Wall Street Fine Tracker - Forbes.com
Multimillion Dollar Fines & Settlements
Paid by Corporations
corporations with names beginning G through M
click here for corporations A to F
click here for corporations N to T
click here for corporations U to Z
compiled by George Draffan
Endgame
Note: this list is not complete.
Please send additions to Endgame
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Gemstar-TV Guide International
$67,500,000
Recently, in addition to resolving several other patent infringement lawsuits, the company paid $67.5 million to settle a group of shareholder lawsuits..." (Gemstar Agrees to $10-Million Settlement, By Sallie Hofmeister, Los Angeles Times, June 24, 2004).
Gemstar-TV Guide International
see also KMPG LLP
2004
$10,000,000
"Removing another obstacle on the road to its recovery, Gemstar-TV Guide International Inc. agreed Wednesday to pay $10 million to settle allegations by federal regulators that it overstated revenue. The money will be distributed to shareholders hurt by the Los Angeles company's questionable accounting, according to the Securities and Exchange Commission, which had accused Gemstar of inflating revenue from 1999 through 2002... In settling with the SEC, the company didn't acknowledge any wrongdoing. Yuen and Gemstar's chief financial officer, Elsie Leung, were forced out in late 2002 after the disclosure of Gemstar's accounting irregularities. Billions of dollars in shareholder value were subsequently wiped out as Gemstar's stock plunged. The SEC filed charges against the two former Gemstar executives a year ago, alleging that they overstated revenue by at least $248 million. That represents another hurdle for Gemstar: It is by law required to pay for the legal defense of the two former executives, who recently sued the company for paying their bills too slowly... Recently, in addition to resolving several other patent infringement lawsuits, the company paid $67.5 million to settle a group of shareholder lawsuits..." (Gemstar Agrees to $10-Million Settlement, By Sallie Hofmeister, Los Angeles Times, June 24, 2004).
Genentech
199?
$30,000,000
Multinational Monitor, July/August 1999
General Electric
199?
$9,500,000
Multinational Monitor, July/August 1999
General Motors
2003
$1,200,000,000
GM settles $1.2B lawsuit over car fire. "General Motors (GM) said Friday it has agreed to settle a lawsuit stemming from a 1993 car fire that resulted in a $1.2 billion punitive damage award against the automaker. GM spokeswoman Brenda Rios declined to provide details of the settlement, including the amount that GM would pay. In July 1999, a California jury ordered GM to pay $4.9 billion to six people who were burned in 1993 when their 1979 Chevrolet Malibu exploded after being hit from behind by a drunken driver. A month later, a judge cut the $4.9 billion judgment, said to be the largest product-liability decision ever, to $1.2 billion. The judge wrote that GM placed the Malibu's fuel tank behind the axle "in order to maximize profits, to the disregard of public safety." Rios said Friday that GM "remains confident in the performance of the Malibu, which has had an outstanding safety record for many years." GM had been appealing the case before reaching the settlement." (Reuters, USA Today, July 25, 2003)
Geneva Pharmaceuticals
2005
$12,700,000
"Abbott Laboratories and Geneva Pharmaceuticals Inc. have agreed to a $30.7 million nationwide settlement to refund customers and third-party payers in 18 states who claimed that the two companies had conspired to engage in anticompetitive conduct selling a drug that treats hypertension and enlarged prostate. The settlement agreement, reached earlier this month, is still subject to final court approval. The commercial version of the drug, Hytrin, is manufactured by Abbott, which will pay $18 million in the case. The generic version, called terazosin, is made by Geneva... The settlement will benefit consumers who purchased terazosin products between Oct. 15, 1995 and March 7, 2005. Between 1999 and 2001, a number of consumers filed lawsuits against Abbott and Geneva. These cases were consolidated into a single lawsuit in federal court in the Southern District of Florida. According to the federal lawsuit, Abbott wrongfully paid Geneva to delay introduction of its generic version of Hytrin and took other steps to delay competition from lower-priced generic versions of its product, harming consumers." (CBS MarketWatch, March 31, 2005)
Georgia Pacific
199?
$5,000,000
Multinational Monitor, July/August 1999
GlaxoSmithKline
2003
$90,000,000
Pharmaceutical companies Bayer AG and GlaxoSmithKline have each agreed to pay Medicaid abuse settlements to resolve allegations they overcharged the government insurance program for the poor. Bayer will pay the government about $250 million and Glaxo will pay about $90 million for failing to give the Medicaid program the lowest price charged to any consumer, according to the agreement negotiated with the U.S. Attorney's office in Boston and Medicaid fraud investigators around the country... he Globe reported that Bayer is pleading guilty to violating the Federal Prescription Drug Marketing Act and paying a criminal fine of about $5 million for alleged overcharges involving its antibiotic Cipro and its high blood pressure drug Adalat, citing unnamed federal investigators and others familiar with the case. Glaxo, which was not accused of criminal wrongdoing, is paying a civil fine for overcharges involving its anti-depressant Paxil and nasal allergy spray Flonase. The investigation focused on allegations that the companies hid their lowest prices from Medicaid by repackaging or relabeling their drugs under a middleman's name. The middleman then sold the drug at a deep discount not reported to the government. By law, the companies are required to report all their prices and then pay Medicaid a rebate if they charge anyone less than the government... All 50 states will share the settlement money. A whistleblower who alerted federal officials will also receive a share. (AP, Drug Makers Settle Medicaid Overcharges, April 18, 2003
GlaxoSmithKline
2004
$175,000,000
"Drug manufacturer GlaxoSmithKline PLC will pay $175 million to settle a class-action lawsuit brought on behalf of wholesalers of the company's anti-inflammatory drug Relafen. The antitrust settlement on Friday was submitted for review to the U.S. District Court in Boston, where the case has been pending since 2001. London-based GlaxoSmithKline was sued by consumers, health plans and pharmacies who alleged that the company tried to block cheaper generic alternatives to nonsteroidal Relafen, an arthritis medicine. "GSK continues to believe that its actions were appropriate in obtaining and enforcing its patent for Relafen," the company said in a statement. GlaxoSmithKline said its financial results for the fourth quarter, scheduled to be announced Thursday, will include a legal charge of about $403 million, including provisions for settled and outstanding Relafen cases. (GlaxoSmithKline Paying $175M in Settlement, AP, Chicago Tribune, Feb 7, 2004).
GlaxoSmithKline
2004
$2,500,000
GlaxoSmithKline Plc has agreed to release all clinical studies of its drugs to settle a lawsuit that accused it of withholding negative information about the antidepressant Paxil, the New York Attorney General's office said on Thursday. GlaxoSmithKline has agreed to pay $2.5 million and will register the results of clinical trials, detailing safety and drug effectiveness, for all studies done after Dec. 27, 2000, and relevant earlier studies, New York Attorney General Eliot Spitzer said. Spitzer, in a lawsuit filed in June, had accused GlaxoSmithKline of concealing studies that showed Paxil may not work when used to treat children and could lead to suicidal behavior. The lawsuit said GlaxoSmithKline had conducted at least five studies on the use of Paxil in children and adolescents, but released only one of the studies. The company said the charges are "unfounded" and said it settled to avoid costly and time-consuming litigation. GlaxoSmithKline on June 18 said it would reveal details of its clinical studies, but the settlement gives the company a formal timetable to disclose those studies, Glaxo spokeswoman Nancy Pekarek said. Summaries of the clinical studies are expected to be posted online between now and Dec. 31, 2005, Spitzer said. The drug industry has been criticized for keeping quiet about negative results from clinical trials, since bad publicity would make product marketing more difficult. GlaxoSmithKline published its Paxil studies on its corporate Website in June in response the public concerns, the company said." (Glaxo Settles Paxil 'Suicide Pill' Suit, Reuters/ABCNews.com, Aug 26, 2004).
Goldman Sachs
2002
$50,000,000
FOR MORE INFO SEE ENTRY: Citigroup - 2002 - $300,000,000
Goldman, Sachs
2003
$110,000,000
$1.4 Billion Wall Street Settlement Unveiled. "As part of the settlement, two former research analysts -- telecommunications expert Jack Grubman of Citigroup's Salomon Smith Barney and Internet expert Henry Blodget of Merrill Lynch & Co. -- agreed to pay $15 million and $4 million, respectively, and be permanently barred from the securities industry. The $1.4 billion settlement amount is among the highest ever imposed by securities regulators, and Citigroup's $400 million share of that settlement is the highest ever imposed on an individual firm. It follows a nearly two-year investigation started by Spitzer and later joined by the SEC and other state attorneys general.... Adding to Citigroup's $400 million, Merrill Lynch and Credit Suisse First Boston will each contribute $200 million toward the global settlement. The other firms -- Bear, Stearns & Co. Inc.; Goldman, Sachs & Co.; Lehman Brothers Inc.; J.P. Morgan Securities Inc.; Morgan Stanley & Co. Inc.; UBS Warburg LLC; and U.S. Bancorp Piper Jaffray Inc. -- will pay between $125 million and $32.5 million. About $387 million will go toward a fund to benefit customers of the firms. Another $387 million will be paid to the states. In addition, the firms will pay some $433 million to fund independent research and $80 million to promote investor education. ($1.4 Billion Wall Street Settlement Unveiled, by Tamara Loomis, New York Law Journal, April 29, 2003). See also SEC Releases Brokerage Settlement Details. Associated Press, April 28, 2003.
"Six months after securities regulators and 10 of Wall Street's biggest banks signed a landmark $1.4 billion conflict-of-interest settlement, a federal judge approved the deal Friday, clearing the way for harmed investors to recoup $399 million... The SEC, industry self-regulatory groups and 25 other states eventually joined the investigation. Firms agreeing to settle included Merrill, Citigoup Inc., Morgan Stanley, J.P. Morgan Chase, Goldman Sachs, Bear Sterns, Credit Suisse First Boston, Lehman Brothers, Piper Jaffray and UBS Warburg. Spitzer has gone on to lead regulatory probes into alleged trading abuses by mutual fund firms. In both the research and mutual fund cases, Spitzer seized on behavior long recognized by Wall Street but largely ignored by regulators. As part of the "global settlement," the firms were ordered to pay $894 million in penalties and disgorgement as well as $432.5 million to fund the purchase and distribution of independent research and $80 million to fund investor education programs." ($1.4 Billion Wall Street Settlement Approved: Federal Judge Accepts Conflict-of-Interest Deal. By Ben White, Washington Post, Nov. 1, 2003, p. E1).
The $1.4 billion settlement is divided so:
Citigroup/Salomon Smith Barney: $400,000,000
Credit Suisse First Boston: $200,000,000
Merrill Lynch: $200,000,000
Morgan Stanley: $125,000,000
Goldman Sachs Group: $110,000,000
Lehman Brothers Holdings: $80,000,000
J.P. Morgan Chase: $80,000,000
Bear Stearns: $80,000,000
UBS Warburg: $80,000,000
U.S. Bancorp Piper Jaffray: $32.500,000
Goldman Sachs
2004
$2,000,000
July 1, 2004: "Goldman Sachs Group agreed to pay $2 million to settle an administrative proceeding with the SEC. According to the SEC, sales traders at Goldman violated the waiting period for marketing an IPO before a registration became effective. Additionally, the SEC alleged that a Goldman executive spoke to the media about an IPO by PetroChina before an initial registration was filed. In the settlement, Goldman neither admitted nor denied the findings." (Forbes Wall Street Fine Tracker).
Graco Children’s Products
2005
$4,000,000
Graco Children’s Products Inc. has agreed to pay a record $4 million to settle charges that it belatedly reported problems with car seats, high chairs, strollers and other products that resulted in hundreds of injuries and at least six deaths.
The company also is recalling 1.2 million Graco Toddler Beds sold nationwide from 1994 to 2001. The beds are linked to scores of injuries, including more than a dozen broken bones, caused when children’s limbs were trapped in the bed’s guard rails or footboard.
The civil penalty is the largest ever imposed by the Consumer Product Safety Commission, which planned to announce the settlement and recall Tuesday.
The penalty was sizable because of "the number of consumer products and the egregiousness of the failure to report," CPSC Chairman Hal Stratton said in an interview.
Under federal law, companies must immediately inform the commission after discovering any product defects that pose injury risks or violate federal safety standards. That time limit typically is interpreted as 24 hours.
But the safety agency said Graco and its subsidiary, Century Products, failed to immediately report defects in 16 different products sold from 1991 to 2002. Stratton could not say when his agency first learned of possible reporting violations...
The products — more than 12 million in all — included car seats, infant carriers, high chairs, strollers, swings and beds.
The products have been subject to seven recalls since 1997, including Tuesday’s. The commission said it expects to announce two more Graco recalls soon.
The six deaths were linked to Graco Infant Swings, 7 million of which were recalled in April 2000 after reports that babies could fall out of the seat’s leg openings or get trapped in them. More recently, 140,000 Graco Travel Lite Infant Swings were recalled in July after the company received 100 reports of children slipping out of faulty seat belts and sustaining injuries such as bloody lips, bumps and bruises.
Acquired by Rubbermaid in 1996, Exton, Pa.-based Graco is now a subsidiary of Newell Rubbermaid Inc., formed in 1999...
The penalty more than doubles the previous high of $1.75 million paid in 2001 by baby products maker Cosco Inc. and sister company Safety 1st to settle charges of not reporting product defects." (AP / MSNBC.com, March 21, 2005).
Grant Thornton LLP
2004
$1,500,000
"Grant Thornton LLP, the nation's fifth-largest accounting firm, will pay a $1.5 million fine and spend a minimum of $1 million on training its staff to better detect fraud under a settlement announced today with the Securities and Exchange Commission... Besides the fine and training requirement, the settlement prohibits Grant Thornton from doing joint audits of public companies with other firms for five years... In January, the SEC accused Grant Thornton and the Troy, Mich., accounting firm of Doeren Mayhew & Co. of contributing to an accounting fraud at MCA Financial when the Southfield, Mich.-based mortgage bank failed to disclose several million dollars in related-party transactions in its 1998 annual financial statement. The SEC also said the auditors also engaged in improper professional conduct because they failed to bring "sufficient skepticism" to the job or obtain enough evidence to support their opinion of the firm's accounting... Doeren Mayhew agreed not to accept new public-company auditing assignments for six months and to pay $115,000. Doeren Mayhew didn't admit or deny the SEC's accusations... Some of the money paid by Grant Thornton and Doeren Mayhew will be distributed to investors the SEC alleges were defrauded by slipshod audit work..." (Chicago Tribune, Aug 5, 2004).
