferred-
prosecution agreement in which it admitted, accepted, and acknowledged responsibility for 
specific conduct related to Promeca’s operations in Mexico, and paid a $ 2,220,000 criminal fine.     
B. Background 
3. During the relevant period, Orthofix Brazil accounted for approximately 5-7% of 
Orthofix’s consolidated net sales.  During the relevant period, Orthofix Brazil sold its products 
through either (i) direct sales to a customer through third-party commercial representative 
entities who provide assistance and receive a commission, or (ii) indirect sales through a third-
party distributor that purchased the products from Orthofix Brazil, held the inventory, and resold 
them to an end customer.   
4. During the relevant period, Orthofix Brazil engaged in direct sales with the 
assistance of third-party commercial representatives who helped to market and sell its products 
in Brazil.  These commercial representatives also employed sales agents to make sales.  
Commercial representative sales comprised approximately two-thirds of the sales of the 

 
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subsidiary.  In addition, Orthofix Brazil engaged sixteen distributors to conduct indirect sales.  
Orthofix Brazil sold its products to the distributors who in turn resold the products to health care 
providers, including private and government-owned hospitals, in various regions in Brazil.  
Indirect sales through distributors comprised about one-third of the sales of the subsidiary.  
5. Orthofix provided budgets, financial targets, and guidance to Orthofix Brazil and 
approved certain actions and expenditures.  Orthofix also received regular updates from Orthofix 
Brazil on many details regarding sales opportunities, numbers, and business developments.  
Orthofix set internal sales targets and management imposed pressure on subsidiaries to meet 
those targets.  Orthofix’s reporting structure and relationship with its subsidiaries was 
decentralized during the relevant time period, complicating parent oversight, compliance 
monitoring, and communication with U.S. executives.  Orthofix lacked adequate training, 
policies, processes, and corporate culture that would have allowed employees at its subsidiaries 
to raise compliance concerns to the parent level. 
C. Orthofix Brazil Made Improper Payments to Doctors Through Commercial 
Representatives 
6. During the relevant period, Orthofix Brazil entered into agreements with third-
party commercial representatives to directly sell its products to hospitals and doctors in Brazil, 
and it paid commissions to those commercial representatives as part of such agreements.  
Orthofix Brazil’s commercial representatives in turn made improper payments to certain doctors 
at government owned hospitals in exchange for sales contracts.   
7. The scheme involving commercial representatives worked in one of two ways.  In 
the first scenario, commercial representatives made arrangements to pay doctors a specific 
amount, usually constituting 20-25% of the sales price, in exchange for using Orthofix products.  
After doctors performed a procedure using Orthofix’s products, Orthofix Brazil typically billed 
the hospital for the products used.  Orthofix Brazil then paid a commission of approximately 33-
43% of the sales price to the commercial representative responsible for the sale, who then used a 
portion of that commission to make certain agreed upon payments to doctors.   
8. In the second scenario, a company related to the commercial representative sent 
Orthofix Brazil false invoices for services such as marketing that were never provided.  The 
former general manager of Orthofix Brazil approved these payments and the former finance 
director of Orthofix Brazil instructed Orthofix Brazil employees to classify the payments as 
“administrative expenses.”  The services were never rendered and the payments were not 
administrative expenses but rather provided funds that were intended to be used to make 
improper payments to certain doctors.  The payments were intentionally improperly recorded as 
legitimate expenses to hide the true nature of the payments. 
9. Certain Orthofix Brazil employees knew that commercial representatives were 
paying doctors and were involved in the schemes.  The former general manager was responsible 
for negotiating the arrangements with the commercial representatives, and he instructed the 
former finance director and other lower level Orthofix Brazil employees to make the commission 

 
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payments to commercial representatives.  Payments to commercial representatives were referred 
to by these employees as “doctors’ commissions.” Orthofix Brazil employees and commercial 
representatives openly discussed payment percentages, total amounts, and payment instructions 
for making direct deposits or in-person payments to doctors. 
D. Orthofix Brazil Made Improper Payments to Doctors Through Distributors 
 
10. Similar to the schemes involving commercial representatives, Orthofix Brazil 
used third-party distributors in two ways to make improper payments to doctors.  In the first 
scenario, Orthofix Brazil provided a high discount ranging in certain instances of up to 70% to 
the distributors, who then used part of the profit generated by that discount to make improper 
payments to certain doctors.  The high discounts were purportedly meant to allow distributors to 
make a sufficient profit while also covering their overhead costs.  In reality, part of the discount 
was often used to make the improper payments to certain doctors at public hospitals.  Employees 
of the distributors openly discussed the improper payment scheme in emails to certain Orthofix 
Brazil employees.  For example, in 2011, one distributor emailed an Orthofix Brazil employee 
that “[t]he agreement with the physicians is to make the payment after using the material,” 
indicating a promise to pay doctors after they used Orthofix products.  The four distributors that 
made improper payments to doctors on behalf of Orthofix Brazil openly discussed the improper 
payments in person with certain Orthofix Brazil employees and demanded higher discounts from 
the company to facilitate the payments. 
11. In the second scenario involving distributors, Orthofix Brazil made payments for 
services that were never rendered.  These payments were inaccurately described in the 
company’s books and records as “consulting for sales” payments made to a company related to 
one of the distributors, when, in fact, the payments to the distributor were made to facilitate 
improper payments to doctors. 
12. The general manager, finance director, and certain other Orthofix Brazil 
employees no longer associated with Orthofix Brazil knew that distributors were using excessive 
discounts and making payments on false invoices to pay doctors.  Nevertheless, Orthofix Brazil 
improperly recorded the payments as legitimate business expenses to hide the true nature of the 
payments.    
E. Orthofix Failed to Maintain Accurate Books and Records 
 
