MDO | ALERTS

MDO | ALERTS

WALMART TO SETTLE SHAREHOLDER CLASS ACTION

FOR $160 MILLION FOR MEXICO BRIBES

 

■ ■ ■  November 5, 2018

 

 

On October 26, 2018, Walmart and a group of its shareholders agreed to settle a lawsuit brought by The City of Pontiac General Employees' Retirement System on behalf of thousands of investors for $160 million. The lawsuit arose from a significant drop in Walmart's stock price following an article published by the New York Times in 2012 about a bribery scheme involving Walmart's subsidiaries in Mexico in violation of the Foreign Corrupt Practices Act (FCPA).

 

While Walmart had previously disclosed the company's investigation of possible FCPA violations in a filing with the U.S. Securities and Exchange Commission (SEC) in December 2011, the class action claims the statement in the filing were misleading because they failed to mention the allegations dated back to 2005. The lawsuit alleges that Walmart's actions have affected thousands of investors who held about 3 billion shares of Walmart's stock from December 2011 through April 2012.

 

Walmart has also been under extensive investigation by the U.S. Department of Justice (DOJ), the SEC, and Mexican authorities since 2011 for violations of the FCPA when its employees paid alleged bribes to government officials in order to obtain permits to build Walmart stores in Mexico. Since the commencement of the investigation, Walmart has fired its General Counsel in Mexico and spent over $870 million dollars on the probe and global compliance upgrades. While the DOJ has not officially commented on the penalty sought against Walmart, some experts estimate the fine will be in the range of $600 million to $1 billion. However, the company has disclosed that based on its talks with the DOJ and the SEC, it may reach a settlement for a much lower amount, approximately $283 million, as a result of various remedial measures.

 

With increasing private class actions, coupled with the DOJ and SEC's aggressive enforcements efforts and record-setting fines, MDO Partners encourages companies to establish strong Anti-Corruption Compliance Programs to mitigate the risks of FCPA violations. In fact, recent reports reflect that nearly 500 enforcement actions were initiated and $4 billion in fines levied by the DOJ and SEC in 2018, boosted in large part by foreign corruption cases.  MDO Partners advises companies on global compliance programs; our attorneys and advisors have extensive experience advising clients on the FCPA and effective Anti-Corruption Compliance Programs in over 30 countries.

 

About MDO Partners

 

MDO Partners is a boutique law firm that focuses on Corporate, International, and Real Estate Law, as well as Global Compliance and Business Ethics. The firm is comprised of a solid team of attorneys and advisors with more than 100 years of combined experience who are committed to the business goals and best interests of their clients. The firm delivers value-added services of the highest caliber, and serves as a trusted advisor to its clients with a practical and business-savvy approach. For more information on MDO Partners, please visit www.mdopartners.com

 

If you have questions or comments regarding this Alert, please contact the attorney or advisor listed below.

 

Richard Montes de Oca

Managing Partner

305.704.8452

rmontes@mdopartners.com

 

Javier Jaramillio

Compliance Advisor

786.295.6644

jjaramillo@mdopartners.com

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