Gulf Oil
1976
$4,000,000
Gulf Oil Corp & executives Claude Wild [resigned] Dorsey [resigned] Deering [resigned] Henry [resigned], plus executive 1975 pay reductions. Stockholder Suit relating to illegal corporate domestic money-in-politics activity. http://www.politicalmoneyline.com/cgi-win/x_vce.exe
Haarman & Reimer
199?
$50,000,000
Multinational Monitor, July/August 1999
Haarmann & Reimer
Archer Daniels Midland
Cerestar Bioproducts
Hoffmann-La Roche
Jungbunzlauer
2001
$120,500,000 total
"The European Commission fined Hoffmann-La Roche AG, Archer Daniels Midland Co (ADM), Jungbunzlauer AG, Haarmann & Reimer Corp and Cerestar Bioproducts B.V. a total of $120.5 million for participating in a price-fixing and market-sharing cartel in citric acid." (Corporate Crime Reporter, Dec 5, 2001).
Halliburton
1995
$1,200,000 fine
$2,610,000 civil penalties
"Halliburton came under fire in the early '90s for supplying Libya and Iraq with oil drilling equipment which could be used to detonate nuclear weapons. Halliburton Logging Services, a former subsidiary, was charged with shipping six pulse neutron generators through Italy to Libya. In 1995, the company pled guilty to criminal charges that it violated the U.S. ban on exports to Libya. Halliburton was fined $1.2 million and will pay $2.61 million in civil penalties." (Washington Post, July 11, 2002)
Halliburton
2002
$2,000,000 settlement
"... In February 2002 [Halliburton subsidiary Brown & Root] agreed to pay the [U.S.] government $2 million to settle charges that it inflated contract prices for maintenance and repairs at Fort Ord, a now-closed military installation near Monterey, Calif. Even had the Army known about the investigation, officials said, it would not have affected the decision to award the troop-support contract to Brown & Root. "They did not admit to any wrongdoing, and the government did not find them guilty of any wrongdoing, so legally we could not use that," said Gale Smith, spokeswoman for the Army Operations Support Command. (Associated Press, Washington Times, August 5, 2002).
Halliburton
2004
$7,500,000
"Halliburton Co. will pay $7.5 million to settle charges that it misled investors by not disclosing a 1998 accounting change at a time when Vice President Dick Cheney was CEO, officials said on Tuesday. The U.S. Securities and Exchange Commission said it did not charge Cheney in the case. The agency charged the Houston-based oil services group, as well as its former Chief Financial Officer Gary Morris and former Controller Robert Muchmore. The size of the penalty against Halliburton partly reflects an SEC view that company documents and information were not turned over quickly enough to SEC investigators, it said... The case focused on Halliburton's failure to disclose a change in accounting for revenue from claims against customers for construction project cost overruns, it said. The accounting change boosted Halliburton's pretax profits over several quarters in 1998 and 1999 by more than $120 million, but investors were not informed until March 2000, the SEC said... The SEC found Cheney was not involved in the accounting practice change, nor in the decision on whether to disclose it, said a lawyer for Cheney who asked not to be named. Halliburton and Muchmore agreed to a settlement, with Muchmore paying a penalty of $50,000 and the company a penalty of $7.5 million. Neither admitted nor denied wrongdoing, as is customary in SEC settlement agreements. The enforcement action against Morris is unsettled and has been filed in U.S. District Court in Houston, the SEC said... " (Halliburton Settles SEC Charge from Cheney Years, Reuters/ABCNews.com, Aug 3, 2004).
Halliburton
2005
$4,700,000,000
"Halliburton Units Exit Bankruptcy Protection. Halliburton Co., the world's largest oil field services company, said its DII Industries and Kellogg Brown & Root units exited bankruptcy protection, formalizing a $4.7-billion settlement of asbestos claims with more than 400,000 people. The units filed for bankruptcy protection in December 2003 to win court approval of the settlement with people who claimed they were exposed to asbestos or silica." (Bloomberg News, Jan 4, 2005).
HCA-The Healthcare Company (formerly known as Columbia-HCA)
2000
$840,000,000
"HCA-The Healthcare Company (formerly known as Columbia-HCA), the largest for-profit hospital chain in the United States, has agreed to plead guilty to criminal conduct and pay more than $840 million in criminal fines, civil penalties and damages for alleged unlawful billing practices... HCA will pay a total of $745 million to resolve five allegations regarding the manner in which it bills the U.S. government and the states for health care costs. The agreement does not resolve allegations that HCA unlawfully charged for the costs of running its hospitals on cost reports submitted to the government, and that it paid kickbacks to physicians to get Medicare and Medicaid patients referred to its facilities. Of the $745 million, the settlement requires HCA to pay: more than $95 million to resolve civil claims arising from the company's outpatient laboratory billing practices, which included billing to Medicare, Medicaid, the Defense Department's TRICARE health care program, and the Federal Employees' Health Benefits Program, for lab tests that were not medically necessary, not ordered by physicians, as well as other billing violations; more than $403 million to resolve civil claims arising from "upcoding," where false diagnosis codes were assigned to patient records in order to increase reimbursement to the hospitals by Medicare, Medicaid, TRICARE and the Federal Employees' Health Benefits Program. The guilty plea includes one count relating to this upcoding practice; $50 million to resolve civil claims that the company illegally claimed non-reimbursable marketing and advertising costs it disguised as community education. Medicare reimburses providers for "community education" - costs to educate the community at large about public health issues - but not for advertising and marketing a hospital's services; $90 million to resolve civil claims that HCA illegally charged Medicare for non-reimbursable costs incurred in the purchase of home health agencies owned by the Olsten Corporation, as well as other agencies in Florida, Georgia and Alabama. According to the government, HCA devised an elaborate scheme to hide these costs in reimbursable "management fees" paid to third parties. In 1999, a subsidiary of Olsten Corporation, Kimberly Quality Care, entered into criminal plea agreements in three districts and paid more than $10 million in criminal fines. Olsten paid nearly $41 million as part of a civil settlement arising from its collusion with HCA for that conduct. HCA has now agreed to pay $90 million to settle this issue, and; $106 million to resolve civil claims for billing Medicare, Medicaid and TRICARE for home health visits for patients who did not qualify to receive them or were not performed and for committing other billing violations. (US DOJ, Dec 2000).
HCA-The Healthcare Company
2001
March 15, 2001 - The Justice Department filed in federal court today a document of more than 1,000 pages detailing a vast and broad scheme by HCA-The Healthcare Co. (formerly Columbia/HCA Healthcare Corp.) to defraud the Medicare system of more than $400 million by making false claims in its annual "cost reports."
"The amended complaint - filed by the government today to meet a court deadline - is the latest salvo in a eight-year government investigation of Medicare cost reporting fraud by HCA and its related companies that was sparked by two "qui tam" (whistleblower) lawsuits. HCA is the nation's largest hospital company.
"The government also filed today separate complaints pursuing its longstanding investigation of the other outstanding civil issue confronting HCA: kickbacks and improper physician investment arrangements.
"If the cost report case results in a victory at trial, HCA's liability could be more than $1 billion plus an undetermined amount in penalties, because the lawsuits were brought under the False Claims Act. That federal fraud law provides that liable companies may be required to pay up to three times damages plus penalties of $5,000 to $10,000 for each false claim made to the government.
"The complaint also includes allegations of HCA cost report fraud schemes for which the government has not yet determined its monetary losses.
"A former HCA management subsidiary pleaded guilty last December to criminal charges related to many of the schemes alleged in today's complaints. HCA paid $95.3 million to settle the criminal charges, but has not yet resolved its civil liability for cost report and kickback issues. HCA's cost reporting liability will be separate from and in addition to the $745 million civil settlement reached last year on other claims.
"The breadth of the allegations and the detailed calculations of Medicare's losses are a clear signal that HCA's problems with the government are far from over," said Stephen Meagher, a San Francisco attorney with Phillips & Cohen LLP, which represents the two whistleblowers.
"The government's analysis of HCA's cost reports finds that the company set aside reserves totaling more than $400 million from 1987 to 1997 to cover claims that it knew were not allowed under Medicare reimbursement regulations. Nearly 400 past and present HCA facilities made thousands of false claims, the government found.
"The scope of the fraud alleged in the government's complaint is unprecedented," said Peter W. Chatfield, a Washington, D.C., attorney with Phillips & Cohen. "But it is in many ways a very conservative estimate of the fraud. The Justice Department has given HCA the benefit of any possible doubt on tens of millions of dollars in highly dubious claims submitted, and reserved for, by HCA."
"The government charges that HCA: Filed claims and received reimbursement for nonallowable costs such as for marketing, advertising and unrelated investments by mischaracterizing them. Billed Medicare for idle space in hospitals by claiming it was being used for patient care. Concealed overcharges and Medicare auditing errors that favored HCA facilities. Failed to implement Medicare audit adjustments in cost reports in subsequent years - continuing to claim costs that Medicare auditors previously had disallowed for reimbursement. Shifted costs to home health rehabilitation and other facilities that Medicare reimbursed at higher rates.
"The government's amended complaint also reveals for the first time details of HCA's spin off of 104 hospitals in 1987 to form HealthTrust Inc. The complaint alleges that Medicare unwittingly paid more than $100 million of the cost of that business deal. The chairman, CEO and president of HCA at that time was its current chairman, Thomas Frist." (Whistleblowers.com, March 15, 2001).
Health Master Home Health Care Inc
1998
$14,000,000
Health Master Home Heath Care Inc executive Jeannette Garrison [3 yr prison term, $11.5 restitution, fine 2.5 million]. US Dept of Justice civil and/or criminal actions relating to illegal corporate domestic money-in-politics activity. http://www.politicalmoneyline.com/cgi-win/x_vce.exe
HealthSouth Corporation
2004
$325,000,000
"HealthSouth Corp., the largest U.S. operator of rehabilitation hospitals, agreed to pay $325 million to settle charges it overbilled the government's Medicare program... HealthSouth is seeking to recover from an alleged $2.7 billion accounting fraud in which 17 ex-officers have been indicted [including] former Chief Executive Officer Richard Scrushy..." (Coalition Against Insurance fraud News, Dec 2004).
Hewlett-Packard
2006
$14,500,000
Hewlett-Packard agreed Thursday to pay $14.5 million to settle civil claims brought by the California Attorney General's Office arising from the company's board-spying scandal. The civil claims, filed alongside the settlement Thursday, included unlawful business practices and using false pretenses or lying to obtain private phone records. The civil claims are separate from the criminal charges filed in October against the former chairman of HP, Patricia Dunn, and four others involved in the spying case. The investigation was undertaken by private investigators, working for HP, who sought to find out who on HP's board of directors was leaking confidential company information to the press. (San Jose Mercury News, Dec 8, 2006).
Hoechst AG
199?
$36,000,000
Multinational Monitor, July/August 1999
Hoffmann-La Roche
1999
$500,000,000
"90 per cent of the world's vitamins are manufactured by a handful of companies, including F. Hoffman LaRoche Ltd. and Lonza AG in Switzerland, Rhone-Poulenc SA in France, BASF AG and Hoechst AG in Germany and three Japanese companies -- Takeda Chemical Industries Ltd., Eisai Co. and Daiichi Pharmaceutical Co. In the late '80s and early '90s, these conglomerates saw the price of vitamins declining too much for their liking, so they began meeting to discuss how to fix prices and divide up the world market for such vitamins as A, E, B2, B4, B5, B12, C and beta carotene.... After the cartel was busted, it received the largest fines in American judicial history, a total of US$875 billion. In Canada, it was hit with another $130 million -- also a record high... The fines were unprecedented -- F. Hoffman LaRoche alone paid US$500 million, the largest fine in American criminal history. Chinook was fined $2.25 million here and US$5 million in the States for its role in the vitamin B4 cartel... After the convictions, lawsuits were launched by animal feed, food and tablet manufacturers. Last year the cartel settled a few of the suits for US$1 billion in the States, but some of the biggest customers opted out of the settlement, feeling it was inadequate, and are continuing to pursue their own cases. In Canada, about eight lawsuits seeking more than $2 billion in total are underway." (EyeNet) See also QuackWatch.
Hoffmann-La Roche
Jungbunzlauer
Haarmann & Reimer
Archer Daniels Midland
Cerestar Bioproducts
2001
$120,500,000 total
"The European Commission fined Hoffmann-La Roche AG, Archer Daniels Midland Co (ADM), Jungbunzlauer AG, Haarmann & Reimer Corp and Cerestar Bioproducts B.V. a total of $120.5 million for participating in a price-fixing and market-sharing cartel in citric acid." (Corporate Crime Reporter, Dec 5, 2001).
Hughes Space and Communication
2003
$32,000,000
In 2003, Loral and Hughes Space and Communication were fined $32 million for illegal export of satellite technology to China. [the Hughes fine was paid by Boeing becuase by 2003 the Hughes division had been acquired by Boeing] (Seattle Times, April 8, 2006).
Hynix
2005
$185,000,000
"Samsung Electronics Company, the world's largest maker of computer memory chips, agreed Thursday to plead guilty and pay a $300 million fine for participating in a global conspiracy to fix prices, federal prosecutors said. It is the second-largest criminal antitrust fine ever levied.
The Justice Department has spent more than three years investigating Samsung of Korea, along with its competitors Hynix Semiconductor of Korea and Infineon Technologies of Germany, on charges of conspiring to fix prices of dynamic random access memory chips from April 1999 to June 2002. Both Hynix and Infineon have already pleaded guilty for their roles in the scheme.
DRAM chips are the most common type of computer memory products and are found in personal computers, hand-held devices, printers and other consumer electronics. In 2004, the market in those chips totaled $7.7 billion...