13. Orthofix Brazil improperly recorded certain payments to commercial 
representatives and discounts to third-party distributors, portions of which were used to make 
improper payments to doctors, as commissions, discounts, consulting fees, administrative 
expenses, and other legitimate business expenses in its books and records that were subsequently 
consolidated into Orthofix’s books and records, rendering them inaccurate. 
F. Orthofix Lacked Adequate Internal Accounting Controls 
 

 
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14. Orthofix failed in a timely manner to devise and maintain an adequate system of 
internal accounting controls in Brazil, even after the company had been charged previously for 
internal controls failings in the Commission’s earlier case against it for improper payments in 
Mexico.  The controls in place during the relevant period were minimal and clearly deficient. 
15. The internal accounting controls were deficient with respect to the setting, 
approval, and payment of commissions and discounts.  Orthofix had no policies or processes in 
place to standardize or centrally approve and monitor the commissions and discounts that 
Orthofix Brazil was providing to third parties, which allowed Orthofix Brazil to push through 
high commissions and discounts that ultimately were used to facilitate improper payments.  The 
decentralized nature of Orthofix’s business in Brazil allowed Orthofix Brazil to easily evade the 
policies and controls that Orthofix did have in place when the conduct occurred.  An indirect 
reporting structure created gaps in supervision that provided the opportunity to orchestrate and 
execute the bribery schemes without detection.   
16. Furthermore, a lack of centralized global accounting and payment controls 
allowed Orthofix Brazil to record the improper payments as legitimate business expenses.  Given 
the prior corruption and internal controls issues at its Mexican subsidiary, Orthofix was aware of 
deficiencies in its controls and the FCPA risks at its subsidiaries’ operations.  Despite these red 
flags, Orthofix failed to establish better controls and supervision over its subsidiaries in high risk 
countries.   
COOPERATION AND REMEDIAL ACTION  
17. Orthofix disclosed the Brazil allegations as part of its ongoing self-reporting 
obligations undertaken as part of its earlier settlement with the Commission for its conduct 
related to Mexico discussed above.  Orthofix cooperated with the investigation by, among other 
things:  (i) conducting a thorough and timely internal investigation; (ii) voluntarily producing 
documents and other information in a timely manner, identifying significant documents and 
translating documents from Portuguese; (iii) compiling financial data and analysis; (iv) providing 
detailed witness interview downloads, Power-Point presentations summarizing its findings, and 
timelines; and (v) assisting us in our efforts to coordinate witness interviews with current and 
former Orthofix and Orthofix Brazil employees. 
18. Although the Company took remedial steps following the resolution of the 
Promeca allegations in 2012, Orthofix did not start fully implementing sufficient remedial steps 
until after the discovery of the Brazil conduct in late 2013.  Though delayed, these efforts have 
been significant.  Orthofix and Orthofix Brazil now have terminated problematic representatives 
and distributors; developed and implemented new global accounting policies to provide further 
structure and guidance to foreign subsidiaries; established an internal audit function and 
expanded Orthofix’s compliance department; conducted extensive audits of third-party vendors 
used by subsidiaries; and revised existing trainings and implemented additional compliance 
training for employees. 

 
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LEGAL STANDARDS AND VIOLATIONS 
19. As a result of the conduct described above, Orthofix violated Section 13(b)(2)(A) 
of the Exchange Act, which requires issuers to make and keep books, records, and accounts 
which, in reasonable detail, accurately and fairly reflect their transactions and dispositions of the 
assets of the issuer. 
20. In addition, as a result of the conduct described above, Orthofix violated Section 
13(b)(2)(B) of the Exchange Act, which requires issuers to devise and maintain a system of 
internal accounting controls sufficient to provide reasonable assurances that (i) transactions are 
executed in accordance with management’s general or specific authorization; (ii) transactions are 
recorded as necessary (I) to permit preparation of financial statements in conformity with 
generally accepted accounting principles or any other criteria applicable to such statements, and 
(II) to maintain accountability for assets; (iii) access to assets is permitted only in accordance 
with management’s general or specific authorization; and (iv) the recorded accountability for 
assets is compared with the existing assets at reasonable intervals and appropriate action is taken 
with respect to any differences.  
IV. 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer. 
Accordingly, it is hereby ORDERED that: 
A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from 
committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 
13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]. 
B. Respondent shall, within thirty days of the entry of this Order, pay disgorgement 
of $2,928,000, prejudgment interest of $263,375, and a civil money penalty in the amount of 
$2,928,000 to the Securities and Exchange Commission.  If timely payment is not made, 
additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must be made in one of 
the following three ways: 
1. Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request; 
2. Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofin.htm; or 
3. Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to: 

