Legg Mason pays $34.5 million to settle charges of foreign bribes

Legg Mason a publicly traded American investment management firm will pay $34.5 million to settle charges that its Permal Group hedge fund business bribed Libyan officials to win investment contracts, the Securities and Exchange Commission announced Monday.

The settlement is like one announced June 4 by the U.S. Justice Department, with Legg Mason agreeing to pay $64 million including a $32.6 million penalty and $31.6 million disgorgement. The SEC order said that because of that criminal penalty, it was not imposing a civil fine.

The money manager holding company admitted that from 2004 to 2010, Permal was a partner with Societe Generale in seeking business from Libyan state-owned companies and paying bribes through a Libyan broker in connection with 14 investments. In the non-prosecutorial agreement, the Justice Department said Legg Mason cooperated in the federal investigation, and that its misconduct “involved only mid-to-lower-level employees” of Permal. Societe Generale pleaded guilty in U.S. District Court in New York to bribery charges earlier this year and agreed to pay $292.5 million each to the U.S. and French governments.

At the time of the DOJ settlement, Legg Mason Chairman and CEO Joseph Sullivan said in a letter to shareholders that the company was working on a settlement with SEC staff. The SEC found Legg Mason violated the internal accounting controls provision of the Securities Exchange Act of 1934. The company will disgorge $27.6 million of ill-gotten gains plus $6.9 million in prejudgment interest to settle the SEC’s case.