Samsung's plea agreement brings the total fines related to this investigation to $645 million. In April, Hynix pleaded guilty and agreed to pay a $185 million fine, and in October 2004, Infineon pleaded guilty and was fined $160 million. The fine against Samsung was larger because the company controls the largest portion of the DRAM market. (The single largest fine in a criminal antitrust case, $500 million, was levied in 1999 against the vitamin maker Hoffman-LaRoche.)
The one-count felony charge against Samsung Electronics and its American subsidiary, Samsung Semiconductor, will be filed in a federal district court in San Francisco in the coming weeks. The government has accused the chip companies of conspiring through telephone calls, meetings and e-mail correspondence over a period of more than three years.
Micron Technology, a memory chip maker in Boise, Idaho, has been cooperating with the Justice Department in the investigation in exchange for amnesty, said Thomas O. Barnett, acting assistant attorney general in the antitrust unit. Micron is not expected to face charges, though one Micron executive has pleaded guilty to obstruction charges.
Named as victims in the case were six American computer companies: Dell, Compaq Computer, Hewlett-Packard, Apple Computer, I.B.M. and Gateway. A related class-action civil suit brought by chip customers in 2002 is still pending...
In December 2004, four Infineon executives, T. Rudd Corwin, Peter Schaefer, Günter Hefner and Heinrich Florian, pleaded guilty to the price-fixing charges; each paid a $250,000 fine. All four men, three of whom are German citizens, also served from four to six months in federal prison.
Alfred P. Censullo, a regional sales manager for Micron, pleaded guilty to obstruction of justice in the investigation, admitting that he withheld and altered documents. Mr. Censullo, based in Boise, was sentenced to six months of home detention..." (Samsung to Pay Large Fine In Price-Fixing Conspiracy, By Laurie J. Flynn, New York Times, Oct 14, 2005).
IBM East Europe/Asia Ltd.
199?
$8,500,000
Multinational Monitor, July/August 1999
IBM
2004
$320,000,000
"I.B.M. said yesterday that it had agreed to pay $320 million to current and former employees to settle in part a class-action lawsuit over its pension plan in a case that may affect millions of workers at many companies and nonprofit organizations. Under the settlement, I.B.M.'s liability in the case will be limited to an additional $1.4 billion if the courts uphold a ruling that a new pension plan discriminates against its older workers and is illegal. The agreement came as a federal judge was preparing to rule on how much I.B.M. should pay to some 130,000 current and former employees. The judge, G. Patrick Murphy of the Federal District Court in Southern Illinois, had ruled a year ago that the company discriminated against its older workers in the 1990's when it changed its traditional pension plan twice, leaving them with what is known as a cash-balance plan. A cash-balance plan combines some features of traditional pensions with other features of 401(k) plans. Under the settlement, which must be approved by the court, I.B.M. would pay at least $300 million to current and former employees and $20 million to employees who had not been at the company long enough to earn a pension. The payment of $300 million settles all disputes that arose when I.B.M. changed its pension plan the first time, in 1995, to an interim design called a pension-equity plan..." (I.B.M. Agrees to Settle Part of Giant Pension Case, By David Cay Johnston, New York Times, September 30, 2004).
Infineon
SEE ALSO:
Samsung 2005 ENTRY
2004
$160,000,000
"Federal prosecutors announced on Wednesday that they had cracked a global cartel that had illegally fixed prices of memory chips in personal computers and servers for three years, and that one of the companies involved, Infineon Technologies, had agreed to plead guilty to one criminal count and pay a fine of $160 million... Infineon had participated in a series of discussions in the United States and elsewhere from July 1999 through June 2002 to set prices of memory equipment, known as dynamic random access memory, or DRAM. Such chips are used in an array of consumer and industrial products, including cellphones, hand-held organizers, digital cameras, television sets, games and MP3 music players. The American market for the memory equipment is about $5 billion a year. Complaints by computer makers of possible collusion in the memory equipment market led to the investigation. The computer makers that were hurt by the collusion, the government said, included Dell, Compaq, Hewlett-Packard, Apple, I.B.M. and Gateway. Officials said that in some instances, the computer makers passed the price increases on to consumers, and in other instances, they responded by limiting the amount memory in their computers... [Assistant Attorney General R. Hewitt Pate] emphasized that the investigation was continuing but declined to identify the other companies, which he called co-conspirators. He would not say how much the cartel had cost consumers and computer makers, but noted that the memory chip was among the most expensive components of computers. A related class-action lawsuit filed by the computer makers identifies the cartel's other participants as including Micron Technology, Samsung, Hynix and Nanya Technologies. Mr. Pate said that the scheme was conducted with the approval of top executives of Infineon. "There were high-level employees involved," he said. "This was not a question of a couple of low-level bad apples." He said the plea agreement offered immunity to some executives and not others, but declined to elaborate... Infineon, with headquarters in Munich, Germany, issued a statement Wednesday afternoon saying that it accepted responsibility for its role in the cartel and that it would pay the fine over the next five years. The $160 million penalty is the third-largest criminal fine under the Sherman Act and the biggest one under Attorney General John Ashcroft. (The two larger fines were levied in 1999 on two vitamin makers: $500 million against Hoffmann-La Roche and $225 million against BASF.)..." (New York Times, Sept 16, 2004).
International Paper
199?
$2,200,000
Multinational Monitor, July/August 1999
Inviva
2004
$5,000,000
"Two insurance companies will pay $20 million in a settlement that ends an investigation into charges that the companies allowed improper trading of annuities... Conseco and its successor in the variable annuities business, Inviva, agreed to the settlement with New York Attorney General Eliot Spitzer and the Securities and Exchange Commission. Regulators accused the companies of allowing some favored investors to engage in rapid trading of mutual funds linked to variable annuity products... The SEC called the settlement the first enforcement action charging insurance companies with securities fraud for allowing market time of mutual funds. The insurance companies misled investors by saying the annuities were "not designed for professional market timing organizations," according to the firms' prospectuses. But the companies marketed and sold the annuities to professional market timers anyway, according to the SEC... Conseco was accused of allowing certain hedge fund managers to do rapid, short-term trading of its mutual fund sub-accounts from 2000 through April 2003. Inviva, which bought Conseco's variable annuities business in 2002, was accused of continuing the preferential treatment for a year... Conseco will pay $15 million in restitution and Inviva will pay $5 million. Inviva will also hire a monitor to make sure the firm is complying with reforms to prevent market timing of trades of variable annuities, which provide annuities payments, a death benefit and the option to invest in the stock market through separate mutual fund accounts."
Iroquois Pipeline Operating Company
199?
$15,000,000
Multinational Monitor, July/August 1999
ITT
2007
$100,000,000
ITT "agreed to pay a $100 million penalty for illegally sending classified night-vision technology used by the U.S. military to China, Singapore and the United Kingdom...
ITT... the 12th-largest systems supplier to the U.S. military, is the first major defense contractor convicted of violating the Arms Export Control Act.
The $100 million penalty includes a $2 million criminal fine, the forfeiture of $28 million in illegal proceeds to the United States, and $20 million to the State Department.
The remaining $50 million penalty will be suspended for five years and the White Plains, N.Y.-based company can reduce it on a dollar-for-dollar basis by investing in the development and production of more advanced night-vision technology so the U.S. military can maintain its advantage on the battlefield.
The Army must approve any reduction in the suspended fine, and the government will maintain the rights to any technologies ITT develops and can share them with rival defense firms on future contracts, according to the agreement..." (AP/Cbsnews.com, March 27, 2007).
J. Ray McDermott & Co
1978
$1,000,000
FEC & Dept of Justice civil and/or criminal actions relating to illegal corporate domestic money-in-politics activity (Political Money Line).
John Morrell and Company
199?
$2,000,000
http://multinationalmonitor.org/mm1999/99july-aug/crime1.html
Johnson & Johnson
Menarini Diagnosticos
Pharmaceutica Quimica
Bayer
Abbott Laboratories
2005
16 million Euros total
"Portugal's antitrust regulator said it had fined five major US and European drug companies a total of 16 mln eur for working together to artificially fix prices.
The five firms -- Abbott Laboratories and Johnson & Johnson of the United States, Germany's Bayer AG, Italy's Menarini Diagnosticos and Switzerland's Pharmaceutica Quimica -- formed a cartel during 36 bidding processes to supply 22 hospitals in Portugal, it said. The goal of the companies was to 'prevent, restrict or falsify in a significant way competition by fixing prices', the competition authority said in a statement.
Abbott Laboratories was hit with the largest fine, 6.8 mln eur, for 34 infractions while Johnson & Johnson, which cooperated with antitrust regulator in its investigation, received the smallest fine, it added. The firm will have to pay 360,000 eur for 36 infractions. The antitrust regulator opened its investigation after a public hospital in Coimbra, Portugal's third-largest city, complained that the five firms had all proposed the same price for the same drug." (AFX News Limited, Oct 14, 2005).
JP Morgan Chase
2002
$50,000,000
FOR MORE INFO SEE ENTRY: Citigroup - 2002 - $300,000,000
J.P. Morgan Chase
2003
$80,000,000
$1.4 Billion Wall Street Settlement Unveiled. "As part of the settlement, two former research analysts -- telecommunications expert Jack Grubman of Citigroup's Salomon Smith Barney and Internet expert Henry Blodget of Merrill Lynch & Co. -- agreed to pay $15 million and $4 million, respectively, and be permanently barred from the securities industry. The $1.4 billion settlement amount is among the highest ever imposed by securities regulators, and Citigroup's $400 million share of that settlement is the highest ever imposed on an individual firm. It follows a nearly two-year investigation started by Spitzer and later joined by the SEC and other state attorneys general.... Adding to Citigroup's $400 million, Merrill Lynch and Credit Suisse First Boston will each contribute $200 million toward the global settlement. The other firms -- Bear, Stearns & Co. Inc.; Goldman, Sachs & Co.; Lehman Brothers Inc.; J.P. Morgan Securities Inc.; Morgan Stanley & Co. Inc.; UBS Warburg LLC; and U.S. Bancorp Piper Jaffray Inc. -- will pay between $125 million and $32.5 million. About $387 million will go toward a fund to benefit customers of the firms. Another $387 million will be paid to the states. In addition, the firms will pay some $433 million to fund independent research and $80 million to promote investor education. ($1.4 Billion Wall Street Settlement Unveiled, by Tamara Loomis, New York Law Journal, April 29, 2003). See also SEC Releases Brokerage Settlement Details. Associated Press, April 28, 2003.
"Six months after securities regulators and 10 of Wall Street's biggest banks signed a landmark $1.4 billion conflict-of-interest settlement, a federal judge approved the deal Friday, clearing the way for harmed investors to recoup $399 million... The SEC, industry self-regulatory groups and 25 other states eventually joined the investigation. Firms agreeing to settle included Merrill, Citigoup Inc., Morgan Stanley, J.P. Morgan Chase, Goldman Sachs, Bear Sterns, Credit Suisse First Boston, Lehman Brothers, Piper Jaffray and UBS Warburg. Spitzer has gone on to lead regulatory probes into alleged trading abuses by mutual fund firms. In both the research and mutual fund cases, Spitzer seized on behavior long recognized by Wall Street but largely ignored by regulators. As part of the "global settlement," the firms were ordered to pay $894 million in penalties and disgorgement as well as $432.5 million to fund the purchase and distribution of independent research and $80 million to fund investor education programs." ($1.4 Billion Wall Street Settlement Approved: Federal Judge Accepts Conflict-of-Interest Deal. By Ben White, Washington Post, Nov. 1, 2003, p. E1).
The $1.4 billion settlement is divided so:
Citigroup/Salomon Smith Barney: $400,000,000
Credit Suisse First Boston: $200,000,000
Merrill Lynch: $200,000,000
Morgan Stanley: $125,000,000
Goldman Sachs Group: $110,000,000
Lehman Brothers Holdings: $80,000,000
J.P. Morgan Chase: $80,000,000
Bear Stearns: $80,000,000
UBS Warburg: $80,000,000
U.S. Bancorp Piper Jaffray: $32.500,000
JP Morgan Chase
see also Morgan Stanley
2003
$135,000,000
The Securities and Exchange Commission announced today that J.P. Morgan Chase and Citigroup had agreed to pay a total of $255 million to settle S.E.C. allegations that they helped Enron, the collapsed energy-trading company, to fraudulently mislead investors on its financial condition. In addition, the two banking companies agreed to pay a total of $50 million to New York State and New York City to settle a similar allegations about their dealings with Enron, the Manhattan district attorney's office announced this afternoon. Without admitting or denying the commission's allegations, J.P. Morgan Chase agreed to pay $135 million and and Citigroup $120 million. The settlement also resolves the commission's charges stemming from the assistance that Citigroup provided to Dynegy, another energy-trading company, to manipulate its financial statements. "These two cases serve as yet another reminder that you can't turn a blind eye to the consequences of your actions - if you know or have reason to know that you are helping a company mislead its investors, you are in violation of the federal securities laws," Stephen M. Cutler, the director of the S.E.C.'s enforcement division, said in a statement. The S.E.C. said $236 million of the money would go to Enron investors who experienced losses because of the fraudulent finances, while $19 million would go to Dynegy investors. The Securities and Exchange Commission accused J.P. Morgan Chase and Citigroup of helping their clients to set up complex financial transactions to cover up what were in essence loans. These financial transactions, the S.E.C. said, enabled Enron and Dynegy to inflate reported cash flow from their operating activities, underreport cash flow from financing activities, and underreport debt. As a result, the S.E.C. said, Enron and Dynegy presented false and misleading pictures of their financial health and results of operations. The commission asserted that both financial institutions knew that Enron was engaging in these transactions specifically to allay concerns among investors, Wall Street analysts and credit-rating agencies about its cash flow from operating activities and outstanding debt. It also asserted that Citigroup knew that Dynegy had similar motives for its structured finance transaction. Under the agreement with the Manhattan district attorney's office, J.P. Morgan Chase and Citigroup will each pay $12.5 million to New York State and $12.5 million to New York City, as well as the costs of the investigation. As a result of these settlements, the Manhattan district attorney's office said it would not prosecute J.P. Morgan Chase or Citigroup or their employees for their involvement with Enron's financial transactions." (J.P. Morgan and Citigroup Settle Inquiries on Enron's Fraud, By Jack Lynch, New York Times, July 28, 2003).
