Boston Injury Lawyer Blog
Fund giant Legg Mason has been ordered to pay more than $32 million to resolve a charge with the Securities and Exchange Commission (SEC) that it was in violation of policies in the Foreign Corrupt Practices Act. According to the SEC, Legg Mason paid bribes to Libyan government officials from 2004 to 2010. Permal Group Inc., a former asset management subsidiary of Legg Mason, partnered with French bank Société Générale to pay $26.5 million in bribes to officials under Muammar Gaddafi. Why? So the country would buy bonds from the Paris-based bank, which was managed by Legg Mason at the time.
In 2004, Libya was emerging from international economic sanctions. As a result, Libyan banks and other financial institutions needed to invest their significant assets, and “financial institutions from around the globe aggressively sought access to these assets,” reports the SEC. Contact a MA whistleblower lawyer if you have information about fraudulent or illegal activities against the U.S. government.
“I Cooked Him”
Around the same time, Permal partnered with Société Générale, engaging in an illegal scheme to secure investments by bribing government officials. They used a middleman in these transactions, and coded language to communicate without raising any red flags. For instance, the term “cooking” was used by the middleman in reference to his ability to convince officials to invest through the use of bribes.
“I cooked him,” one banker told another on a recorded call. “Only we have to go there, start the fire, have a barbecue.”
According to the SEC, the person they “cooked” was a Libyan government official, to whose relative the middleman had transferred around $75,000 earlier that day.
Through its scheme, Legg Mason profited more than $31 million in Libyan investments.
The Risk of Corruption
“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.
After the SEC found Legg Mason to be in violation of the Securities Exchange Act of 1934, the company agreed to settle the case by paying back $27.6 million in illegally-obtained funds and another $6.9 million in interest.
In a letter to shareholders, Legg Mason wrote that “the misconduct by former employees of the legacy Permal business that the government found was totally unacceptable. It violated our high standards, our long-held core values and our ‘no-chalk’ culture.” A Boston whistleblower attorney can help you determine how to proceed if you have information about illegal or fraudulent securities activities.
Legg Mason is Not a Lone Wolf
The Legg Mason case is only the latest in a surge of Wall Street firms found to be tied to bribes involving the known terrorist regime. In June, SocGen settled for $585 million after being caught paying $90 million in bribes to Libyan officials in a similar scheme. Goldman Sachs was also implicated, with Libya accusing the company of bribing officials with everything from money to prostitutes.
Although many may see the Legg Mason case as vindication and just desserts, the $32 million settlement is not even half of the company’s estimated second-quarter liability.
Altman & Altman, LLP—Whistleblower Law Firm Serving All of MA
If you are aware of any type of fraudulent or illegal activity being committed against the U.S. government, the skilled legal team at Altman & Altman, LLP can help. We have been protecting the rights of whistleblowers for more than 50 years. Our experienced, knowledgeable attorneys understand the sensitive nature of these cases. We will ensure that you fully understand your rights and options before moving forward, and we will position you for the most favorable outcome possible. Considering that funds recovered are often in the hundreds of thousands or even millions of dollars, and that whistleblowers are entitled to a percentage of those funds, blowing the whistle can be more than just a good deed. Contact Altman & Altman, LLP today for a free and confidential consultation about your case.
