Securities Enforcement Blog

SEC v. Pfizer Inc., Case No. 1:12-cv-01303 (D.D.C.); SEC v. Wyeth LLC, Case No. 1:12-cv-01304 (D.D.C.).  On August 8, 2012, the SEC announced the filing of settled actions against Pfizer and Wyeth for violations of the Foreign Corrupt Practices Act (“FCPA”).   The employees of Pfizer’s subsidiaries in various Eastern European Nations and China bribed officials to obtain regulatory approval, sales, and increased prescriptions for the company’s products.  They tried to hide the bribery by recording the transactions in accounting records as business expenses for promotional activities.  Wyeth was acquired by Pfizer a few years ago.  Starting at least in 2005, subsidiaries marketing Wyeth nutritional products in China, Indonesia, and Pakistan bribed government doctors with cash and gifts to recommend their products to patients.  Wyeth’s employees often used fake invoices to conceal the true nature of the payments.

Pfizer voluntarily disclosed the misconduct to the SEC and Department of Justice in 2004, and fully cooperated with SEC investigators.  Pfizer took such extensive remedial actions.  Also, after Pfizer’s acquisition of Wyeth, Pfizer undertook a risk-based FCPA due diligence review of Wyeth’s global operations and voluntarily reported the findings to the SEC staff.

Without admitting or denying the allegations, Pfizer consented to the entry of a final judgment ordering it to pay disgorgement of $16,032,676 in net profits and prejudgment interest of $10,307,268 for a total of $26,339,944.  Pfizer must also report to the SEC on the status of its remediation and implementation of compliance measures over a two-year period, and is permanently enjoined from further violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.  Wyeth consented to the entry of a final judgment ordering it to pay disgorgement of $17,217,831 in net profits and prejudgment interest of $1,658,793, for a total of $18,876,624. Wyeth also is permanently enjoined from further violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.