JP Morgan Chase
2005
$2,000,000,000
"J.P. Morgan Chase, which sold billions of dollars in WorldCom bonds to the public just about a year before the telecommunications giant filed for bankruptcy, agreed today to pay $2 billion to settle investors' claims that it did not conduct adequate investigation into the company's financial condition before the securities were sold. If the court approves this settlement, the total recovered by the plaintiff in the case will exceed $6 billion. That is almost twice the previous record of $3.1 billion paid by Cendant and its accounting firm to settle a securities class action related to an accounting fraud that occurred in 1998. The settlement came, coincidently, a day after WorldCom's former chief executive, Bernard J. Ebbers, was convicted in federal court of orchestrating an $11 billion accounting fraud that pulled down the company, forcing it to file for bankruptcy protection in July 2002. J.P. Morgan Chase was the last of the major banks involved with WorldCom to settle with the New York retirement fund. The bank's lawyers had argued that it relied on financial statements vetted by WorldCom's auditor, Arthur Andersen, and that it could not have spotted the accounting fraud. The bank was a co-manager in both the 2000 and 2001 debt offerings; it sold approximately one-third of the securities offered to investors... The bank neither admitted nor denied wrongdoing under terms of the settlement... The bank had a chance to settle the case.. last year after Citigroup struck its own deal with the fund and paid $2.575 billion. But J.P. Morgan Chase chose to hang tough, arguing that digging into WorldCom's financial statements was its auditor's responsibility, not that of its bankers. That decision was costly. The $2 billion J.P. Morgan agreed to pay today amounts to a 45 percent premium to the settlement formula used by Citigroup when it settled in May..." (New York Times, March 16, 2005).
JP Morgan Chase
2005
some portion of $21,250,000
"... NASD, the brokerage industry's self-policing organization, disclosed that Citigroup, American Express Financial Advisers and J. P. Morgan Chase & Company had agreed to pay a total of $21.25 million for reported violations in sales of mutual funds." (AP / New York Times, March 24, 2005).
JP Morgan Chase
2005
$2,200,000,000
"JPMorgan Chase agreed to pay investors $2.2 billion to resolve claims it helped Enron inflate revenue by hiding debt, in the largest fraud settlement by the company's investment bankers...
JPMorgan, the third-largest U.S. bank, settled less than a week after Citigroup said it would pay $2 billion to resolve litigation sparked by the energy trader's 2001 collapse, attorney William Lerach said in an e-mailed release. Both banks were accused of helping Enron mislead investors through off-the-books partnerships. Shareholders also alleged that JPMorgan misrepresented loans as energy trades...
The agreement leaves Merrill Lynch, Credit Suisse First Boston (CSFB) and six other former Enron lenders facing claims in shareholders' $30 billion class-action lawsuit. Investors are seeking compensation after a plunge in shares of Enron, once the seventh-biggest U.S. corporation, erased about $67 billion from its market value in less than 16 months... JPMorgan in March settled allegations by WorldCom shareholders that it should have known the long-distance company was engaged in an $11 billion accounting fraud. JPMorgan agreed to pay $2 billion in the case, $630 million more than plaintiffs had sought 10 months earlier...
The JPMorgan settlement brings to $4.7 billion the total amount recovered by Enron shareholders. The agreements include Lehman Brothers' for $222.5 million, Enron directors' for $168 million and Bank of America's for $69 million.
JPMorgan and Citigroup, the world's biggest bank, agreed in July 2003 to pay a combined $255 million to settle state and federal investigations into their role in Enron's collapse. JPMorgan paid $135 million and Citibank handed over $120 million...
Enron filed the second-largest bankruptcy in U.S. history in December 2001 after disclosing hidden debt. The company emerged from bankruptcy in November with a plan to repay creditors owed $74 billion about 20 cents on the dollar by selling its assets. The company will cease to exist once the assets are sold...
A U.S. Senate committee found in December 2002 that JPMorgan bankers helped Enron design "sham" transactions to evade taxes. Senators questioned JPMorgan officials about a loan that provided $60 million in tax benefits.
The deal cloaked a $375 million loan inside a $1.4 billion fake loan, the senators said. Enron repaid $1 billion instantly, allowing the company to write off higher interest payments for tax purposes...
The next month, JPMorgan recouped as much as $654 million of losses on trades with Enron in a settlement with insurers. The bank had sued 11 insurers, including Travelers and CNA Financial's Continental Casualty, after they refused to pay $1.1 billion of surety bonds that backed energy trades JPMorgan made with Enron. The insurers claimed they were tricked into backing the loans disguised as energy trades." (Bloomberg News, June 15, 2005).
JP Morgan Securities
2003
$25,000,000
J.P. Morgan to Pay $25 Mln to Settle SEC's IPO Case. J.P. Morgan Securities Inc., a subsidiary of J.P. Morgan Chase & Co., agreed to pay $25 million to settle regulatory charges that it illegally allotted shares in initial public offerings based on promises from customers to buy more shares later. The Securities and Exchange Commission charged that in 1999 and 2000, New York-based J.P. Morgan pressed customers to agree to buy shares in the ``aftermarket,'' after the IPO was completed, before allocating IPO shares to those customers. ``This case stands as a warning to all underwriters -- they cannot engage in conduct that could distort the market for IPO stocks,'' SEC enforcement chief Stephen Cutler said in a statement. The SEC and the National Association of Securities Dealers have been examining how IPO shares were allocated during the bull market of the late 1990s and 2000. In December 2001, Credit Suisse First Boston agreed to pay $100 million to settle SEC charges over its IPO allocations. Last January, FleetBoston Financial Corp. agreed to pay $28 million to settle SEC charges that its Robertson Stephens unit got kickbacks for stakes in hot IPOs. ``We are pleased that we and the SEC have settled these charges and put this matter behind us,'' J.P. Morgan spokeswoman Kristin Lemkau said. In today's case filed in U.S. District Court in Washington, the SEC alleged that some J.P. Morgan customers placed the aftermarket orders as requested and bought shares during the new issues' first few days of trading. J.P. Morgan also solicited customers to provide information about whether and in what quantity they wanted to buy aftermarket shares and indicated to certain customers that buying the shares would help them obtain large allocations of oversubscribed or hot IPOS, the SEC said. The sales team at J.P. Morgan made follow-up calls to customers who had previously expressed interest in buying aftermarket shares, the SEC said. The SEC cited an e-mail from J.P. Morgan's head of global equity capital markets stating that a customer ``owe(s) it to us to be in buying the stock today.'' Investors were interested in hot IPOs due to the profits to be made by ``flipping,'' or selling them immediately after the allocation was over in the aftermarket. The SEC alleged that J.P. Morgan was aware that some of the shares were likely to be ``flipped.'' J.P. Morgan also violated a NASD rule by persuading some of its customers to accept allocation of ``cold'' Biopure Corp. IPO shares in exchange for promises of shares in Interactive Pictures Corp., an oversubscribed IPO, according to the SEC. The alleged conduct took place between March 1999 and August 2000, according to Antonia Chion, the SEC's associate director of enforcement. (Bloomberg, October 1, 2003).
Jungbunzlauer
Haarmann & Reimer
Archer Daniels Midland
Cerestar Bioproducts
Hoffmann-La Roche
2001
$120,500,000 total
"The European Commission fined Hoffmann-La Roche AG, Archer Daniels Midland Co (ADM), Jungbunzlauer AG, Haarmann & Reimer Corp and Cerestar Bioproducts B.V. a total of $120.5 million for participating in a price-fixing and market-sharing cartel in citric acid." (Corporate Crime Reporter, Dec 5, 2001).
Ketchikan Pulp Company
199?
$3,000,000
Multinational Monitor, July/August 1999
Kimberly Home Health Care
199?
$10,080,000
Multinational Monitor, July/August 1999
KMPG
2004
$10,000,000
"Accounting giant KMPG LLP will pay $10 million to settle Securities and Exchange Commission charges of improper conduct in the firm's audit of the financial statements of Gemstar-TV Guide International. The SEC says it is the largest payment ever to the agency by an accounting firm. Bryan E. Palbaum, a former KPMG partner, was barred from working for publicly traded companies for three years, the SEC said. John M. Wong, another former partner, and Kenneth B. Janeski, a partner in KPMG's Los Angeles office, were barred from working for publicly traded companies for one year. David A. Hori, a manager in the Phoenix office, was barred from working for publicly traded companies for 18 months. In June, Gemstar-TV Guide agreed to pay $10 million to settle the SEC's accusations that the company overstated revenue by $250 million from 1999 through 2002. The Los Angeles publishing and technology company allegedly improperly reported revenue from its highly touted interactive program guide, which enables TV watchers to navigate through and select programs. During the relevant period, Gemstar licensed the technology to other companies and sold advertising space on the guide." (USAToday.com, Oct 20, 2004).
KMPG
2005
$456,000,000
"In the largest criminal tax case ever, accounting titan KPMG admitted to running fraudulent tax shelters for rich clients and settled with prosecutors for $456 million, while eight former KPMG executives and an outside lawyer were indicted Monday in New York. The scheme, which took place from 1996 to 2002, churned out $11 billion dollars in phony tax losses that cost the USA $2.5 billion in evaded taxes, the Justice Department and the IRS said. The fraud was "deliberately approved and perpetrated at the highest levels of KPMG's tax management," according to court documents unsealed Monday. Former KPMG tax partners and CPAs prepared false tax returns for more than 600 clients, issued false opinions and hid the tax shelters from the IRS, court documents show." (USA Today, AUg 29, 2005).
KMPG
2005
about 80% of $195 million
"The accounting firm KPMG and a law firm have agreed to pay $195 million to as many as 280 wealthy investors who bought four types of questionable shelters, the first major step by the two firms to deal with billions of dollars in potential civil claims.
The agreement also calls for the firms to pay the lead plaintiffs' lawyers $30 million in fees. Papers describing the settlement were filed in federal court in Newark this week; it will be presented to a judge next week for approval.
The settlement covers four tax shelters known as Blips, Flip, Opis and SOS that were sold to investors to help them evade billions of dollars in taxes. All but the SOS shelter were cited in the $456 million deferred-prosecution agreement reached last month that allowed KPMG to avoid a criminal indictment.
The settlement covers buyers of the shelters who received legal opinions or representations from KPMG and the law firm of Brown & Wood, now Sidley Austin Brown & Wood, from Jan. 1, 1996 through Sept. 14 of this year. (KPMG, however, stopped selling the questionable shelters well before that date.) KPMG used other law firms to sell the four shelters, but the settlement covers only those bought through the accounting firm and Brown & Wood.
Sidley Austin Brown & Wood will pay about 20 percent of the $195 million, according to a person briefed on the settlement. Sidley Austin Brown & Wood wrote legal opinions blessing the transactions..." (New York Times, Sept 30, 2005).
Knight Trading
2004
$79,000,000
July 7, 2004: "Knight Trading announced that it reached an agreement in principle with NASD and the U.S. Securities and Exchange Commission for $79 million. The agreements concerns trading and conduct at Knight Securities between 1999 and 2001. Though the administrative order has not yet been finalized, Knight expects that the company "would neither admit nor deny the findings" in the agreement. The agreement in principle requires Knight to disgorge $41 million in institutional trading profits and pay $13 million in interest and $25 million in penalties." (Forbes Wall Street Fine Tracker).
Koch Industries
2000
$30,000,000
Largest US Environmental Protection Agency fine up to that time, for claims related to oil spills in six states.
Korean corporations including Haitai America, Hyundai, Korean Airlines, Samsun Airlines, Daewoo
1995
$1,600,000
Illegal political contributions, use of corporate funds and money laundering.
Kyowa Hakko Kogyo Co. Ltd.
199?
$10,000,000
Multinational Monitor, July/August 1999
LaBranche & Co
2004
"Five New York Stock Exchange trading firms have agreed to pay $242 million to settle charges of violating federal securities laws and exchange rules, the NYSE and the Securities and Exchange Commission said Tuesday. The SEC, after a joint investigation with the Big Board, said the five firms -- Bear Wagner Specialists, Fleet Specialist Inc., LaBranche & Co., Spear, Leeds & Kellogg Specialists and Van der Moolen Specialists USA -- violated securities laws and exchange rules by executing orders for their accounts ahead of orders for the public between 1999 and 2003. The firms -- known as market "specialists" for their roles bringing together buyers and sellers at the exchange -- violated their basic obligation to match orders from the public with other similar orders, and not to fill the orders via trades from their own accounts, the SEC and NYSE said. The firms agreed to the settlement without admitting or denying the allegations, the SEC said, adding that the investigation will continue, possibly targeting individuals... Under the agreement, $87.7 million of the settlement may be distributed to customers hurt by the firms' actions, according the SEC. The rest of the fines will go to the SEC and NYSE..." (NYSE firms pay $242M in trading case. The SEC says five trading firms agree to settle allegations of improper trading activities. CNN/Money, March 30, 2004).
Laidlaw
1993
$1,825,000
"Penalized $1.825 million, the state's largest penalty ever, for repeated violations including improper disposal of infectious waste and wastewater sludge (36 total)" in Pinewood, South Carolina ( Sevanick and Lipsett, Environmental Background Information Center, citing South Carolina Environmental Compliance Update, November, 1993)
Laidlaw
1994
$1,000,000
"Fined $1 million for violations including illegal handling and disposal of hazardous wastes at its commercial hazardous waste fuel blending facility" in Crowley, Louisiana. (Sevanick and Lipsett, Environmental Background Information Center, citing Laidlaw Hammered by DEQ, Louisiana Environmental Compliance Update, March, 1994)
Leeds & Kellogg Specialsts
2004
"Five New York Stock Exchange trading firms have agreed to pay $242 million to settle charges of violating federal securities laws and exchange rules, the NYSE and the Securities and Exchange Commission said Tuesday. The SEC, after a joint investigation with the Big Board, said the five firms -- Bear Wagner Specialists, Fleet Specialist Inc., LaBranche & Co., Spear, Leeds & Kellogg Specialists and Van der Moolen Specialists USA -- violated securities laws and exchange rules by executing orders for their accounts ahead of orders for the public between 1999 and 2003. The firms -- known as market "specialists" for their roles bringing together buyers and sellers at the exchange -- violated their basic obligation to match orders from the public with other similar orders, and not to fill the orders via trades from their own accounts, the SEC and NYSE said. The firms agreed to the settlement without admitting or denying the allegations, the SEC said, adding that the investigation will continue, possibly targeting individuals... Under the agreement, $87.7 million of the settlement may be distributed to customers hurt by the firms' actions, according the SEC. The rest of the fines will go to the SEC and NYSE..." (NYSE firms pay $242M in trading case. The SEC says five trading firms agree to settle allegations of improper trading activities. CNN/Money, March 30, 2004).
