SEC Fines Orthofix International $14 Million For Accounting Failures, Foreign Bribery

The Securities and Exchange Commission said on Wednesday it would fine Orthofix International , a Texas-based medical device company, $14 million to settle charges that it improperly booked revenue in certain instances and made improper payments to doctors at government-owned hospitals in Brazil in order to increase sales. Orthofix violated the Foreign Corrupt Practices Act, or FCPA, when its Brazilian subsidiary used high discounts and fake invoices to make improper payments through third-parties to induce government doctors to use Orthofix's products. The accounting failures caused the company to materially misstate certain financial statements from at least 2011 to the first quarter of 2013. The company agreed to admit its wrongdoing and pay an $8.25 million penalty to resolve the accounting violations and more than $6 million to settle the FCPA charges. Four former Orthofix executives, including its CFO, also agreed to settle cases related to the accounting failures without admitting or denying the findings. Orthofix's then-CEO Robert Vaters, who was not charged with wrongdoing, reimbursed the company $72,886 for cash bonuses and certain stock awards he received in error based on the restated accounting, making it unnecessary for the SEC to pursue a Sarbanes-Oxley Section 304(a) clawback action against him. Orthofix shares were flat Wednesday, but are down 8% in the last 12 months, while the S&P 500 has gained about 20%.