 
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Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
Payments by check or money order must be accompanied by a cover letter identifying 
Orthofix as a Respondent in these proceedings, and the file number of these proceedings; a copy 
of the cover letter and check or money order must be sent to Kara N. Brockmeyer, Division of 
Enforcement, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-
5720. 
C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 
of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
D. Respondent shall comply with the following undertakings: 
1. Retain an independent consultant (the “Independent Consultant”) not 
unacceptable to the Staff within sixty (60) calendar days after the issuance of 
this Order.  Within thirty (30) calendar days after the issuance of this Order, 
Respondent shall recommend to the Staff three qualified candidates to serve 
as the Independent Consultant.  The Staff shall provide feedback to 
Respondent within fifteen (15) calendar days of receiving Respondent’s 
recommendations. 
2. The Independent Consultant candidates shall have, at a minimum, the 
following qualifications: demonstrated expertise with respect to the FCPA, 
including experience counseling on FCPA issues; experience designing and/or 
reviewing corporate compliance policies, procedures, and internal controls, 
including FCPA-specific policies, procedures, and internal controls; ability to 
access and deploy resources as necessary to discharge the Independent 
Consultant’s duties as described herein; and independence from Respondent 

 
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to ensure effective and impartial performance of the Independent Consultant’s 
duties. 
3. The Independent Consultant should not have provided legal, auditing, or other 
services to, or have had any affiliations with, the Respondent during the two 
years prior to the issuance of this Order. 
4. Respondent shall retain the Independent Consultant for a period of one (1) 
year from the date of the engagement.  Respondent shall exclusively bear all 
costs, including compensation and expenses, associated with the retention of 
the Independent Consultant.  
5. To ensure the independence of the Independent Consultant, Respondent shall 
not have the authority to terminate the Independent Consultant without the 
prior written approval of the Staff. 
6. The Independent Consultant’s responsibility is to review and evaluate 
Respondent’s internal controls, record-keeping and financial reporting policies 
and procedures as they relate to its compliance with the books and records, 
internal accounting controls, and anti-bribery provisions of the FCPA (“the 
Policies and Procedures”) and to make recommendations designed to 
reasonably improve the Policies and Procedures.  This review and evaluation 
shall include an assessment of the Policies and Procedures as actually 
implemented and how FCPA compliance fits within Respondent’s ethics and 
compliance function.  The Independent Consultant shall consider whether the 
ethics and compliance function has sufficient resources, authority, and 
independence, and provides sufficient training and guidance.   
7. Respondent and the Independent Consultant shall agree that the Independent 
Consultant is an independent third-party and not an employee or agent of the 
Respondent.  In addition, Respondent and the Independent Consultant agree 
that no attorney-client relationship shall be formed between them. 
8. Respondent shall require the Independent Consultant to enter in an agreement 
with Respondent providing that, for the period of engagement and for a period 
of two years from completion of the engagement, the Independent Consultant 
shall not enter into any employment, consultant, attorney-client, auditing or 
other professional relationship with Respondent, or any of its present or 
former affiliates, directors, officers, employees, or agents acting in their 
capacity as such.  Any firm with which the Independent Consultant is 
affiliated or of which he/she is a member, and any person engaged to assist the 
Independent Consultant in performance of his/her duties under this Order shall 
not, without prior written consent of the Staff enter into any employment, 
consultant, attorney-client, auditing or other professional relationship with 
Respondent, or any of its present or former affiliates, directors, officers, 

 
10 
 
 
 
employees, or agents acting in their capacity as such for the period of the 
engagement and for a period of two (2) years after the engagement. 
9. Respondent shall require the Independent Consultant to prepare a written 
work plan and submit it to Respondent and the Staff for comment within thirty 
(30) calendar days of commencing the engagement.  The Respondent’s 
comments shall be provided to the Independent Consultant no more than 
fifteen (15) calendar days after receipt of the written work plan.  In order to 
conduct an effective initial review and to understand fully any deficiencies in  
the Policies and Procedures, including how FCPA compliance fits within 
Respondent’s ethics and compliance function, the Independent Consultant’s 
initial work plan shall include such steps as are reasonably necessary to 
develop an understanding of the facts and circumstances surrounding any 
violations that may have occurred as reflected in this matter and to assess the 
effectiveness of Respondent’s existing Policies and Procedures, and of 
Respondent’s ethics and compliance program.  Any dispute between 
Respondent and the Independent Consultant with respect to the work plan 
shall be decided by the Staff. 
10. Respondent shall cooperate fully with the Independent Consultant, and the 
Independent Consultant shall have the authority to take such reasonable steps 
as, in his or her view, may be necessary to be fully informed about 
Respondent’s Policies and Procedures in accordance with the principles set 
forth herein and applicable law, including data protection, blocking statutes, 
and labor laws and regulations applicable to Respondent.  To that end 
Respondent shall provide the Independent Consultant with access to all 
information, documents, records, facilities and/or employees, as requested by 
the Independent Consultant, that fall within the scope of the Independent 
Consultant’s responsibility, except as provided in this paragraph; and provide 
guidance on applicable laws (such as relevant data protection, blocking 
statutes, and labor laws). 
11. In the event the Respondent seeks to withhold from the Independent 
Consultant access to information, documents, records, facilities and/or 
employees of Respondent that may be subject to a claim of attorney-client 
privilege or to the attorney work product doctrine, or where Respondent 
reasonably believes production would otherwise be inconsistent with 
applicable law or beyond the scope of these undertakings, Respondent shall 
work cooperatively with the Independent Consultant.  If the matter cannot be 
resolved, at the request of the Independent Consultant, Respondent shall 
promptly provide written notice to the Independent Consultant and the Staff.  
Such notice shall include a general description of the nature of the 
information, documents, records, facilities and/or employees that are being 
withheld, as well as the basis for the claim.  To the extent Respondent has 
provided information to the Staff in the course of the investigation leading to 