Lehman Brothers
2002
$50,000,000
FOR MORE INFO SEE ENTRY: Citigroup - 2002 - $300,000,000
Lehman Brothers
2003
$80,000,000
$1.4 Billion Wall Street Settlement Unveiled. "As part of the settlement, two former research analysts -- telecommunications expert Jack Grubman of Citigroup's Salomon Smith Barney and Internet expert Henry Blodget of Merrill Lynch & Co. -- agreed to pay $15 million and $4 million, respectively, and be permanently barred from the securities industry. The $1.4 billion settlement amount is among the highest ever imposed by securities regulators, and Citigroup's $400 million share of that settlement is the highest ever imposed on an individual firm. It follows a nearly two-year investigation started by Spitzer and later joined by the SEC and other state attorneys general.... Adding to Citigroup's $400 million, Merrill Lynch and Credit Suisse First Boston will each contribute $200 million toward the global settlement. The other firms -- Bear, Stearns & Co. Inc.; Goldman, Sachs & Co.; Lehman Brothers Inc.; J.P. Morgan Securities Inc.; Morgan Stanley & Co. Inc.; UBS Warburg LLC; and U.S. Bancorp Piper Jaffray Inc. -- will pay between $125 million and $32.5 million. About $387 million will go toward a fund to benefit customers of the firms. Another $387 million will be paid to the states. In addition, the firms will pay some $433 million to fund independent research and $80 million to promote investor education. ($1.4 Billion Wall Street Settlement Unveiled, by Tamara Loomis, New York Law Journal, April 29, 2003). See also SEC Releases Brokerage Settlement Details. Associated Press, April 28, 2003.
"Six months after securities regulators and 10 of Wall Street's biggest banks signed a landmark $1.4 billion conflict-of-interest settlement, a federal judge approved the deal Friday, clearing the way for harmed investors to recoup $399 million... The SEC, industry self-regulatory groups and 25 other states eventually joined the investigation. Firms agreeing to settle included Merrill, Citigoup Inc., Morgan Stanley, J.P. Morgan Chase, Goldman Sachs, Bear Sterns, Credit Suisse First Boston, Lehman Brothers, Piper Jaffray and UBS Warburg. Spitzer has gone on to lead regulatory probes into alleged trading abuses by mutual fund firms. In both the research and mutual fund cases, Spitzer seized on behavior long recognized by Wall Street but largely ignored by regulators. As part of the "global settlement," the firms were ordered to pay $894 million in penalties and disgorgement as well as $432.5 million to fund the purchase and distribution of independent research and $80 million to fund investor education programs." ($1.4 Billion Wall Street Settlement Approved: Federal Judge Accepts Conflict-of-Interest Deal. By Ben White, Washington Post, Nov. 1, 2003, p. E1).
The $1.4 billion settlement is divided so:
Citigroup/Salomon Smith Barney: $400,000,000
Credit Suisse First Boston: $200,000,000
Merrill Lynch: $200,000,000
Morgan Stanley: $125,000,000
Goldman Sachs Group: $110,000,000
Lehman Brothers Holdings: $80,000,000
J.P. Morgan Chase: $80,000,000
Bear Stearns: $80,000,000
UBS Warburg: $80,000,000
U.S. Bancorp Piper Jaffray: $32.500,000
LippoBank California
2001
$8,600,000
LippoBank California (fine paid by James Riady, 2 yrs probation, 400 hr comm.service). US Dept of Justice civil and/or criminal actions relating to illegal corporate domestic money-in-politics activity. http://www.politicalmoneyline.com/cgi-win/x_vce.exe
Litton
199?
$16,500,000
Multinational Monitor, July/August 1999
Lonza AG
199?
$10,500,000
Multinational Monitor, July/August 1999
Loral
2003
$32,000,000
In 2003, Loral and Hughes Space and Communication were fined $32 million for illegal export of satellite technology to China. [the Hughes fine was paid by Boeing becuase by 2003 the Hughes division had been acquired by Boeing] (Seattle Times, April 8, 2006).
Louisiana-Pacific
1993
$11,000,000 civil penalties
$70,000,000 required equipment
At the time, it was the largest Clean Air Act civil penalty and the second largest penalty under any U.S. environmental statutue (U.S. v. Louisiana-Pacific Foundation and Kirby Forest Industries , 1993).
Louisiana-Pacific
199?
$37,000,000
Multinational Monitor, July/August 1999
Lucas Western
199?
$18,500,000
Multinational Monitor, July/August 1999
Lucent Technologies
2003
$517,000,000
The case against Lucent dates back to November 2000, when the company alerted financial regulators about revenues it improperly recorded. S.E.C. regulators ultimately found that $511 million in revenue and $91 million in pretax income were prematurely recorded in the 2000 fiscal year, which ended Sept. 30 that year. Another $637 million and $379 million in pretax income should not have been recognized at all. Lucent subsequently restated $679 million in sales, an act that prompted 54 class-action lawsuits by investors, who said they were intentionally misled by the company. In December, Lucent settled those cases by agreeing to pay $517 million in cash and shares as compensation for shareholders, bond holders and other investors..." (Lucent Fined $25 Million by S.E.C. in Fraud Case, By Ken Belson, New York Times, May 18, 2004).
Lucent Technologies
2004
$25,000,000
"The Securities and Exchange Commission accused Lucent Technologies and nine former and current employees yesterday of fraudulently reporting nearly $1.2 billion in revenue. The agency also accused a former executive of WinStar Communications of engaging in a fraud scheme in which Lucent recorded $125 million in software sales to WinStar. The accusations, made in a civil lawsuit filed in Federal District Court in New Jersey, come after a three-year government inquiry into Lucent's inflation of its sales figures dating back to the 2000 fiscal year. Lucent, the nation's largest maker of telecommunications equipment, and three of the nine employees have agreed to settle with the government without admitting or denying wrongdoing. Lucent will not have to make any additional adjustments to its earnings statements, but it will pay a $25 million fine for not cooperating with the investigation, the largest penalty ever levied against a corporation for failure to cooperate..." (Lucent Fined $25 Million by S.E.C. in Fraud Case, By Ken Belson, New York Times, May 18, 2004).
"Federal regulators fined Lucent Technologies Inc. $25 million Monday in a settlement of civil fraud allegations after the company failed to fully cooperate in an investigation of its accounting. The Securities and Exchange Commission also charged eight former and one current executive of the telecom equipment maker, along with one former official of Winstar Communications, with securities fraud and aiding and abetting Lucent's alleged violations of securities laws in the accounting irregularities. In a civil lawsuit filed in federal court in Newark, N.J., the SEC alleged that Lucent "fraudulently and improperly" booked some $1.1 billion in revenue in 2000. The executives, pushing to increase revenue, meet sales targets and reap sales bonuses, failed to disclose incentives that Lucent gave customers to induce them to buy its products, the SEC said in the suit. In the case of Winstar, the SEC alleged that former Lucent sales executive William Plunkett and David Ackerman, a former Winstar executive vice president, engaged in a scheme that led to Lucent prematurely booking $125 million in revenue from a software licensing deal with Winstar. The scheme included post-dating letters documenting agreements between the two companies, the SEC said. Plunkett agreed in a settlement with the SEC to pay a $110,000 civil fine. Ackerman is contesting the SEC's allegations. Lucent, based in Murray Hill, N.J., neither admitted to nor denied wrongdoing in its settlement with the SEC. The company was not required to restate its earnings. It did agree not to commit future such violations." (SEC Fines Lucent Technologies $25 Million. Associated Press, May 17, 2004).
Marsh & McLennan
2005
$850,000,000
"Marsh & McLennan Companies, the largest insurance broker in the world, agreed yesterday to pay $850 million to settle a lawsuit accusing it of cheating customers by rigging prices and steering business to insurers in exchange for incentive payments. Although Marsh did not formally acknowledge any wrongdoing, Michael G. Cherkasky, the chief executive, apologized for what he called the "shameful" and "unlawful" behavior of "a few people" at the company. But he added, "We don't believe that our corporate entity has ever been involved in a pattern of covering up or a pattern of criminal behavior." The $850 million, which Marsh will pay over a four-year period, will be used to compensate about 100,000 corporations and smaller businesses whose commercial insurance it arranged from 2001 to 2004. In the days after the charges were filed in October, Marsh stopped taking incentive payments from insurers, and its chief executive, Jeffrey W. Greenberg, was forced to resign. The company agreed yesterday to fundamental changes in the way it does business. The lawsuit, brought by the New York State attorney general, Eliot Spitzer, maintained that Marsh received kickbacks from insurance companies that increased the cost of coverage for its customers and did not serve as an unbiased broker. He has also been investigating other brokers and insurance companies for similar activities, and attorneys general and insurance regulators in many other states are pursuing their own inquiries..." (Insurance Broker Settles Spitzer Suit for $850 Million, By Joseph B. Treaster, New York Times, Feb 1, 2005).
MasterCard
2003
$1,000,000,000
"A judge on Tuesday permitted lawyers to circulate the details of the surprise $1bn settlement between MasterCard and millions of US retailers in a giant lawsuit over debit card fees." (Lawyers detail $1bn MasterCard deal. By Ellen Kelleher, FT.com, April 29, 2003).
Visa USA, facing a trial over its debit card fees, said last night that it had agreed to settle a class-action lawsuit brought by retailers, two days after a similar deal was reached by MasterCard. Under the terms of the settlement, Visa will pay $2 billion to retailers and will reduce the fees it charges merchants on some debit card purchases, according to a person close to the retailers' legal team. MasterCard, under its settlement, agreed to pay $1 billion and also agreed to cut its fees, the company confirmed last night. Both will also pay $25 million immediately... Visa and MasterCard were scheduled to go to trial this week in a class-action lawsuit brought by Wal-Mart, Sears and other retailers in 1996. They contended that Visa and MasterCard used their dominance in the credit card market to force merchants to accept both credit and debit cards and to exact excessive fees on debit card transactions. Under the agreements, which Mr. Balto called one of the largest antitrust settlements ever, both Visa and MasterCard agreed to give retailers the choice of accepting one or both kinds of cards." (Jennifer Bayot, Visa to Pay Retailers $2 Billion and Cut Fees, New York Times, May 1, 2003).
McAfee
2005
$50,000,000
To settle SEC charges that McAfee inflated revenue by $622 million between 1998 and 2000 by engaging in "channel stuffing," in which McAfee, then known as Network Associates, improperly booked sales to its distributors as revenue. {eWeek, Jan 16, 2005).
MCI
see also WorldCom
2004
$19,500,000
"MCI Inc., former WorldCom Inc. Chief Executive Officer Bernard Ebbers and 18 ex-WorldCom officials agreed to pay about $51 million to settle a suit by employees who lost hundreds of millions of dollars when the long-distance telephone company collapsed... The pact, which must be approved by U.S. District Judge Denise Cote, leaves 401(k) fund trustee Merrill Lynch Trust Co., a subsidiary of Merrill Lynch & Co., as the only active defendant. A suit against ex-WorldCom Chief Financial Officer Scott Sullivan is suspended until after he is sentenced Nov. 8 for his admitted role in accounting fraud at the company. The employees of WorldCom, which emerged from bankruptcy in April as MCI, are seeking about $100 million from Merrill.. The agreement follows the $2.65 billion settlement in May of a fraud suit by WorldCom investors against Citigroup Inc. The investors, who said Citigroup sold WorldCom securities at inflated prices, have claims against a dozen other WorldCom underwriters. MCI will pay about $19.5 million as part of the settlement... MCI's share of the settlement could vanish if the U.S. bankruptcy court that supervised WorldCom's bankruptcy rules that employee shareholders occupy the same low priority for payment of debts or claims as other shareholders..." (Bloomberg.com, July 6, 2004)
Medco Health Solutions
2004
$29,000,000
"The nation's largest pharmacy benefits manager said Monday it has agreed to pay $29 million to settle allegations by 20 states that it was switching patients to medications to save itself money, not to benefit the patients. Medco Health Solutions Inc. will also be required to make a number of disclosures to prescribers and patients. Those include the minimum or actual cost savings for health plans and the difference in a patient's co-payment, the difference in side effects between prescribed and proposed medications, and Medco's financial incentives for certain drug switches..." (Medco to Pat $29M to Settle Accusations. Associated Press, ABCNews.com, April 26, 2004).
Medtronic
2007
$25,000,000
Medtronic Inc., the world's largest maker of electronic heart devices, has agreed to pay more than $75 million to settle lawsuits claiming it hid defects in its defibrillators, people with direct knowledge of the accord said.
The settlement will resolve about 2,000 claims over battery defects in Medtronic's implantable defibrillators, which automatically send electric jolts to correct heart rhythms that are potentially fatal, according to three people familiar with the agreement....
The settlement is conditioned on Medtronic's being able to get about 90 percent of the claimants to sign onto the accord, which was negotiated last month, the people said.
Battery failures and other glitches in the devices prompted voluntary recalls by Medtronic and rivals Guidant Corp. and St. Jude Medical Inc. starting in 2005, shrinking global sales of defibrillators to $5.6 billion last year from $6 billion...
Boston Scientific Corp., Guidant's parent, agreed last week to pay $195 million to satisfy about 4,000 claims that its defibrillators were defective.
The Medtronic settlement is designed to end more than 1,400 defibrillator suits that have been consolidated in federal court in Minneapolis, people familiar with the deal said. Chief U.S. District Judge James Rosenbaum is overseeing those cases. The accord also aims to end suits filed in Minnesota state courts, as well as claims not yet filed, the people said.
