In The FCPA Report, Ropes & Gray Attorney Discusses Resolution between Johnson Controls, DOJ and SEC
In an article published by The FCPA Report (subscription required), business & securities litigation partner Nicholas Berg examines a decision by Johnson Controls (JCI) to pay $14 million to resolve SEC charges related to allegations of loose internal controls. The article also examines DOJ’s decision not to prosecute JCI by issuing a declination letter, the third such declination under the FCPA Pilot Program. Speaking about JCI’s internal controls, Mr. Berg notes that JCI’s “…Chinese subsidiary’s employees appear to have engaged in a carefully orchestrated effort to evade those controls in a way that was extremely difficult to detect.” Mr. Berg continued, explaining that “while it is certainly a good idea to implement corporate oversight of a higher-risk local subsidiary, managers reviewing key records for fraud and compliance with policies have to know enough about the business to adequately identify problems.”