 
11 
 
 
 
this action pursuant to a non-waiver of privilege agreement, Respondent and 
the Independent Consultant may agree to production of such information to 
the Independent Consultant pursuant to a similar non-waiver agreement. 
12. Respondent shall require the Independent Consultant to issue a written report 
(“Report”), within six (6) months after being retained to review Respondent’s 
Policies and Procedures: (a) summarizing its review and evaluation, and (b) if 
necessary, making recommendations based on its review and evaluation that 
are reasonably designed to improve Respondent’s Policies and Procedures.  
Respondent shall require that the Independent Consultant provide the Report 
to the Board of Directors of Respondent and simultaneously transmit a copy to 
the Staff at the following address:  Ansu N. Banerjee, Assistant Regional 
Director, Division of Enforcement, Securities and Exchange Commission, 444 
South Flower Street, Suite 900, Los Angeles, California 90071. 
13. Respondent shall adopt all recommendations in the Report within sixty (60) 
days of the issuance of the Report; provided, however, that, as to any 
recommendations that Respondent considers to be unduly burdensome, 
impractical, or costly, Respondent need not adopt the recommendations at that 
time, but may submit in writing to the Staff, within thirty (30) days of 
receiving the Report, an alternative policy or procedure designed to achieve 
the same objective or purpose.  Respondent and the Independent Consultant 
shall attempt in good faith to reach an agreement relating to each 
recommendation Respondent considers unduly burdensome, impractical, or 
costly.  In the event that Respondent and the Independent Consultant are 
unable to agree on an alternative proposal within thirty (30) days, Respondent 
will abide by the determinations of the Staff.   
14. Upon completion of the implementation, the Independent Consultant shall 
have thirty (30) calendar days to complete a follow-up review to confirm that 
Respondent has implemented the recommendations or agreed-upon 
alternatives and continued the application of the Policies and Procedures, and 
to deliver a supplemental report to the Board of Directors of Respondent and 
the Staff setting forth its conclusions and whether any further improvements 
should be implemented.   
15. Respondent agrees that the Staff may extend any of the dates set forth above 
at its direction. 
16. Respondent shall certify, in writing, compliance with the undertaking(s) set 
forth above.  The certification shall identify the undertaking(s), provide 
written evidence of compliance in the form of a narrative, and be supported by 
exhibits sufficient to demonstrate compliance.  The Staff may make 
reasonable requests for further evidence of compliance, and Respondent 
agrees to provide such evidence.  Respondent shall submit the certification 

 
12 
 
 
 
and supporting material to Ansu N. Banerjee, Assistant Regional Director, 
Division of Enforcement, with a copy to the Office of Chief Counsel of the 
Enforcement Division, no later than sixty (60) days from the date of the 
completion of the undertakings.   
17. Respondent agrees that these undertakings shall be binding upon any 
successor in interest to Respondent or any acquirer of substantially all of 
Respondent’s assets and liabilities or business.     
By the Commission. 
   
  Brent J. Fields 
Secretary 
 
 
 
 
 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

SECURITIES EXCHANGE ACT OF 1934 
Release No. 79828 / January 18, 2017  

ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 3851 / January 18, 2017 

ADMINISTRATIVE PROCEEDING 
File No. 3-17800 

 

In the Matter of 

Orthofix International N.V. 

Respondent. 

 ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING REMEDIAL 

SANCTIONS AND A CEASE-AND-DESIST 

ORDER 

 

I. 

The Securities and Exchange Commission (“Commission”) deems it appropriate that 

cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 

Securities Exchange Act of 1934 (“Exchange Act”) against Orthofix International N.V. 

(“Orthofix” or “Respondent”). 

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 

facts set forth in Paragraphs 1 through 20 below, acknowledges that its conduct violated the 

federal securities laws, admits the Commission’s jurisdiction over it and the subject matter of 

these proceedings, and consents to the entry of this Order Instituting Cease-and-Desist 

Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, 

and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.    

  



 

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III. 

On the basis of this Order and Respondent’s Offer, the Commission finds
1 
that: 

SUMMARY 

 This matter concerns violations of the books and records and internal controls provisions 

of the Foreign Corrupt Practices Act of 1977 (“FCPA”) by Orthofix International N.V., a 

medical device company organized under the laws of Curacao and headquartered in Lewisville, 

Texas, and its Brazilian subsidiary, Orthofix do Brasil LTDA.  From at least 2011 to 2013 

(hereinafter “the relevant period”), senior personnel at Orthofix Brazil employed at least four 

schemes, with third-party commercial representatives and distributors, to make improper 

payments to doctors employed at government-owned hospitals to induce them to use Orthofix’s 

products, thereby increasing sales.  The improper payments to doctors employed at government 

hospitals were improperly recorded as legitimate expenses and generated illicit profits to 

Orthofix of approximately $2,928,000.   

 Orthofix also failed to devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances to detect and prevent such payments by Orthofix 

Brazil, despite the fact that Orthofix had been charged by the Commission in 2012 with violating 

the books and records and internal controls provisions of the FCPA in connection with bribes 

paid to Mexican officials by its Mexican subsidiary.   

 By engaging in the foregoing conduct, Orthofix violated the books and records and 

internal controls provisions of the federal securities laws set forth in Sections 13(b)(2)(A) and 

13(b)(2)(B) of the Exchange Act. 