Medtronic sought to keep the settlement confidential so claimants could have time to decide whether to participate, the people familiar with the deal said. The company gave itself the right under the accord to pull out if it can't resolve more than 90 percent of all claims, the people said.
The devices, which cost as much as $30,000, are implanted in patients' chests and wired directly to the heart. More than 1 million people in the U.S. have heart conditions that make them susceptible to sudden cardiac death. Studies show defibrillators can reduce such fatalities by about 7 percent over five years...
Medtronic recalled 87,000 defibrillators because of battery failures. No deaths were linked to failures of the devices, according to the company. After the recall, 19,000 people had surgery to replace the defibrillators, Medtronic officials said....
Lawyers for defibrillator users contend those documents prove Medtronic officials continued selling flawed products for two years after learning in September 2003 about battery-failure glitches. Similar allegations were leveled at Guidant officials over their handling of defibrillators.
Guidant voluntarily began a recall in June 2005 that was eventually expanded to include 109,000 defibrillators. Lawyers for defibrillator patients contend the company knew as early as June 2002 that the devices were flawed and hid the defects to protect sales. The devices were linked to at least seven deaths.
St. Jude, the third-largest heart device maker, voluntarily recalled a total of 75,000 defibrillators starting in 2005. The St. Paul, Minnesota-based company launched two separate recalls, one for software errors and the other for battery failures caused by cosmic rays. None involved deaths, St. Jude officials said at the time. (Bloomberg, July 20, 2007)
Menarini Diagnosticos
Pharmaceutica Quimica
Bayer
Abbott Laboratories
Johnson & Johnson
2005
16 million Euros total
"Portugal's antitrust regulator said it had fined five major US and European drug companies a total of 16 mln eur for working together to artificially fix prices.
The five firms -- Abbott Laboratories and Johnson & Johnson of the United States, Germany's Bayer AG, Italy's Menarini Diagnosticos and Switzerland's Pharmaceutica Quimica -- formed a cartel during 36 bidding processes to supply 22 hospitals in Portugal, it said. The goal of the companies was to 'prevent, restrict or falsify in a significant way competition by fixing prices', the competition authority said in a statement.
Abbott Laboratories was hit with the largest fine, 6.8 mln eur, for 34 infractions while Johnson & Johnson, which cooperated with antitrust regulator in its investigation, received the smallest fine, it added. The firm will have to pay 360,000 eur for 36 infractions. The antitrust regulator opened its investigation after a public hospital in Coimbra, Portugal's third-largest city, complained that the five firms had all proposed the same price for the same drug." (AFX News Limited, Oct 14, 2005).
Merck
2005
$253,000,000
"A Texas jury on Friday found drug maker Merck & Co. Inc. negligent in the death of a man who took its popular painkiller Vioxx and awarded his widow $253 million in the first of thousands of Vioxx lawsuits to go to trial.
The stunning verdict was certain to be greatly reduced under Texas law, but Merck's stock fell sharply as investors feared it could set a precedent for more than 4,200 lawsuits charging that the company hid the drug's health risks.
Merck pulled Vioxx off the market in September 2004, saying its long-term usage could double users' risks of heart attack or stroke...
But the 12-member jury in Texas state court voted 10-2 that Merck should pay $24 million to Carol Ernst for mental anguish and loss of companionship and $229 million in punitive damages.
Merck attorney Jonathan Skidmore said the company would appeal the decision, but estimated that even if it is upheld the punitive damages would be trimmed to less than $2 million.
Texas law limits punitive awards to two times economic damage -- in this case $450,000 -- plus up to another $750,000. There is no financial limit for loss of companionship and mental anguish...
The arthritis drug had been taken by about 20 million people at the time of its recall and contributed more than $2.5 billion in sales for Merck in 2003, about 10 percent of the company's total revenue.
Vioxx is the trade name for rofecoxib, part of a class of drugs called NSAIDs. A type of painkiller known as a COX-2 inhibitor, it was touted as a pain and inflammation reliever that did not cause ulcers or gastrointestinal bleeding, a side effect of many NSAIDs.
Due to the pending lawsuits, Merck said at the end of last year it had set aside $675 million to help cover legal costs.
Another Vioxx trial is set to begin September 12 in New Jersey, where Merck is based.
Wall Street analysts, who have been closely watching the case in Angleton, a small town about 40 miles south of Houston, say Merck's legal woes will last for years and liability in all the cases could run into billions of dollars.
"It will cost them at least $1 billion a year for the next 10 years," said John LeCroy, an analyst at Natexis Bleichroeder..." (Reuters / Yahoo, Aug 19, 2005).
Merrill Lynch
1999
$25,000,000
"Agreed to pay $25 million in fines Wednesday for its alleged participation as a financier in the Sumitomo Corp. trading scandal that pummeled world copper markets in 1996. Along with $10 million to be paid to the London Metal Exchange (LME), the Washington-based Commodity Futures Trading Commission (CFTC) will receive $15 million, which officials believe is the first punishment the 25-year-old agency has levied against a broker for "aiding and abetting" a client's improper trading... Merrill Lynch negotiated with the two entities separately and neither admitted nor denied wrongdoing in the settlements. However, both the LME and the CFTC alleged the same thing -- that Merrill provided financing for trading that it knew to be bogus. Sumitomo trader Yasuo Hamanaka, who is now serving a prison term in Japan for fraud and forgery, lost more than $2.6 billion in unauthorized trades dating back to 1994." (Cyber Law Harvard)
Merrill Lynch
2002
$100,000,000
FOR MORE INFO SEE ENTRY: Citigroup - 2002 - $300,000,000
Merrill Lynch
2002
$100,000,000
Merrill Lynch & Co.... agreed to pay $100 million and change the way it compensates analysts to settle charges it issued misleading stock research to win investment banking business. New York State Attorney General Eliot Spitzer had charged Merrill with issuing overly bullish and biased research after his 10-month probe into the No. 1 U.S. brokerage. Last month, Spitzer released e-mails and other documents showing Merrill analysts... privately derided stocks they publicly touted. Spitzer's investigation -- which has widened to include most of Wall Street's biggest firms -- has given stock research a black eye and the settlement looks certain to put pressure on other firms to adopt reforms like decoupling analyst pay from investment banking deals... Merrill said the settlement represents neither evidence nor admission of wrongdoing or liability. By declining to admit wrongdoing, the firm is seeking to guard itself against a raft of class action lawsuits -- which could lead to much bigger payments... Merrill shares jumped on the news, climbing $1.43, or 3.3 percent... Other brokerage share also gained. Before the settlement, Merrill shares had fallen more than 18 percent since Spitzer revealed his probe on April 8. " (Reuters, May 21, 2002).
"Merrill will pay $48 million to New York state within 10 days. Of the remaining funds, $50 million will be available to the 49 remaining states, the District and Puerto Rico. And $2 million will go to the North American Securities Administrators Association, which has taken part in Spitzer's probe... Spitzer pledged to press ahead with his investigation into analyst behavior at other firms. The attorney general has subpoenaed at least seven other major Wall Street houses: Morgan Stanley Dean Witter & Co.; Credit Suisse First Boston; the Salomon Smith Barney Inc. unit of Citigroup Inc.; Lehman Brothers Inc.; Bear, Stearns & Co.; UBS Warburg; and J.P. Morgan Chase & Co." (Washington Post, May 22, 2002).
Merrill Lynch
2003
$80,000,000
"Merrill Lynch Agrees to Pay $80 Million on 2 Enron Transactions. Merrill Lynch & Co. said on Monday it finalized a previously announced agreement with the U.S. Securities and Exchange Commission under which the financial services company will pay $80 million to settle an investigation into two transactions with failed energy trader Enron Corp. New York-based Merrill, one of several Wall Street heavyweights under Enron-related scrutiny, announced the settlement in principle last month. At issue is a $7 million deal between Enron and Merrill Lynch related to power-generating barges in Nigeria, and a series of energy trades involving Enron and Merrill's energy trading division, which has since been sold. The transactions took place in 1999. ``The resolution concludes the SEC's investigation into Enron-related matters with respect to the company,'' Merrill said in a statement. Under the agreement, Merrill neither admits nor denies wrongdoing. The firm said last month it would also consent to an injunction barring it from violating federal securities laws under the deal" (March 17, 2003, Reuters.
Merrill Lynch
2003
$200,000,000
$1.4 Billion Wall Street Settlement Unveiled. "As part of the settlement, two former research analysts -- telecommunications expert Jack Grubman of Citigroup's Salomon Smith Barney and Internet expert Henry Blodget of Merrill Lynch & Co. -- agreed to pay $15 million and $4 million, respectively, and be permanently barred from the securities industry. The $1.4 billion settlement amount is among the highest ever imposed by securities regulators, and Citigroup's $400 million share of that settlement is the highest ever imposed on an individual firm. It follows a nearly two-year investigation started by Spitzer and later joined by the SEC and other state attorneys general.... Adding to Citigroup's $400 million, Merrill Lynch and Credit Suisse First Boston will each contribute $200 million toward the global settlement. The other firms -- Bear, Stearns & Co. Inc.; Goldman, Sachs & Co.; Lehman Brothers Inc.; J.P. Morgan Securities Inc.; Morgan Stanley & Co. Inc.; UBS Warburg LLC; and U.S. Bancorp Piper Jaffray Inc. -- will pay between $125 million and $32.5 million. About $387 million will go toward a fund to benefit customers of the firms. Another $387 million will be paid to the states. In addition, the firms will pay some $433 million to fund independent research and $80 million to promote investor education. ($1.4 Billion Wall Street Settlement Unveiled, by Tamara Loomis, New York Law Journal, April 29, 2003). See also SEC Releases Brokerage Settlement Details. Associated Press, April 28, 2003.
"Six months after securities regulators and 10 of Wall Street's biggest banks signed a landmark $1.4 billion conflict-of-interest settlement, a federal judge approved the deal Friday, clearing the way for harmed investors to recoup $399 million... The SEC, industry self-regulatory groups and 25 other states eventually joined the investigation. Firms agreeing to settle included Merrill, Citigoup Inc., Morgan Stanley, J.P. Morgan Chase, Goldman Sachs, Bear Sterns, Credit Suisse First Boston, Lehman Brothers, Piper Jaffray and UBS Warburg. Spitzer has gone on to lead regulatory probes into alleged trading abuses by mutual fund firms. In both the research and mutual fund cases, Spitzer seized on behavior long recognized by Wall Street but largely ignored by regulators. As part of the "global settlement," the firms were ordered to pay $894 million in penalties and disgorgement as well as $432.5 million to fund the purchase and distribution of independent research and $80 million to fund investor education programs." ($1.4 Billion Wall Street Settlement Approved: Federal Judge Accepts Conflict-of-Interest Deal. By Ben White, Washington Post, Nov. 1, 2003, p. E1).
The $1.4 billion settlement is divided so:
Citigroup/Salomon Smith Barney: $400,000,000
Credit Suisse First Boston: $200,000,000
Merrill Lynch: $200,000,000
Morgan Stanley: $125,000,000
Goldman Sachs Group: $110,000,000
Lehman Brothers Holdings: $80,000,000
J.P. Morgan Chase: $80,000,000
Bear Stearns: $80,000,000
UBS Warburg: $80,000,000
U.S. Bancorp Piper Jaffray: $32.500,000
Merrill Lynch
2005
$13,500,000
"Merrill Lynch & Co. was fined $13.5 million by the states of New Jersey and Connecticut and the New York Stock Exchange, after a group of the company’s brokers engaged in improper market-timing of mutual funds... The NYSE said it determined that a group of brokers in Fort Lee, N.J., made more than 3,700 short-term mutual fund transactions from January through April 2002. The brokers used multiple accounts, all of which were held for a single hedge fund client, the NYSE said, and the accounts were transferred outside the firm and back in later that year.
According to a statement from the New Jersey attorney general’s office, Millennium Partners L.P. was the hedge fund involved in the incidents. The transfers and other violations continued through October 2003, with the traders involved hiding their transactions from Merrill Lynch, the exchange said. While Merrill Lynch told the brokers to stop the trades in November 2002, but the brokers did not, and Merrill Lynch failed to follow up, the NYSE said... Market timing is a practice in which shares of mutual funds are bought and sold quickly and ultimately skim profits from the fund at the expense of the long-term investors the funds were designed to serve. Brokers can use the fund’s listing of holdings to determine whether the funds will take losses on a given day, then sell the fund before the markets close and the value of each share is recomputed at the end of the session. According to the NYSE, $10 million of the fine will be paid to the state of New Jersey as part of its settlement, and another $3.5 million to the state of Connecticut as part of settlement talks there. In addition to the fine, the NYSE censured Merrill Lynch and required the brokerage review its procedures regarding the creation and retention of documents with regard to outside accounts... Several major mutual fund companies — including Alliance Capital Management, Janus Capital Group and Bank of America Corp. — paid hundreds of millions of dollars in 2003 and 2004 to settle improper trading charges brought by regulators. Fund executives, managers and traders have also been accused of wrongdoing..."(Associated Press/MSNBC.com, March 8, 2005).
MFS Investment Management
Massachusetts Financial Services
2004
$351,000,000
Massachusetts Financial Services, the U.S. fund management arm of Canada's Sun Life Financial, became the latest company to settle with regulators over alleged improper trading. MFS will pay $351 million - $225 million in restitution and fines, $125 million in fee cuts over five years and $1 million in investor education - in a deal struck with the Securities and Exchange Commission and Eliot Spitzer, New York attorney-general. John Ballen, MFS's chief executive, and Kevin Parke, its investment chief, have been banned from serving as officers or directors of public companies for three years. MFS made Robert Manning its new chief executive. Mr. Spitzer said investors had lost $175 million as a result of MFS allowing market timing of its fund shares. "Fees will continue to be a central part of our negotiations," he said. "A new fee structure is required and we will continue to scrutinize the fees of companies we are holding talks with." (Scandal fails to stem mutual fund surge, By Deborah Brewster, Financial Times, MSNBC News, Feb 6, 2004).
Microsoft
summary of antitrust settlements
(2001 to 2004)
November 2001: Reached settlement with U.S. Justice Department in landmark antitrust case. Included behavioral remedies but not monetary penalties.
