Avon's legal matters involving the SEC continue

Avon has come a long way since its inception. While undoubtedly some of the changes it has encountered along the way are positive for the business, there are likely some that those in charge of the business would prefer go away. One of those things is the bribery probe the Securities and Exchange Commission has been conducting into the business' operations. The SEC has invested five years and an unknown amount of money looking into the securities matter. 

The SEC is trying to determine whether the beauty company violated the Foreign Corrupt Practices Act while trying to obtain licenses to do business in China. More specifically they are looking into whether Avon either gave gifts or money to Chinese officials. Over the course of the last few years other markets have been included in the probe as well.

Recently Avon sought to bring an end to the investigation. It offered the SEC a $12 million settlement. That offer was rejected most likely due to the low amount offered. According to one source, prior to the settlement offer multiple officials with the SEC and the Justice Department indicated that the business should pay at least $100 million.

The business' new chief executive appears eager to have this investigation compete so it can move forward. This is not surprising when one considers that since 2008, the company has spent at least $340 million on the matter. In addition to an internal investigation, that money has been spent on legal bills. At this time the business is reportedly awaiting a counteroffer from the SEC.

As this case illustrates, incidents involving investigations by the SEC are usually complex and expensive. It is often in the best interest of the business to resolve the matter in a timely manner. Working with lawyers who routinely handle such cases are a part of that solution.

Source: The Wall Street Journal, "Avon Earnings: Probe Settlement Is Rejected," Joe Palazzolo and Paul Ziobro, August 1, 2013

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