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In the Matter of Qualcomm Incorporated

 
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Qualcomm Incorporated
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SEC Civil
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March 1, 2016
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In the Matter of Qualcomm Incorporated
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In the Matter of Qualcomm Incorporated, Admin. Pro. File No. 3-17145 (2016)
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The SEC’s enforcement action against Qualcomm marks the second time the Commission has accused a company of violating the FCPA by offering employment to the family members of foreign officials.
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Telecommunications-Other/Multi
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China
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2002; 2003; 2004; 2005; 2006; 2007; 2008; 2009; 2010; 2011; 2012
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Various unnamed Chinese government officials and executives of Chinese state-owned enterprises.
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Qualcomm Incorporated is a Delaware corporation headquartered in San Diego, California. The company designs and sells wireless telecommunication products and earns royalties from licensing its patented technologies. The company’s common stock trades on the Nasdaq Global Select Market and is registered with the Commission pursuant to Section 12(b) of the Exchange Act.

As explained by the SEC, Qualcomm maintained a high interest in promoting the use of its wireless telecommunications technologies within the Chinese telecommunications market. The SEC claims that Qualcomm’s success hinged on the decisions of Chinese state-owned telecommunications companies and specifically, whether those companies would adopt and promote Qualcomm technologies on an expedited basis. To curry favor with those companies, and specifically those officials with decision making authority, the SEC Claims that between 2002 and 2012, Qualcomm (i) hired relatives or other individuals at the request of Chinese officials and (ii) offered or provided others meals, gifts, and entertainment.

As to the SEC’s allegations concerning Qualcomm’s hiring practices, the SEC claims that Qualcomm offered to employ multiple individuals, often family members of Chinese telecommunications officials, with the purpose of influencing those officials’ decisions. In total, the SEC described three occasions where Qualcomm offered to hire the children or other individuals at the request of Chinese officials. In each case the SEC made clear that the decision to offer those individuals employment was based on the company’s interest in promoting Qualcomm technologies among the Chinese state-owned telecommunications companies. In at least two of those three instances, the SEC points out that the children of those officials were not qualified for the position they were offered.

The SEC also described instances where Qualcomm officials provided foreign officials with extravagant meals, gifts, and entertainment. This included lavish hospitality packages to events such as the 2008 Beijing Olympics, sightseeing tours, and golf outings. According to the SEC, none of these benefits had a valid business purpose.

On March 1, 2016 the SEC announced that it settled its enforcement action against Qualcomm through an administrative proceeding whereby Qualcomm agreed to pay a civil penalty of $7.5 million. For its part, Qualcomm acknowledged that its conduct caused the company to violate the FCPA’s anti-bribery, books-and-records, and internal controls provisions. The DOJ had launched a separate investigation in 2012 and notified the company in 2015 that it would not pursue any charges.
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Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
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Cease and Desist
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$7,500,000 in civil monetary penalty.
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7,500,000
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0
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Issuer
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U.S.
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United States
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Not stated.
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Entertainment, Gifts, Travel
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Not stated.
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China
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No
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No