2003: Settled consumer antitrust suits in 10 states, including California, for up to $1.55 billion in software vouchers.
May 2003: Paid AOL Time Warner $750 million for Netscape antitrust claims.
July 2003: Paid Immersion Corp. $26 million, settling patent-infringement claim over technology used in joysticks.
September 2003: Agreed to pay Be Inc. $23.25 million to settle antitrust lawsuit.
March 5, 2004: Settled patent dispute with AT&T for an undisclosed payment.
March 18, 2004: Settlement talks with European Commission failed, leading to $600 million fine that Microsoft plans to appeal.
April 2, 2004: Settled Sun Microsystems antitrust and patent claims for $1.6 billion.
April 12, 2004: Agreed to pay $440 million to resolve dispute with InterTrust Technologies Corp.
Source: Seattle Post-Intelligencer, April 13, 2004.
Microsoft
2003
$1,100,000,000
"A California judge on Friday gave preliminary approval to a landmark settlement under which Microsoft will pay $1.1 billion to settle a class-action suit that claimed it overcharged consumers for Windows. The ruling by San Francisco Superior Court Judge Paul Alvarado allows the settlement to proceed to the next step, during which consumers and corporations in the state will be notified that they may qualify for vouchers ranging in value from $5 to $29. The vouchers can be used to buy most hardware or software products from any manufacturer. Townsend and Townsend and Crew, the law firm that filed the suit, described Friday's ruling as "the largest recovery of a monopoly overcharge ever achieved in the United States and the largest recovery ever achieved under the antitrust laws of California."... The lawsuit, filed in February 1999, claimed that Microsoft violated California antitrust laws by overcharging by as much as $40 for every copy of the Windows 95 and 98 operating systems... The settlement affects individuals and businesses in California that bought Windows or certain Microsoft application software--including MSDOS or Windows software obtained as part of the purchase of a computer--between Feb. 18, 1995 and Dec. 15, 2001... Two-thirds of the unclaimed money will go to California public schools in a mix of donated Microsoft software and cash grants. Although the maximum value of the settlement is $1.1 billion, Microsoft could end up paying as little as $367 million in cash, which is what it would owe to California public schools if no vouchers are claimed. If all vouchers are claimed, Microsoft would be required to pay the maximum, but schools would then get nothing... Microsoft isn't the first technology company ordered to pay large sums after finding itself a class-action defendant. In 1999, Toshiba settled a billion-dollar class-action lawsuit that arose from claims that the company had sold notebooks with defective floppy drives. Immediately after the settlement, the same lawyers that pursued Toshiba sued Compaq Computer, eMachines, Hewlett-Packard, NEC and Packard Bell NEC. Microsoft said both sides had agreed to alter the settlement from the version signed in January. That version had called for 50 percent of the money Microsoft might end up giving to schools to be in the form of software vouchers. Now the settlement says that half will be general-purpose vouchers that can be used for any hardware, software, equipment or training, and the other half will be earmarked for buying software from multiple vendors."(Judge OKs $1.1 billion Microsoft deal, by Declan McCullagh, CNET News.com, July 21, 2003).
Microsoft
2003
$750,000,000
Microsoft reached a deal with AOL Time Warner in which the software maker will pay $750 million to settle a suit brought by its Netscape Communications unit. (Microsoft settles Be suit for $23 million, By Ina Fried, CNET News, September 6, 2003)
Microsoft
2003
$520,000,000
"Microsoft Corp. says it will appeal a jury's ruling that it pay more than $520 million in damages to a university and a software company because its popular Web browser infringed on a patent. The jury could have awarded as much as $1.2 billion to University of California and Eolas Technologies Inc., based in Chicago... Microsoft faces more than 30 patent-infringement lawsuits, covering digital rights management, online video game software and other technologies." (Microsoft to Appeal $520M Patent Ruling. By Mike Robinson, Associated Press, August 14, 2003).
Microsoft
2003
$23,000,000
"Microsoft announced late Friday that it will pay more than $23 million to settle an antitrust suit filed by onetime operating system rival Be. Microsoft did not admit wrongdoing in the settlement, in which Be will receive $23.2 million after attorneys' fees. The total amount Microsoft will pay was not immediately clear from a joint statement by the two companies. "Both parties are satisfied with the agreement and believe that it is fair and reasonable," the companies said in a statement. In the suit, Be had charged that Microsoft's anticompetitive efforts led to the company's destruction, with the software maker's efforts having thwarted deals that would have put the company's OS onto major name brand PCs. The move all but closes the book on Be, which has said it will shutter itself and return all its remaining assets to shareholders. The company's technology and much of its staff went to handheld maker Palm two years ago in exchange for $11 million in Palm stock. As part of the Palm deal, Be retained the rights to file suit against Microsoft, which it eventually did in February 2002. For Microsoft, the deal brings an end to another of the antitrust lawsuits hanging over the company. Earlier this year, Microsoft reached a deal with AOL Time Warner in which the software maker will pay $750 million to settle a suit brought by its Netscape Communications unit. Executives have said the company is looking to settle legal actions where it can. The company still faces a number of actions, including a pending antitrust action by the European Union, a suit by Sun Microsystems as well as consumer class-action suits in several states..." (Microsoft settles Be suit for $23 million, By Ina Fried, CNET News, September 6, 2003)
Microsoft
2003
$10,500,000
"Microsoft said on Tuesday that it would pay $10.5 million to settle an antitrust lawsuit brought by customers who claimed the software maker used its monopoly power to overcharge them for direct purchases of software. Under the settlement, U.S. consumers and businesses who bought Microsoft's software directly from the company's Web site or through direct marketing campaigns agreed to drop their charges. Microsoft, which admitted no wrongdoing, said it will pay each purchaser a portion of the price paid for software bought up until April 30, 2003. Microsoft and the plaintiff's lawyers estimated that the total value of the payout would amount to $10.5 million. The settlement, which is pending in the U.S. District Court in Maryland, must be approved by U.S. District Judge J. Frederick Motz... The settlement, if approved, would represent progress for Microsoft as it works to resolve remaining antitrust cases. These are based on claims that the No. 1 software company used its monopoly on PC operating systems to push prices higher or to harm rivals. Earlier this month, Microsoft settled an antitrust suit by Be /news:link>, agreeing to pay the failed software developer $23 million to drop its suit accusing Microsoft of destroying its business through anti-competitive practices. Redmond, Washington-based Microsoft also reached a $750 million settlement and strategic partnership with AOL Time Warner in May. A lawsuit brought by Sun Microsystems remains pending. In January, Microsoft settled a number of class-action lawsuits filed in California for $1.1 billion. That settlement returned money to consumers in the form of vouchers to buy computers and computer-related items. (Microsoft pays $10 million to settle suit. Reuters, Sept 30, 2003).
Microsoft
2003
$200,000,000
October 2003: "Microsoft announced yesterday that it had agreed to pay roughly $200 million to settle consumer class-action lawsuits in five states and the District of Columbia. Similar suits are pending in five other states. Executives said the settlements bring Microsoft a step closer to final resolution of its legal entanglements. Microsoft struck agreements with customers in North Carolina, Tennessee, North Dakota, South Dakota, Kansas and the District of Columbia, after settlements in four other states earlier in the year. The suits all contended that Microsoft used its monopoly position to overcharge customers for software. In all its class-action settlements, Microsoft has agreed to give vouchers to customers for buying computer hardware and software, including products produced by competitors. Because a large part of such settlements often go unclaimed, Microsoft has agreed to turn over half of any unclaimed amount to needy schools. "This means we are well over halfway toward resolving our consumer class-action lawsuits," said Brad Smith, senior vice president and general counsel for Microsoft, in a teleconference with reporters and analysts. "Obviously, we still have some antitrust issues that remain but we've made important progress." Earlier in the year, Microsoft settled a claim by AOL Time Warner. Antitrust accusations against it continue in a European Union investigation as well as a legal challenge from Sun Microsystems. Massachusetts has said it plans to press on with an antitrust suit, and arguments in that case are scheduled to begin next month. In 2001, the Justice Department entered into a settlement with Microsoft of its 1998 antitrust suit that several state attorneys general, as well as some competitors and consumers, called little more than a slap on the wrist. In January, Microsoft agreed to pay up to $1.1 billion to California consumers, settling the largest class-action claim. In April, it announced a deal with Florida consumers valued around $202 million. West Virginia and Montana accepted settlements earlier this year. Microsoft has established a reserve of $1.55 billion to cover the state settlements. Mr. Smith said yesterday that the company had no plans to adjust that amount. Of the settlements announced yesterday, only those with Kansas and the District of Columbia have received preliminary court approval. The settlement in Kansas is valued at $32 million; the District of Columbia settlement at $6.2 million." (Microsoft Settles 6 More Suits, By Laurie J. Flynn, New York Times, October 29, 2003).
Microsoft
2003
$60,000,000
"Microsoft agreed to pay $60 million and to license a plaintiff's whiteboard technology following a somewhat stiffer but not yet finalized jury verdict against the software giant. The settlement, announced by SPX and its Imagexpo unit Wednesday, gives Microsoft the right to use technology covered under patent #5,206,934, "Method and apparatus for interactive computer conferencing." A U.S. district court jury in Richmond, Va., on Nov. 14 had awarded SPX $62.5 million in damages after finding that Microsoft had violated the patent with its NetMeeting software. Since the court had yet to dispense with final motions in the case, the software giant still had a window of opportunity to settle the case under more favorable terms. Microsoft has spent much of the year on the patent defensive, though the SPX verdict pales in comparison to its patent nemesis, the University of California and Eolas patent covering browser plug-in technology. "This settlement is another step in Microsoft's efforts to resolve legal conflicts, to focus on the future, and to continue building great software," company representative Stacy Drake said Friday. Microsoft has until Tuesday to pay the $60 million, which SPX said would be reduced by expenses associated with the lawsuit." (Microsoft settles in whiteboard patent dustup, By Paul Festa, CNET News, Dec 26, 2003).
Microsoft
2004
$609,000,000
"Mcrosoft Corp. was ordered by European Union regulators to pay a record 497 million-euro ($609 million) fine, share secret programming data with competitors and offer a version of Windows without a music and video player. The world's largest software maker said the ruling breaks trademark and copyright law and vowed to appeal. The EU said the company illegally used Windows, which powers 95 percent of personal computers, to quash competition from rival makers of server software and media players such as RealNetworks Inc. ``Microsoft has abused its virtual monopoly power over the PC desktop in Europe,'' European Competition Commissioner Mario Monti, 61, said at a briefing in Brussels. ``This is not a decision we have taken easily or hastily.''... The fine, which tops the 462 million euros against Swiss drugmaker Roche Holding AG in 2001, is less than 2 percent of Microsoft's $32.2 billion in sales in the year ended June 30. The company, which had $52.8 billion in cash and short-term investments as of Dec. 31, generated that much cash in about 22 days last fiscal year. The company is accused by the European Commission, the EU's regulatory arm, of deliberately restricting the ability of non- Microsoft software on larger computers to work with Windows. Microsoft's bundling of the media player with its operating system was unfair, stifles innovation in the industry and will leave consumers ``with less choice and higher prices,'' it said... If upheld, the ruling could serve as a precedent for competitors seeking changes to Windows. Analysts said the ruling could bolster efforts by competitors such as RealNetworks and Linux operating system sellers Red Hat Inc. and Novell Inc. to sell their programs... The commission is also investigating complaints about products including Windows XP and handheld computers. Microsoft is also working on a new version of Windows, code-named Longhorn, which will add additional security and search features. Analysts say the program will go on sale in two to three years and could be affected by the ruling..." (EU Imposes Curbs on Microsoft, Demands Disclosure, Bloomberg, March 24, 2004).
Microsoft
2004
$520,000,000
A federal judge yesterday upheld a jury ruling that Microsoft Corp.'s Internet Explorer Web browser infringed on a patent owned by Eolas Technologies Inc. and the University of California and ordered the company to pay $520.6 million in damages... The technology covered in the '906 patent was developed by Eolas President Michael Doyle at the University of California, San Francisco. The patent describes in part "a system allowing a user of a browser program ... to access and execute an embedded program object," or small computer programs, often referred to as "applets" or "plug-ins." Eolas, whose name is an acronym for "Embedded Objects Linked Across Systems," jointly holds the patent with the University of California. (Microsoft ordered to pay Eolas $520M in patent case, by Laura Rohde, Computerworld, Jan 14, 2004).
Microsoft
2004
$34,000,000
"Microsoft Corp. said on Tuesday it would offer as much as $34 million in product vouchers to settle a class action in Massachusetts, the latest in a series of suits claiming it broke laws on unfair competition and consumer protection. In a joint release with the plaintiffs' attorneys, Microsoft said the deal received preliminary approval from Massachusetts Superior Court Judge Judith Fabricant on Monday. Microsoft also won preliminary approval on Monday for a similar settlement in Arizona worth nearly $105 million. Microsoft has been working to put antitrust claims behind it, having settled such suits in 12 states and the District of Columbia over the past two years, for a total of more than $1.5 billion. The company has reserves set aside to pay for those settlements, the largest of which was a $1.1 billion deal with California plaintiffs in 2003. As with the Arizona settlement and other such deals it has struck across the United States, Microsoft said it will provide half of the value of any unclaimed vouchers to certain Massachusetts school districts..." (Microsoft Settles Mass. Consumer Suit, Reuters, ABCNews.com, June 29, 2004).
Microsoft
2004
$31,500,000
"Microsoft Corp. said this week that it will pay New Mexico consumers as much as $31.5 million to settle a class-action lawsuit claiming that the world's largest software maker had overcharged for software. The settlement, which received preliminary approval by New Mexico's First Judicial District Court in late July, will allow eligible class-action members to receive vouchers from Microsoft that can be used to buy any computer hardware or software from any manufacturer. The settlement is the latest since Microsoft settled class-action suits with Massachusetts and Arizona in June. Microsoft has been working to put antitrust claims behind it, having settled such suits in more than a dozen states and the District of Columbia over the past two years, for a total of more than $1.5 billion. As with the Massachusetts settlement and other such deals it has struck across the U.S., Microsoft said it will provide half the value of any unclaimed vouchers to certain New Mexico school districts... Class actions are still pending in Iowa and Wisconsin. Consumers and businesses in New Mexico that purchased Microsoft operating system and application software between December 1995 and December 2002 in that state are eligible to claim vouchers, according to the terms of the settlement." (Reuters, Aug 6, 2004).