RESPONDENT 

Orthofix International N.V. (“Orthofix,” “Respondent,” or “Company”) is a limited 

liability company formed under the laws of Curacao and headquartered in Lewisville, Texas.  It 

is a diversified medical device company that develops and sells surgical and non-surgical 

medical products to medical professionals in various market sectors, including orthopedics.  It 

distributes its products both domestically in the United States and internationally in multiple 

countries.  Orthofix’s common stock is registered with the Commission pursuant to Section 12(b) 

of the Exchange Act and currently trades on the Nasdaq Global Select Market under the symbol 

“OFIX.”   

                                                 

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 The findings herein are made pursuant to Respondent’s Offer and are not binding on any other person or 

entity in this or any other proceeding.
 



 

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RELEVANT ENTITY 

  Orthofix do Brasil LTDA (“Orthofix Brazil”) is a wholly-owned subsidiary of 

Orthofix headquartered in Sao Paulo, Brazil.  Orthofix Brazil markets and sells extremity 

fixation products through direct and indirect sales to public and private sector customers.  From 

2011 to 2013, approximately 12.5 % of Orthofix Brazil’s sales were made to public sector 

customers, such as government-owned hospitals and associated doctors, and the remaining 

87.5% to private customers, including non-government-owned hospitals and associated doctors.  

Orthofix consolidated Orthofix Brazil’s financial statements into its financials. 

FACTS 

A. Prior Commission Enforcement Action Against Orthofix 

1. In 2012, the Commission filed a settled civil injunctive action in United States 

District Court for the Eastern District of Texas alleging that Orthofix had violated the books and 

records and internal controls provisions of the FCPA through its Mexican subsidiary, Promeca 

S.A. de C.V. (“Promeca”).  From at least 2003 to 2010, Promeca made improper payments 

totaling approximately $317,000 to employees of a government agency in Mexico.  These 

improper payments, recorded as training and promotional expenses, generated illicit net profits to 

Orthofix of approximately $4.9 million. 

2. Orthofix settled the matter by consenting to the entry of a final judgment that (i) 

enjoined the company from violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, 

(ii) ordered Orthofix to pay disgorgement and prejudgment interest of approximately $5.2 

million, and (iii) ordered Orthofix to undertake certain remedial measures concerning its FCPA 

compliance program, including self-reporting to the staff for a two-year term regarding its 

remediation efforts.  In a parallel criminal investigation, Orthofix entered into a deferred-

prosecution agreement in which it admitted, accepted, and acknowledged responsibility for 

specific conduct related to Promeca’s operations in Mexico, and paid a $ 2,220,000 criminal fine.     

B. Background 

3. During the relevant period, Orthofix Brazil accounted for approximately 5-7% of 

Orthofix’s consolidated net sales.  During the relevant period, Orthofix Brazil sold its products 

through either (i) direct sales to a customer through third-party commercial representative 

entities who provide assistance and receive a commission, or (ii) indirect sales through a third-

party distributor that purchased the products from Orthofix Brazil, held the inventory, and resold 

them to an end customer.   

4. During the relevant period, Orthofix Brazil engaged in direct sales with the 

assistance of third-party commercial representatives who helped to market and sell its products 

in Brazil.  These commercial representatives also employed sales agents to make sales.  

Commercial representative sales comprised approximately two-thirds of the sales of the 



 

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subsidiary.  In addition, Orthofix Brazil engaged sixteen distributors to conduct indirect sales.  

Orthofix Brazil sold its products to the distributors who in turn resold the products to health care 

providers, including private and government-owned hospitals, in various regions in Brazil.  

Indirect sales through distributors comprised about one-third of the sales of the subsidiary.  

5. Orthofix provided budgets, financial targets, and guidance to Orthofix Brazil and 

approved certain actions and expenditures.  Orthofix also received regular updates from Orthofix 

Brazil on many details regarding sales opportunities, numbers, and business developments.  

Orthofix set internal sales targets and management imposed pressure on subsidiaries to meet 

those targets.  Orthofix’s reporting structure and relationship with its subsidiaries was 

decentralized during the relevant time period, complicating parent oversight, compliance 

monitoring, and communication with U.S. executives.  Orthofix lacked adequate training, 

policies, processes, and corporate culture that would have allowed employees at its subsidiaries 

to raise compliance concerns to the parent level. 

C. Orthofix Brazil Made Improper Payments to Doctors Through Commercial 

Representatives 

6. During the relevant period, Orthofix Brazil entered into agreements with third-

party commercial representatives to directly sell its products to hospitals and doctors in Brazil, 

and it paid commissions to those commercial representatives as part of such agreements.  

Orthofix Brazil’s commercial representatives in turn made improper payments to certain doctors 

at government owned hospitals in exchange for sales contracts.   

7. The scheme involving commercial representatives worked in one of two ways.  In 

the first scenario, commercial representatives made arrangements to pay doctors a specific 

amount, usually constituting 20-25% of the sales price, in exchange for using Orthofix products.  

After doctors performed a procedure using Orthofix’s products, Orthofix Brazil typically billed 

the hospital for the products used.  Orthofix Brazil then paid a commission of approximately 33-

43% of the sales price to the commercial representative responsible for the sale, who then used a 

portion of that commission to make certain agreed upon payments to doctors.   

