Settlements

ST-471
Mead Johnson Nutrition
Mead Johnson Nutrition
United States
Securities and Exchange Commission
China
2015
7/28
Unknown
Legal Person
Civil
Cease and Desist Order
Disgorgement of Profits; Prejudgment Interest; Civil Penalty
$12,030,000
$7,770,000
$1,260,000
$3,000,000
$0
NA
Art.16
Art. 1, Art. 2, Art. 8
Falsification of Books and Records, Internal Controls Violations
No admission or denial of alleged offenses
Yes
According to the US Securities and Exchange Commission, the "Mead Johnson Nutrition Company has agreed to settle charges that its Chinese subsidiary made improper payments to health care professionals at government-owned hospitals to recommend the company’s infant formula to patients who were new or expectant mothers. [ ] An SEC investigation found that employees funded the improper payments through 'distributor allowance' funds paid to third-party distributors who market, sell, and distribute the company’s products in China. Although the funds contractually belonged to the distributors, employees exercised some control over how the money was spent and provided specific guidance to distributors on how to use the funds. Cash and other incentives were subsequently paid to health care professionals in China hospitals to recommend Mead Johnson Nutrition products and provide the company with contact information for patients who were new or expectant mothers so it could market its infant formula to them directly. The company did not accurately reflect in its books and records the more than $2 million in improper payments made during a five-year period." (Source: US SEC Press Release, "SEC Charges Mead Johnson Nutrition With FCPA Violations," July 28, 2015.)