Microsoft
2004
$1,600,000,000
"Microsoft Corp., the world's biggest software maker, agreed to pay personal-computer company Gateway Inc. $150 million over four years to resolve antitrust claims. The settlement comes after mediation that followed a U.S. government antitrust suit against Microsoft, the companies said today in a statement. Gateway sued because U.S. District Judge Thomas Penfield Jackson said during that case that Microsoft's dominance had hurt Gateway. Resolving Gateway's charges helps Redmond, Washington-based Microsoft wrap up legal cases and focus on product development as sales are expected to post their slowest growth ever this year. Microsoft last month agreed to pay $60 million to Burst.com Inc. to settle a patent-infringement lawsuit and last year paid $1.6 billion to end a 10-year fight with Sun Microsystems Inc..." (Bloomberg, April 11, 2005).
Microsoft
2005
$60,000,000
"Microsoft Corp., the world's biggest software maker, agreed to pay personal-computer company Gateway Inc. $150 million over four years to resolve antitrust claims. The settlement comes after mediation that followed a U.S. government antitrust suit against Microsoft, the companies said today in a statement. Gateway sued because U.S. District Judge Thomas Penfield Jackson said during that case that Microsoft's dominance had hurt Gateway. Resolving Gateway's charges helps Redmond, Washington-based Microsoft wrap up legal cases and focus on product development as sales are expected to post their slowest growth ever this year. Microsoft last month agreed to pay $60 million to Burst.com Inc. to settle a patent-infringement lawsuit and last year paid $1.6 billion to end a 10-year fight with Sun Microsystems Inc..." (Bloomberg, April 11, 2005).
Microsoft
2005
$150,000,000
"Microsoft Corp., the world's biggest software maker, agreed to pay personal-computer company Gateway Inc. $150 million over four years to resolve antitrust claims. The settlement comes after mediation that followed a U.S. government antitrust suit against Microsoft, the companies said today in a statement. Gateway sued because U.S. District Judge Thomas Penfield Jackson said during that case that Microsoft's dominance had hurt Gateway. Resolving Gateway's charges helps Redmond, Washington-based Microsoft wrap up legal cases and focus on product development as sales are expected to post their slowest growth ever this year. Microsoft last month agreed to pay $60 million to Burst.com Inc. to settle a patent-infringement lawsuit and last year paid $1.6 billion to end a 10-year fight with Sun Microsystems Inc..." (Bloomberg, April 11, 2005).
Microsoft
2005
$775,000,000
"Microsoft is paying $775 million to IBM to settle an antitrust lawsuit from the mid-1990s. IBM had accused Microsoft of employing certain practices that hurt its OS/2 operating system and SmartSuite products as well as its server and hardware business." (Forbes, July 1, 2005).
Microsoft
2005
$761,000,000
"Microsoft... would pay $761 million to RealNetworks, one of the software maker's fiercest rivals and critics, to settle antitrust claims and establish a wide-ranging partnership on digital media and games... Microsoft and RealNetworks said it now made more sense for them to collaborate than fight over the placement of media software on desktop computers as they have been doing for many years. The deal is the latest in a string of settlements between Microsoft and other technology companies, and it could complicate European regulators' efforts to pursue antitrust charges against the software maker when competitors who they are meant to help are finding it more beneficial to settle than litigate. Microsoft... will make payments of $460 million and $301 million to RealNetworks, of Seattle, the first of which will be paid upfront to resolve lawsuits between the companies and the second for software and services over 18 months. Under the new partnership, Real will provide both its Rhapsody online music subscription and digital games to Microsoft's online MSN service and some games for the XBox game console..." (New York Times, October 11, 2005).
Microsoft
2006
$357,000,000
The EU fined Microsoft Corp. $357 million on Wednesday and threatened more penalties, saying the company failed to obey a 2004 antitrust order to share technical information that would allow rivals' software to communicate better with Windows. Microsoft said it would appeal the fine, which was set at 280.5 million euros, claiming the hefty amount was unfair... The European Union also said it would double fine rates to 3 million euros a day -- or $3.82 million, at current exchange rates -- starting July 31 unless the company supplies ''complete and accurate'' technical information to help rivals make software that works smoothly with its ubiquitous Windows operating system... The EU imposed daily fines of 1.5 million euros ($1.91 million) after a Dec. 15 deadline to June 20, when it decided that Microsoft was still violating EU law. In comparison, Microsoft earned $2.98 billion in the quarter ended March 31 on revenue of $10.9 billion.It has three months to pay Wednesday's fine. The EU already had levied a record 497 million euro fine on Microsoft in 2004 and ordered it to hand over communications code to rivals, saying it had deliberately tried to cripple them as it won control of the market... Kroes said she had showed restraint on the new fines, since the EU can fine a company up to 5 percent of its annual global revenue. This would mean a fine of 4.28 million euros ($5.47 million) a day out of Microsoft's daily revenue of 85.7 million euros ($109.47 million), she said." (New York Times, July 12, 2006).
Millennium Management LLC
$180,000,000
"[H]edge funds run by Millennium Management LLC and four of the firm’s top executives agreed to pay $180 million to settle charges that they violated trading rules." (Philip Mattera, The New Raiders: Hedge Funds Take on Corporate America, Corporate Research E-Letter No. 57, Jan-Feb 2006).
Mitsubishi
199?
$1,800,000
Multinational Monitor, July/August 1999
Mobil
2004
$5,500,000
The U.S. Environmental Protection Agency and the U.S. Department of Justice today announced a settlement with Mobil Exploration and Producing U.S. Inc. worth over $5.5 million for numerous oil and produced water spills from its oil production activities on the Navajo Nation in southeastern Utah. The settlement includes a $515,000 penalty and requires the company to spend about $4.7 million on field operation improvements to reduce spill incidences. Mobil will also spend approximately $327,000 on environmental projects that include sanitation facilities and construction of a drinking water supply line extension that will provide running water to 17 of the remote residences located on the oil production fields. Currently, local residents may drive as long as an hour to fill 55 gallon drums with drinking water... In March 1998, the EPA and the U.S. Department of Justice filed a lawsuit claiming that between December 1991 and March 1999 approximately 83 spills at Mobil's oil fields reached tributaries of the San Juan River-- a violation of the federal Clean Water Act. Mobil's violations include: 1) unauthorized discharge of oil and oil and water mixtures into tributaries of the San Juan River; 2) failure to prepare and fully implement an adequate spill prevention and control plan; 3) failure to implement existing plans; 4) failure to prepare a facility response plan or conduct drills and training; 5) failure to notify the EPA of discharge events. Mobil's oil production fields are located on both sides of the San Juan River in southeast Utah on lands leased from the Navajo Nation." (US EPA news release, Aug 3, 2004).
Monsanto
2005
$1,000,000
In January 2005, "Monsanto admitted to paying a bribe of $50,000 to a senior official in the [Indonesian] Ministry of the Environment in exchange for dropping a requirement for an environmental impact statement. The company was fined $1 million by the United States Department of Justice." (Raymond Bonner, Corruption in Indonesia Is Worrying Aid Groups, New York Times, Jan 13, 2004).
Morgan Stanley
2002
$50,000,000
FOR MORE INFO SEE ENTRY: Citigroup - 2002 - $300,000,000
Morgan Stanley
2003
$50,000,000
Morgan Stanley on Monday agreed to pay $50 million to settle federal charges of mutual fund abuses as the industry scandal widened amid further withdrawals of funds by investors in Putnam Investments. Morgan Stanley (MWD) settled charges that it failed to tell investors about compensation received for selling certain mutual funds, the U.S. Securities and Exchange Commission and National Association of Securities Dealers said. The deal followed an SEC settlement with Putnam on Thursday that it had allowed some portfolio managers and certain clients to break company rules by buying and selling mutual fund shares very quickly to profit from stale prices. Without admitting or denying the charges, as is customary on Wall Street, Morgan Stanley agreed to provide more disclosure about its relationships with mutual fund groups, the SEC said, adding it was looking at 15 brokers in relation to the Morgan Stanley charges. Morgan Stanley said in a statement it would no longer accept ``soft dollar'' payments -- the paying of brokerages services through commission revenues rather than direct fees, or hard dollar payments -- on retail sales of mutual funds. The probe of the $7 trillion mutual fund industry will expand to include the examination of soft dollar payments and mutual fund fees, New York Attorney General Eliot Spitzer, who has spearheaded the investigations, said last week..." (Fund Scandal Widens, Morgan Stanley Fined, by Reuters, New York Times, Nov 17, 2003).
Morgan Stanley
see also JP Morgan
2003
$125,000,000
$1.4 Billion Wall Street Settlement Unveiled. "As part of the settlement, two former research analysts -- telecommunications expert Jack Grubman of Citigroup's Salomon Smith Barney and Internet expert Henry Blodget of Merrill Lynch & Co. -- agreed to pay $15 million and $4 million, respectively, and be permanently barred from the securities industry. The $1.4 billion settlement amount is among the highest ever imposed by securities regulators, and Citigroup's $400 million share of that settlement is the highest ever imposed on an individual firm. It follows a nearly two-year investigation started by Spitzer and later joined by the SEC and other state attorneys general.... Adding to Citigroup's $400 million, Merrill Lynch and Credit Suisse First Boston will each contribute $200 million toward the global settlement. The other firms -- Bear, Stearns & Co. Inc.; Goldman, Sachs & Co.; Lehman Brothers Inc.; J.P. Morgan Securities Inc.; Morgan Stanley & Co. Inc.; UBS Warburg LLC; and U.S. Bancorp Piper Jaffray Inc. -- will pay between $125 million and $32.5 million. About $387 million will go toward a fund to benefit customers of the firms. Another $387 million will be paid to the states. In addition, the firms will pay some $433 million to fund independent research and $80 million to promote investor education. ($1.4 Billion Wall Street Settlement Unveiled, by Tamara Loomis, New York Law Journal, April 29, 2003). See also SEC Releases Brokerage Settlement Details. Associated Press, April 28, 2003.
"Six months after securities regulators and 10 of Wall Street's biggest banks signed a landmark $1.4 billion conflict-of-interest settlement, a federal judge approved the deal Friday, clearing the way for harmed investors to recoup $399 million... The SEC, industry self-regulatory groups and 25 other states eventually joined the investigation. Firms agreeing to settle included Merrill, Citigoup Inc., Morgan Stanley, J.P. Morgan Chase, Goldman Sachs, Bear Sterns, Credit Suisse First Boston, Lehman Brothers, Piper Jaffray and UBS Warburg. Spitzer has gone on to lead regulatory probes into alleged trading abuses by mutual fund firms. In both the research and mutual fund cases, Spitzer seized on behavior long recognized by Wall Street but largely ignored by regulators. As part of the "global settlement," the firms were ordered to pay $894 million in penalties and disgorgement as well as $432.5 million to fund the purchase and distribution of independent research and $80 million to fund investor education programs." ($1.4 Billion Wall Street Settlement Approved: Federal Judge Accepts Conflict-of-Interest Deal. By Ben White, Washington Post, Nov. 1, 2003, p. E1).
The $1.4 billion settlement is divided so:
Citigroup/Salomon Smith Barney: $400,000,000
Credit Suisse First Boston: $200,000,000
Merrill Lynch: $200,000,000
Morgan Stanley: $125,000,000
Goldman Sachs Group: $110,000,000
Lehman Brothers Holdings: $80,000,000
J.P. Morgan Chase: $80,000,000
Bear Stearns: $80,000,000
UBS Warburg: $80,000,000
U.S. Bancorp Piper Jaffray: $32.500,000
Morgan Stanley
2004
$54,000,000
"Wall Street brokerage Morgan Stanley on Monday settled a sex discrimination suit brought by the Equal Employment Opportunity Commission for $54 million. In its lawsuit, the EEOC alleged a pattern of discrimination that denied scores of women promotions and gave higher salaries to less productive men. U.S. District Judge Richard Berman had scheduled opening statements for Monday. Eight women and four men were chosen as jurors on Friday. The CEO of Morgan Stanley and the chairperson of the EEOC, which brought the suit in 2001, had personally become involved in settlement talks over the weekend, Berman said. He said the settlement would include $12 million for Allison Schieffelin, the former Morgan Stanley bond seller who was the lead plaintiff. Morgan Stanley is to implement "far-reaching" measures — including agreeing to oversight by an outside monitor — to enhance the role of women in its work force. In addition, a retired federal judge is to oversee a $40 million claims fund for women alleging discrimination at the firm, Berman said. Also, $2 million will go to gender diversity programs... Other high-profile bias complaints against brokerages have been settled out of court. Talks in the Morgan Stanley case had collapsed last year. The EEOC had been expected to call about two dozen women to testify. Some told the EEOC that the firm withheld raises and desirable assignments from women who took maternity leave... Merrill Lynch & Co. and Smith Barney, now a unit of Citigroup, in 1998 settled discrimination cases involving hundreds of female employees. The Smith Barney case included allegations that male employees at a Long Island branch harassed female co-workers while partying in a basement "boom-boom room." (Sex Suit Costs Morgan Stanley $54M, CBSNews.com, July 12, 2004).
A breakdown of the $54 million sex discrimination settlement: $40 million will be placed in an interest-bearing claim fund for women who say they have suffered discrimination at Morgan Stanley at any time since Jan. 1, 1995. Abner J. Mikva, a former federal judge, will oversee the fund. Any remaining money will be used to pay for scholarships for women students pursuing careers in the financial services industry. $12 million will be paid to Allison Schieffelin, the lead plaintiff in the discrimination suit. $2 million will be used to fund diversity and anti-discrimination training at Morgan Stanley. (ABCNews.com, July 12, 2004).
Morgan Stanley
2004
$2,200,000
"The NASD temporarily suspended the investment bank and brokerage from registering new brokers for one week, and censured it for more than 1,800 late disclosures of reportable information about its brokers, including customer complaints and disciplinary actions by regulators." (CNNMoney.com, July 29, 2004).
Endgame
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