Back to top

Image: Bigstock

Johnson Controls (JCI) to Pay $14.4M to Settle SEC Charges

Read MoreHide Full Article

Johnson Controls Inc. (JCI - Free Report) announced that it has reached a settlement with the U.S. Securities and Exchange Commission (SEC) related to its violation of the Foreign Corrupt Practices Act (FCPA). The company has agreed to pay $14.4 million to settle U.S. regulatory charges.

Johnson Controls identified that employees of its marine business in China had behaved improperly. These workers bribed Chinese shipbuilders, including those at shipyards, some of which are owned by the Chinese government, in order to gain business and profit themselves. The company had therefore voluntarily reported the situation to the SEC. It also conducted a detailed investigation into the issue and said that it will cooperate with the U.S. authorities.

The SEC identified that during the period 2007 to 2013, around 19 workers of Johnson Controls' subsidiary, China Marine, used fake vendors to make payments of about $4.9 million. The agency further alleged that Johnson Controls incorrectly recorded the payments in its books and this transaction led to a profit of $11.8 million.

The SEC put forward that Johnson Controls was aware of the bribery at the time of acquiring China Marine. This is a wholly-owned subsidiary that Johnson Controls gained through its 2005 buyout of York International. Though Johnson Controls implemented different strategies to address the issue, it could not stop the illegal practice.

The company neither admitted to nor denied the findings of the SEC. However, it agreed to pay a $1.18 million civil penalty, disgorgement of $11.8 million and shell out $1.38 million of interest to settle the issue. In addition to the payment, the company will continuously report to the SEC for one year about the initiatives undertaken to prevent any malpractice.

According to the company, it is committed to responsible management practices and good governance systems.

Zacks Rank

Currently, Johnson Controls carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include O'Reilly Automotive Inc. (ORLY - Free Report) , Spartan Motors Inc. and U.S. Auto Parts Network, Inc. (PRTS - Free Report) , all carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
 


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Johnson Controls International plc (JCI) - free report >>

O'Reilly Automotive, Inc. (ORLY) - free report >>

CarParts.com, Inc. (PRTS) - free report >>

Published in