SEC Strikes Again: Stryker Coughs Up $7.8M to Settle FCPA Violation Charge

This is the second time SEC has accused Stryker of violating the Foreign Corrupt Practices Act.

The SEC has charged Stryker with violating the Foreign Corrupt Practices Act (FCPA), marking the second time the agency has brought an FCPA action against the orthopedic device company.

Stryker agreed to settle the charges and pay a $7.8 million penalty but did not admit or deny the charges. This time around, the agency found that Stryker's internal accounting controls were not sufficient to detect the risk of improper payments in sales of Stryker products in India, China, and Kuwait. SEC also noted that the company's India subsidiary failed to maintain complete and accurate books and records.

In addition to paying $7.8 million, Stryker also must now retain an independent compliance consultant to review and evaluate its internal controls, record-keeping, and anti-corruption policies and procedures relating to its use of dealers, agents, distributors, sub-distributors, and other such third parties that sell on behalf of Stryker.

“Stryker’s failures to implement sufficient internal accounting controls and keep accurate books and records are unacceptable, especially as this is not the first time the company has been charged for these types of violations,” said Marc Berger, director of the SEC’s New York regional office. “The penalty ordered, along with the imposition of a compliance consultant, are appropriate and necessary.”

In October 2013, Stryker settled charges of FCPA violations and was required to pay a $3.5 million penalty plus more than $7.5 million in disgorgement of ill-gotten gains and more than $2.2 million in interest. That time, the company was accused of bribing government officials and doctors to win business in five separate countries.

According to the 2013 charges, Stryker attempted to hide $2.2 million in bribes in Romania, Poland, Mexico, Greece, and Argentina. These bribes were allegedly hidden by booking them as commissions, consulting services, travel costs, and charitable donations. In one bribery example, Stryker is accused of paying for a Polish hospital director's trip to Aruba and New York City. During the trip, the hospital director and his wife received a six-night hotel stay and two live theater tickets compliments of Styrker.

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