Casinos & Hotels

Las Vegas Sands Settles FCPA Charges With SEC

Chris Lange

Published: April 7, 2016 1:25 pm

Last Updated: January 13, 2020 11:02 am

The U.S. Securities and Exchange Commission (SEC) recently announced that Las Vegas Sands Corp. (NYSE: LVS) has agreed to pay $9 million in penalties to settle charges that it violated the Foreign Corrupt Practices Act (FCPA). This is due to the SEC’s finding that the company failed to properly authorize or document millions of dollars in payments to a consultant facilitating business activities in China and Macau.

In the investigation the agency found that the company kept inaccurate books and records and frequently lacked supporting documentation or proper approvals for more than $62 million in payments to a consultant in Asia.

The company’s consultant acted as an intermediary to obscure the role of Las Vegas Sands in certain business transactions, such as the purchases of a basketball team and a building in China, where casino gambling isn’t permitted.

At one point, the company could not account for over $700,000 transferred to the consultant for team expenses, yet continued to transfer millions of dollars to him. A portion of these payments were improperly recorded in company books and records, such as money supposedly spent on artwork for the building when none was actually purchased.

In addition to the $9 million penalty, the company agreed to retain an independent consultant for two years to review its FCPA-related internal controls, record-keeping and financial reporting policies and procedures and its ethics and compliance functions. Las Vegas Sands consented to the SEC’s order without admitting or denying the findings that it violated the books-and-records and internal controls provisions of the Securities Exchange Act of 1934.

Andrew J. Ceresney, director of the SEC Enforcement Division, commented:

Publicly traded companies must have appropriate financial controls in place to ensure that expenses are paid for bona fide services. Las Vegas Sands failed to implement controls to prevent tens of millions of dollars from being paid out without appropriate documentation or authorization.

Shares of Las Vegas Sands were trading up 2.3% at $50.94 on Thursday, with a consensus analyst price target of $48.47 and a 52-week trading range of $34.88 to $59.90.