Smith & Wesson Agrees To Pay $2 Mln To Settle SEC Foreign Bribery Case

(RTTNews) - Firearms maker Smith & Wesson Holding Corp. (SWHC) has agreed to pay $2 million to settle the US Securities and Exchange Commission charges that its employees and representatives bribed foreign officials while trying to win contracts to supply firearms to military and law enforcement overseas.

According to the SEC's statement, the Springfield, Massachusetts-based firearms maker sought to break into new markets overseas starting in 2007 and continuing into early 2010. The company's sales staff engaged in a pervasive effort to attract new business by offering, authorizing, or making illegal payments or providing gifts meant for government officials in Pakistan, Indonesia, and other foreign countries.

SEC noted a incident in which Smith & Wesson retained a third-party agent in Pakistan in 2008 to help the company obtain a deal to sell firearms to a Pakistani police department. Smith & Wesson officials authorized the agent to provide more than $11,000 worth of guns to Pakistani police officials as gifts, and then make additional cash payments. Smith & Wesson ultimately won a contract to sell 548 pistols to the Pakistani police for a profit of $107,852.

Smith & Wesson agreed to pay $107,852 in disgorgement, $21,040 in prejudgment interest, and a $1.906 million penalty. Smith & Wesson consented to the order without admitting or denying the findings.

Chief Executive James Debney said, "We are pleased to have concluded this matter with the SEC and believe that the settlement we have agreed upon is in the best interests of Smith & Wesson and its shareholders."

"This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales," said Kara Brockmeyer, chief of the SEC Enforcement Division's FCPA Unit.