8. In the second scenario, a company related to the commercial representative sent 

Orthofix Brazil false invoices for services such as marketing that were never provided.  The 

former general manager of Orthofix Brazil approved these payments and the former finance 

director of Orthofix Brazil instructed Orthofix Brazil employees to classify the payments as 

“administrative expenses.”  The services were never rendered and the payments were not 

administrative expenses but rather provided funds that were intended to be used to make 

improper payments to certain doctors.  The payments were intentionally improperly recorded as 

legitimate expenses to hide the true nature of the payments. 

9. Certain Orthofix Brazil employees knew that commercial representatives were 

paying doctors and were involved in the schemes.  The former general manager was responsible 

for negotiating the arrangements with the commercial representatives, and he instructed the 

former finance director and other lower level Orthofix Brazil employees to make the commission 



 

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payments to commercial representatives.  Payments to commercial representatives were referred 

to by these employees as “doctors’ commissions.” Orthofix Brazil employees and commercial 

representatives openly discussed payment percentages, total amounts, and payment instructions 

for making direct deposits or in-person payments to doctors. 

D. Orthofix Brazil Made Improper Payments to Doctors Through Distributors 

 

10. Similar to the schemes involving commercial representatives, Orthofix Brazil 

used third-party distributors in two ways to make improper payments to doctors.  In the first 

scenario, Orthofix Brazil provided a high discount ranging in certain instances of up to 70% to 

the distributors, who then used part of the profit generated by that discount to make improper 

payments to certain doctors.  The high discounts were purportedly meant to allow distributors to 

make a sufficient profit while also covering their overhead costs.  In reality, part of the discount 

was often used to make the improper payments to certain doctors at public hospitals.  Employees 

of the distributors openly discussed the improper payment scheme in emails to certain Orthofix 

Brazil employees.  For example, in 2011, one distributor emailed an Orthofix Brazil employee 

that “[t]he agreement with the physicians is to make the payment after using the material,” 

indicating a promise to pay doctors after they used Orthofix products.  The four distributors that 

made improper payments to doctors on behalf of Orthofix Brazil openly discussed the improper 

payments in person with certain Orthofix Brazil employees and demanded higher discounts from 

the company to facilitate the payments. 

11. In the second scenario involving distributors, Orthofix Brazil made payments for 

services that were never rendered.  These payments were inaccurately described in the 

company’s books and records as “consulting for sales” payments made to a company related to 

one of the distributors, when, in fact, the payments to the distributor were made to facilitate 

improper payments to doctors. 

12. The general manager, finance director, and certain other Orthofix Brazil 

employees no longer associated with Orthofix Brazil knew that distributors were using excessive 

discounts and making payments on false invoices to pay doctors.  Nevertheless, Orthofix Brazil 

improperly recorded the payments as legitimate business expenses to hide the true nature of the 

payments.    

E. Orthofix Failed to Maintain Accurate Books and Records 

 

13. Orthofix Brazil improperly recorded certain payments to commercial 

representatives and discounts to third-party distributors, portions of which were used to make 
improper payments to doctors, as commissions, discounts, consulting fees, administrative 

expenses, and other legitimate business expenses in its books and records that were subsequently 

consolidated into Orthofix’s books and records, rendering them inaccurate. 

F. Orthofix Lacked Adequate Internal Accounting Controls 

 



 

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14. Orthofix failed in a timely manner to devise and maintain an adequate system of 

internal accounting controls in Brazil, even after the company had been charged previously for 

internal controls failings in the Commission’s earlier case against it for improper payments in 

Mexico.  The controls in place during the relevant period were minimal and clearly deficient. 

15. The internal accounting controls were deficient with respect to the setting, 

approval, and payment of commissions and discounts.  Orthofix had no policies or processes in 

place to standardize or centrally approve and monitor the commissions and discounts that 

Orthofix Brazil was providing to third parties, which allowed Orthofix Brazil to push through 

high commissions and discounts that ultimately were used to facilitate improper payments.  The 

decentralized nature of Orthofix’s business in Brazil allowed Orthofix Brazil to easily evade the 

policies and controls that Orthofix did have in place when the conduct occurred.  An indirect 

reporting structure created gaps in supervision that provided the opportunity to orchestrate and 

execute the bribery schemes without detection.   

16. Furthermore, a lack of centralized global accounting and payment controls 

allowed Orthofix Brazil to record the improper payments as legitimate business expenses.  Given 

the prior corruption and internal controls issues at its Mexican subsidiary, Orthofix was aware of 

deficiencies in its controls and the FCPA risks at its subsidiaries’ operations.  Despite these red 

flags, Orthofix failed to establish better controls and supervision over its subsidiaries in high risk 

countries.   

COOPERATION AND REMEDIAL ACTION  

17. Orthofix disclosed the Brazil allegations as part of its ongoing self-reporting 

obligations undertaken as part of its earlier settlement with the Commission for its conduct 

related to Mexico discussed above.  Orthofix cooperated with the investigation by, among other 

things:  (i) conducting a thorough and timely internal investigation; (ii) voluntarily producing 

documents and other information in a timely manner, identifying significant documents and 

translating documents from Portuguese; (iii) compiling financial data and analysis; (iv) providing 

detailed witness interview downloads, Power-Point presentations summarizing its findings, and 

timelines; and (v) assisting us in our efforts to coordinate witness interviews with current and 

former Orthofix and Orthofix Brazil employees. 

