Smith & Wesson Holding Corporation said it reached an approximate $2 million civil settlement with the Securities and Exchange Commission (SEC) related to a 2010 inquiry stemming from a Department of Justice (DOJ) investigation which was later dropped by the DOJ.
The company consented to the settlement without admitting or denying the findings of the inquiry. The settlement expense was accrued by the company in the fourth quarter of its fiscal year ending April 30, 2014.
As the company pushed to break into new foreign markets from 2007 to 2010, its international sales staff made a concerted effort to get new business by offering or making illegal payments to government officials, the SEC said.
President and CEO of Smith & Wesson, James Debney, said, “We are pleased to have concluded this matter with the SEC and believe that the settlement we have agreed upon is in the best interests of Smith & Wesson and its shareholders. Today's announcement brings to conclusion a legacy issue for our company that commenced more than four years ago, and we are pleased to now finally put this matter behind us.”
The agency said Smith & Wesson hired a third-party agent in Pakistan in 2008 to help the company secure a deal to sell firearms to a police department. Company officials authorized the agent to give guns worth more than $11,000 as gifts to Pakistani police officials, in addition to cash payments, the SEC said. The company made $107,852 on the resulting contract to sell 548 pistols to the police department.
Smith & Wesson agreed to pay $107,852 in restitution for the contract plus $21,040 in interest, in addition to a $1.9 million penalty.
