LEGG MASON INC.

INDUSTRY

Financial Services/Private Equity

CORPORATE HEADQUARTERS

Maryland, United States

SUMMARY OF ALLEGATIONS

Nationality of Foreign Officials: Libya

Summary of Allegations:

Between 2004 and 2010, one of Legg Mason Inc.'s subsidiaries – Permal Group Ltd. – partnered with Paris-based financial institution Société Générale S.A. to pursue business from Libyan state-owned financial institutions. Société Générale S.A., via an intermediary broker, paid USD 90 million in bribes to Libyan officials to secure investments from various Libyan state-owned institutions. Legg Mason, via Permal, managed seven of the 14 investments that Société Générale S.A. won from the scheme, yielding profits of USD 31.6 million.

Apparently, only low-mid level Permal employees were involved in this scheme. 


Approximate Alleged Payments to Foreign Officials: USD 90 million via Société Générale S.A.

Business Advantage Allegedly Obtained: award of investments from Libyan state-owned entities, yielding profits of USD 31.6 million.

ENFORCEMENT RESULTS

Agencies: United States: Department of Justice
Results: Criminal Fine, Disgorgement, Non-Prosecution Agreement
Year Resolved: 2018
Compliance Monitor:
Ongoing: No
Details:

04 June 2018 - Legg Mason entered into a non-prosecution agreement with the DOJ and will pay a total penalty of US$64.2 million to resolve the matter. The penalty includes disgorgement of US$31.6 million and a penalty of US$32.6 million. As part of non-prosecution agreement, Legg Mason will implement an enhanced compliance program and report to the DOJ.



Agencies: United States: Securities and Exchange Commission
Results: Cease-and-Desist Order, Disgorgement
Year Resolved: 2018
Compliance Monitor:
Ongoing: No
Details:

27 August 2018 - The SEC issued a consensual cease-and-desist order against Legg Mason, Inc. for violations of the internal controls provisions of the federal securities laws set forth in Section 13(b)(2)(B) of the Exchange Act stemming from the Permal - SocGen bribery scheme. 

The SEC ordered Legg Mason to pay a total of US$ 34.5 million, consisting of USD 27.6 million in disgorgement and USD 6.9 million in prejudgment interest.

This order follows the 4 June 2018 non-prosecution agreement between the DOJ and Legg Mason in which Legg Mason was required to pay USD 64.2 million (disgorgement of USD 31.6 million and a criminal penalty of USD 32.6 million).

Legg Mason will receive a credit for the USD 31.6 million in disgorgement paid pursuant to the DOJ non-prosecution agreement. The SEC imposed no civil penalty, noting that the DOJ had already imposed a USD 32.6 million criminal fine against Legg Mason.



ENTITIES/INDIVIDUALS INVOLVED

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