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Foreign Corrupt Practices Act & Anti-Corruption

Legg Mason settles FCPA allegations with DOJ

DOJ FCPA Legg Mason Société Générale S.A.

On June 4, the DOJ announced that Legg Mason, a Baltimore-based investment management firm, had entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve FCPA allegations in connection with the firm’s involvement in Libya through Permal, a London-based fund purchased by the firm. Between 2004 and 2010, Permal, a Legg Mason subsidiary, partnered with Société Générale S.A., a Paris-based multinational bank, “to solicit business from state-owned financial institutions in Libya.” As admitted by Société Générale in its own resolution with the DOJ, Société Générale paid bribes of over $90 million through the use of a Libyan broker with respect to 14 investments made by Libyan state-owned financial institutions. For seven of the transactions, Société Générale made payments to the Libyan broker to benefit Legg Mason, through Permal. Permal managed the investments and earned profits of approximately $31 million.

Legg Mason’s resolution includes a penalty of $32.625 million and disgorgement of $31.617 million. As part of the agreement, Legg Mason agreed to continue to cooperate with the DOJ in related investigations and prosecutions, as well as to enhance its compliance program. According to the DOJ, the resolution is based on factors including Legg Mason’s cooperation in the investigation, as well as the fact that the company “did not voluntarily and timely disclose the conduct at issue.” The DOJ also found that the misconduct was “not pervasive throughout Legg Mason or Permal,” but rather that Société Générale was responsible for running the scheme, noting that Legg Mason and Permal earned less than one-tenth of the profits earned by Société Générale.

As FCPA Scorecard previously reported, Legg Mason had announced the near completion of the agreement in a recent SEC filing.