SEC Cases: Och-Ziff Hedge Fund Settles FCPA Violation Charges for $413M, Employee is Accused of Insider Trading Prior to Drug Announcement, and Company Pays Fine After Firing Whistleblower

NY Hedge Fund to Pay $413M to Settle Civil and Criminal Charges Over FCPA Violations
Och-Ziff Capital Management Group has settled both criminal and civil charges accusing the New York hedge fund of paying bribes to obtain business in Africa. This is the first hedge fund to face punishment over violating the Foreign Corrupt Practices Act. 
 
As part of its settlement with the SEC, Och-Ziff will pay almost $200M to the Commission. Meantime, the hedge fund’s CEO, Daniel S. Och, will pay the regulator almost $2.2M to resolve charges accusing him of causing certain violations. CFO Joel M. Frank also agreed to settle the SEC the charges against him and will pay a penalty. 
 
According to the regulator, the hedge fund worked with agents, intermediaries, and business partners to bribe high-level officials in African governments.  These payments purportedly persuaded the Libyan Investment Authority’s Sovereign Wealth Fund to invest in funds managed by Och-Ziff, while other bribes allowed the hedge fund to gain mining rights and influence officials in Chad, Guinea, Niger, Libya, and the Democratic Republic of Congo. 
 
Och-Ziff also will pay $213M in criminal penalties, cooperate with the U.S. Department of Justice in its ongoing probe, and hire a compliance monitor. It also entered into a three-year deferred prosecution agreement with the feds in the wake of Oz Africa Management GP, one of its subsidiaries, pleading guilty to paying bribes to officials in the Democratic Republic of Congo to obtain investment opportunities that resulted in almost $90M in profits. 
 
Biotech Employee Accused of Making Over $1.1M from Insider Trading
Robert Gadimian, the ex-Sr. Director of Regulatory Affairs for Puma Biotechnology, faces SEC charges of insider trading. The regulator claims that Gadimian made over $1.1M illicitly when he bought Puma stock and short-term call options in secret because of nonpublic information he received about positive developments involving clinical trials for neratinib, which is Puma’s drug for treating breast cancer. 
 
Gadimian is accused of buying the securities before the first trial’s results were announced in 2013 and also before the results from the second trial were made public in 2014. The SEC claims that Gadimian proceeded to modify his trading records and hide certain trades in Puma securities before giving the records to the company, which was conducting its own probe. Puma fired him two years ago.
 
Meantime, the U.S. Attorney’s Office for the District of Massachusetts has filed criminal charges against him.
 
International Game Technology to Pay $500K Penalty Over Firing of Whistleblower
A company accused of retaliating against a whistleblower has settled with the SEC for a $500,000 penalty. International Game Technology (IGT) has also consented to cease and desist from further violations of the Securities Exchange Act of 1934’s Section 21F(h). 
 
According to the regulator, International Game Technology fired an employee because he notified senior management and the Commission that there might be distortions with the company’ financial statements. This same employee had been getting positive performance reviews for several years. 
 
The SEC also found that this individual was pulled away from substantive work assignments within weeks of raising alerts about International Game Technology’s cost accounting model. His firing occurred three months after he brought up his concerns. 
 
The SEC also noted, however, that when International Game Technology performed an internal probe into the whistleblower’s allegations, it found that reported financial statements did not include misstatements. By settling, the company is not denying or admitting to the regulator’s findings.
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