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The Securities and Exchange Commission today announcedthat Legg Mason Inc. will pay over $34 million to resolve an SEC charge that the company violated the Foreign Corrupt Practices Act (FCPA) in a scheme to bribe Libyan government officials.

According to the SECs order, between 2004 and 2010, a former Legg Mason asset management subsidiary, Permal Group Inc., partnered with a French financial services company to solicit investment business from Libyan state-owned financial institutions. These entities engaged in a scheme to pay bribes to Libyan government officials through a Libyan middleman in order to secure investments. As a result of the corrupt scheme, Legg Mason, through its Permal subsidiary, was awarded business tied to $1 billion of investments for the Libyan financial institutions, earning net revenues of approximately $31.6 million.According to the SECs order, the middleman used the term cooking to describe his ability to cause Libyan government officials to invest by any means necessary, including bribes.

Companies must take adequate steps to identify and mitigate the risks of bribery and corruption present in their global business. Those risks are particularly acute when, as here, agents and middlemen are used as part of a companys efforts to obtain business with government clients, said Charles Cain, Chief of the Enforcement Divisions FCPA Unit.

The SECs order finds that Legg Mason violated the internal accounting controls provision of the Securities Exchange Act of 1934. Legg Mason agreed to disgorge approximately $27.6 million of ill-gotten gains plus $6.9 million in prejudgment interest to settle the SECs case. Legg Mason had also previously agreed to pay $33 million to the U.S. Department of Justice in sanctions resulting from the firms involvement in the Libyan bribery scheme.

The SECs investigation was conducted by Eric Heining and Paul G. Block of the FCPA Unit and Rory Alex and Martin F. Healey of the Boston Regional Office. The SEC appreciates the assistance of the Fraud Section of the Department of Justice, the U.S. Attorneys Office for the Eastern District of New York, and the Federal Bureau of Investigation.

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