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SEC v. Yu Kai Yuan

 
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Yu Kai Yuan
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SEC Civil
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February 16, 2016
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SEC v. Yu Kai Yuan
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SEC v. Yu Kai Yuan (2016)
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The Statement of Facts included in Yuan’s DPA makes very little reference to the specific conduct that Yuan engaged in to violate the FCPA. Instead, the DPA only makes reference to general conduct by PTC China employees.
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Computer & Information Technologies-Software
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China
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2006; 2007; 2008; 2009; 2010; 2011
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Employees of state-owned entities in China
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PTC Inc. (formerly Parametric Technology Company) is a Massachusetts corporation. PTC’s stock is registered with the U.S. Securities and Exchange Commission and is listed on NASDAQ.

Yu Kai Yuan is a Chinese citizen who resides in Shanghai, China. From 1996 until 2011, Yuan was employed by PTC as a sales executive at PTC’s Chinese subsidiaries, Parametric Technology (Shanghai) Software Company Ltd. and Parametric Technology (Hong Kong) Ltd. (collectively “PTC China”).

According to the SEC, from at least 2006 to 2011, PTC China provided improper items of value to employees and officers of Chinese state-owned entities that were customers of PTC China. According to the DPA, PTC China provided items of value in one of two ways: (1) by providing improper payments to third party agents disguised as commissions or sub-contracting payments that were used to pay for non-business foreign travel for the Chinese officials; and (2) by allowing sales staff to provide gifts and excessive entertainment to employees of Chinese state-owned entities.

According to the DPA, PTC employees organized overseas trips in conjunction with visits to a PTC facility. For example, PTC China employees would arrange for and accompany Chinese officials on a one-day business trip to PTC’s headquarters in Massachusetts and would then arrange additional sightseeing visits (to locales such as New York, Las Vegas, San Diego, and Hawaii) that lacked any business purpose. According to the DPA, the state-owned employees who went on the trips often were the signatories to the sales agreements with PTC.

On February 16, 2016, the SEC announced that it had entered into a three-year deferred prosecution agreement with Yu Kai Yuan. In the DPA, the SEC alleged that Yuan caused violations of the books and records and internal accounting controls of the FCPA. Yuan, without admitting or denying the SEC’s allegations, offered to accept responsibility for his conduct and to not contest or contradict the factual statements in the DPA in a future SEC enforcement action if he breaches the agreement. Yuan was not required to pay any sanctions.
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Books and records (Issuer), Internal controls (Issuer)
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Deferred-prosecution Agreement
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Not stated.
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0
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Employee of Issuer
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Foreign
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China
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Contract Procurement/Retention
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Not stated.
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Entertainment, Gifts, Travel
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Sales Agent/Consultant
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Not stated.
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China
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No
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Yes