18. Although the Company took remedial steps following the resolution of the 

Promeca allegations in 2012, Orthofix did not start fully implementing sufficient remedial steps 

until after the discovery of the Brazil conduct in late 2013.  Though delayed, these efforts have 

been significant.  Orthofix and Orthofix Brazil now have terminated problematic representatives 

and distributors; developed and implemented new global accounting policies to provide further 

structure and guidance to foreign subsidiaries; established an internal audit function and 

expanded Orthofix’s compliance department; conducted extensive audits of third-party vendors 

used by subsidiaries; and revised existing trainings and implemented additional compliance 

training for employees. 



 

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LEGAL STANDARDS AND VIOLATIONS 

19. As a result of the conduct described above, Orthofix violated Section 13(b)(2)(A) 

of the Exchange Act, which requires issuers to make and keep books, records, and accounts 

which, in reasonable detail, accurately and fairly reflect their transactions and dispositions of the 

assets of the issuer. 

20. In addition, as a result of the conduct described above, Orthofix violated Section 

13(b)(2)(B) of the Exchange Act, which requires issuers to devise and maintain a system of 

internal accounting controls sufficient to provide reasonable assurances that (i) transactions are 

executed in accordance with management’s general or specific authorization; (ii) transactions are 

recorded as necessary (I) to permit preparation of financial statements in conformity with 

generally accepted accounting principles or any other criteria applicable to such statements, and 

(II) to maintain accountability for assets; (iii) access to assets is permitted only in accordance 

with management’s general or specific authorization; and (iv) the recorded accountability for 

assets is compared with the existing assets at reasonable intervals and appropriate action is taken 

with respect to any differences.  

IV. 

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer. 

Accordingly, it is hereby ORDERED that: 

A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from 

committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 

13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]. 

B. Respondent shall, within thirty days of the entry of this Order, pay disgorgement 

of $2,928,000, prejudgment interest of $263,375, and a civil money penalty in the amount of 

$2,928,000 to the Securities and Exchange Commission.  If timely payment is not made, 

additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must be made in one of 

the following three ways: 

1. Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request; 

2. Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofin.htm; or 

3. Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 



 

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Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

Payments by check or money order must be accompanied by a cover letter identifying 

Orthofix as a Respondent in these proceedings, and the file number of these proceedings; a copy 

of the cover letter and check or money order must be sent to Kara N. Brockmeyer, Division of 

Enforcement, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-

5720. 

C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 

of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” 

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

D. Respondent shall comply with the following undertakings: 

1. Retain an independent consultant (the “Independent Consultant”) not 

unacceptable to the Staff within sixty (60) calendar days after the issuance of 

this Order.  Within thirty (30) calendar days after the issuance of this Order, 

Respondent shall recommend to the Staff three qualified candidates to serve 

as the Independent Consultant.  The Staff shall provide feedback to 

Respondent within fifteen (15) calendar days of receiving Respondent’s 

recommendations. 

2. The Independent Consultant candidates shall have, at a minimum, the 

following qualifications: demonstrated expertise with respect to the FCPA, 

including experience counseling on FCPA issues; experience designing and/or 

reviewing corporate compliance policies, procedures, and internal controls, 

including FCPA-specific policies, procedures, and internal controls; ability to 

access and deploy resources as necessary to discharge the Independent 

Consultant’s duties as described herein; and independence from Respondent 



 

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to ensure effective and impartial performance of the Independent Consultant’s 

duties. 

3. The Independent Consultant should not have provided legal, auditing, or other 

services to, or have had any affiliations with, the Respondent during the two 

years prior to the issuance of this Order. 

4. Respondent shall retain the Independent Consultant for a period of one (1) 

year from the date of the engagement.  Respondent shall exclusively bear all 

costs, including compensation and expenses, associated with the retention of 

the Independent Consultant.  

5. To ensure the independence of the Independent Consultant, Respondent shall 

not have the authority to terminate the Independent Consultant without the 

prior written approval of the Staff. 

6. The Independent Consultant’s responsibility is to review and evaluate 

Respondent’s internal controls, record-keeping and financial reporting policies 

and procedures as they relate to its compliance with the books and records, 

internal accounting controls, and anti-bribery provisions of the FCPA (“the 

Policies and Procedures”) and to make recommendations designed to 

reasonably improve the Policies and Procedures.  This review and evaluation 

shall include an assessment of the Policies and Procedures as actually 

implemented and how FCPA compliance fits within Respondent’s ethics and 

compliance function.  The Independent Consultant shall consider whether the 

ethics and compliance function has sufficient resources, authority, and 

independence, and provides sufficient training and guidance.   

7. Respondent and the Independent Consultant shall agree that the Independent 

Consultant is an independent third-party and not an employee or agent of the 

Respondent.  In addition, Respondent and the Independent Consultant agree 

that no attorney-client relationship shall be formed between them. 

8. Respondent shall require the Independent Consultant to enter in an agreement 

with Respondent providing that, for the period of engagement and for a period 

of two years from completion of the engagement, the Independent Consultant 

shall not enter into any employment, consultant, attorney-client, auditing or 

other professional relationship with Respondent, or any of its present or 

former affiliates, directors, officers, employees, or agents acting in their 

capacity as such.  Any firm with which the Independent Consultant is 

affiliated or of which he/she is a member, and any person engaged to assist the 

Independent Consultant in performance of his/her duties under this Order shall 

not, without prior written consent of the Staff enter into any employment, 

consultant, attorney-client, auditing or other professional relationship with 

Respondent, or any of its present or former affiliates, directors, officers, 



 

10 
 

 

 

employees, or agents acting in their capacity as such for the period of the 

engagement and for a period of two (2) years after the engagement. 

9. Respondent shall require the Independent Consultant to prepare a written 

work plan and submit it to Respondent and the Staff for comment within thirty 

(30) calendar days of commencing the engagement.  The Respondent’s 

comments shall be provided to the Independent Consultant no more than 

fifteen (15) calendar days after receipt of the written work plan.  In order to 

conduct an effective initial review and to understand fully any deficiencies in  

the Policies and Procedures, including how FCPA compliance fits within 

Respondent’s ethics and compliance function, the Independent Consultant’s 

initial work plan shall include such steps as are reasonably necessary to 

develop an understanding of the facts and circumstances surrounding any 

violations that may have occurred as reflected in this matter and to assess the 

effectiveness of Respondent’s existing Policies and Procedures, and of 

Respondent’s ethics and compliance program.  Any dispute between 

Respondent and the Independent Consultant with respect to the work plan 

shall be decided by the Staff. 

10. Respondent shall cooperate fully with the Independent Consultant, and the 

Independent Consultant shall have the authority to take such reasonable steps 

as, in his or her view, may be necessary to be fully informed about 

Respondent’s Policies and Procedures in accordance with the principles set 

forth herein and applicable law, including data protection, blocking statutes, 

and labor laws and regulations applicable to Respondent.  To that end 

Respondent shall provide the Independent Consultant with access to all 

information, documents, records, facilities and/or employees, as requested by 

the Independent Consultant, that fall within the scope of the Independent 

Consultant’s responsibility, except as provided in this paragraph; and provide 

guidance on applicable laws (such as relevant data protection, blocking 

statutes, and labor laws). 

11. In the event the Respondent seeks to withhold from the Independent 

Consultant access to information, documents, records, facilities and/or 

employees of Respondent that may be subject to a claim of attorney-client 

privilege or to the attorney work product doctrine, or where Respondent 

reasonably believes production would otherwise be inconsistent with 

applicable law or beyond the scope of these undertakings, Respondent shall 

work cooperatively with the Independent Consultant.  If the matter cannot be 

resolved, at the request of the Independent Consultant, Respondent shall 

promptly provide written notice to the Independent Consultant and the Staff.  

Such notice shall include a general description of the nature of the 

information, documents, records, facilities and/or employees that are being 

withheld, as well as the basis for the claim.  To the extent Respondent has 

provided information to the Staff in the course of the investigation leading to 



 

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this action pursuant to a non-waiver of privilege agreement, Respondent and 

the Independent Consultant may agree to production of such information to 

the Independent Consultant pursuant to a similar non-waiver agreement. 

12. Respondent shall require the Independent Consultant to issue a written report 

(“Report”), within six (6) months after being retained to review Respondent’s 

Policies and Procedures: (a) summarizing its review and evaluation, and (b) if 

necessary, making recommendations based on its review and evaluation that 

are reasonably designed to improve Respondent’s Policies and Procedures.  

Respondent shall require that the Independent Consultant provide the Report 

to the Board of Directors of Respondent and simultaneously transmit a copy to 

the Staff at the following address:  Ansu N. Banerjee, Assistant Regional 

Director, Division of Enforcement, Securities and Exchange Commission, 444 

South Flower Street, Suite 900, Los Angeles, California 90071. 

13. Respondent shall adopt all recommendations in the Report within sixty (60) 

days of the issuance of the Report; provided, however, that, as to any 

recommendations that Respondent considers to be unduly burdensome, 

impractical, or costly, Respondent need not adopt the recommendations at that 

time, but may submit in writing to the Staff, within thirty (30) days of 

receiving the Report, an alternative policy or procedure designed to achieve 

the same objective or purpose.  Respondent and the Independent Consultant 

shall attempt in good faith to reach an agreement relating to each 

recommendation Respondent considers unduly burdensome, impractical, or 

costly.  In the event that Respondent and the Independent Consultant are 

unable to agree on an alternative proposal within thirty (30) days, Respondent 

will abide by the determinations of the Staff.   

14. Upon completion of the implementation, the Independent Consultant shall 

have thirty (30) calendar days to complete a follow-up review to confirm that 

Respondent has implemented the recommendations or agreed-upon 

alternatives and continued the application of the Policies and Procedures, and 

to deliver a supplemental report to the Board of Directors of Respondent and 

the Staff setting forth its conclusions and whether any further improvements 

should be implemented.   

15. Respondent agrees that the Staff may extend any of the dates set forth above 

at its direction. 

16. Respondent shall certify, in writing, compliance with the undertaking(s) set 

forth above.  The certification shall identify the undertaking(s), provide 

written evidence of compliance in the form of a narrative, and be supported by 

exhibits sufficient to demonstrate compliance.  The Staff may make 

reasonable requests for further evidence of compliance, and Respondent 

agrees to provide such evidence.  Respondent shall submit the certification 



 

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and supporting material to Ansu N. Banerjee, Assistant Regional Director, 

Division of Enforcement, with a copy to the Office of Chief Counsel of the 

Enforcement Division, no later than sixty (60) days from the date of the 

completion of the undertakings.   

17. Respondent agrees that these undertakings shall be binding upon any 

successor in interest to Respondent or any acquirer of substantially all of 

Respondent’s assets and liabilities or business.     

By the Commission. 

   

  Brent J. Fields 

Secretary